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2022 (8) TMI 487 - AT - Income TaxRevision u/s 263 - principles of mutuality - CIT(A) enhanced the assessment by denying the mutuality principles and computed the total income on commercial manner - HELD THAT:- Department accepted the ld. CIT(A)'s finding that the assessee is a mutual association and its receipts from members are exempt on the principles of mutuality. In the Asst Years 2004-05, 2007-08 and 2008-09, AO did not dispute that the assessee is a mutual association. However, it was held that the amounts received by the assessee by way of sponsorship fee of an event conducted for the members and for supply of food to members by an outside caterer was not exempt on the principles of mutuality. Both issues were decided in favour of the assessee by this Tribunal vide its common order dated 21.3.2016 for the Asst Years 2004 05, 2007-08 and 2008-09 vide paragraphs 11, 16 and 23 of the order. The assessee has always been treated as Mutual Association since its inception for decades upto AY 2008-09 by the department as is evident from the tabulation handed over by the ld. AR at the time of hearing. As submitted that this has continued even in the subsequent years i.e. Assessment Year 2016-17 to 2018-19 wherein the Ld. AO in the scrutiny assessment treated the assessee as a mutual association and accordingly has accepted Principle of Mutuality in respect of majority of receipts as claimed by the assessee. Taxability of Catering Revenue - addition made on account of club share income of assessee from caterer, on the ground that the same was exempt under principle of mutuality - HELD THAT:- Hon'ble Bombay High Court [2019 (6) TMI 447 - BOMBAY HIGH COURT] has affirmed the finding of this Tribunal in allowing 'Catering Revenue' as income exempt from tax under the principle of Mutuality. Hence, the said issue of applicability of mutuality principle is further covered/ settled in favour of assessee. Hence the observation made by the ld. PCIT in this regard is totally untenable in the eyes of law. Revenue from holding Cricket Matches - Hon'ble Supreme Court in assessee's own case [1968 (8) TMI 200 - SUPREME COURT] had duly considered the issue relating to holding of cricket matches and had clearly laid down that the activity of cricket cannot be held in the nature of trade or business. In any case, we find that the ld. PCIT had only stated that the assessee could have earned more revenue from holding cricket matches. This is only a mere surmise and conjecture on the part of the ld. PCIT. The law is very well settled that no proceedings could be initiated on an assessee merely on surmise and conjecture. We hold that there is no reason for the ld. AO to take a divergent view while framing the assessment for the year under consideration. Hence we are unable to persuade ourselves to agree to the contention of the ld. PCIT that the order of the ld. AO is erroneous. Hence initiation of revision proceedings u/s 263 of the Act deserves to be quashed on this count itself as cumulative twin conditions for invoking section 263 proceedings are not satisfied in this case. Transactions with Non-Members not offered to tax according to ld. PCIT - We have gone through the computation of total income of the assessee for the year under consideration together with the respective returns. We find that the assessee had duly offered the interest income and capital gains to tax in the revised return of income. We find that the ld. PCIT had proceeded completely on incorrect assumption of fact. We hold that the ld. PCIT has grossly erred in stating that the transactions with non-members have not been offered to tax by the assessee. All these facts were duly brought to the knowledge of the ld. PCIT in the reply given to the show cause notice issued u/s 263 of the Act. None of the factual submissions had been considered by the ld. PCIT while passing the revision order u/s 263 of the Act. This goes to prove the complete non-application of mind on the part of the ld. PCIT in the instant case, while invoking his revisionary jurisdiction u/s 263 of the Act. Hence the order of the ld. PCIT u/s 263 of the Act deserves to be quashed on this count also in respect of this issue. Enquiries carried out by the ld. AO in original scrutiny assessment proceedings - As it could be safely concluded that the assessment order has been passed after due application of mind and after making adequate and requisite enquiries by the Ld. AO and accordingly the said order cannot be held to be erroneous and prejudicial to the interests of the Revenue only because the Ld. PCIT takes a different view of the matter. We have already held hereinabove that the view taken by the ld. PCIT is grossly incorrect on various counts. In any case, once a possible view has been taken by the ld. AO in the assessment proceedings, the same cannot be subject matter of revision by the ld. PCIT in the section 263 proceedings, merely because the ld. PCIT is of a different view on the same set of facts. Reliance in this regard is placed on the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. Gabriel India Ltd. [1993 (4) TMI 55 - BOMBAY HIGH COURT] which has been approved by the Hon'ble Supreme Court in Malabar Industrial Co Ltd vs. CIT [2000 (2) TMI 10 - SUPREME COURT] PCIT has directed the conduct of a roving and fishing inquiry which is not permissible in law - Merely calling for information to see whether there is "potential reason" to hold that assessment erroneous and prejudicial to the interest of revenue, constitutes a roving or fishing inquiry. Reliance in this regard is placed on the decision of Hon’ble Delhi High Court in the case of CIT vs. International Travel House Ltd [2010 (9) TMI 347 - DELHI HIGH COURT] it has been held that the PCIT is not permitted to exercise his revisional powers to conduct a roving or a fishing inquiry with a view to detecting alleged potential sources of income. Thus we hold that the ld. PCIT had grossly erred in invoking revisionary jurisdiction u/s 263 of the Act for more than one reason as detailed supra. Accordingly, the revision order passed by him u/s 263 of the Act is hereby quashed. Accordingly, the grounds raised by the assessee are allowed.
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