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Surajmal Memorial Education Society Versus CIT (E) , New Delhi

2016 (4) TMI 250 - ITAT DELHI

Revision u/s 263 - Held that:- The present case of assessee is squarely covered in its favour by the various decisions of Hon’ble Jurisdictional High Court including decision in the case of CIT Vs Joyti Foundations (2013 (7) TMI 483 - DELHI HIGH COURT) wherein it was held that only in the case of no enquiry provisions of section 263 of the Act can validly invoked otherwise in the case of proper enquiry the enquiry cannot be alleged as inadequate or insufficient and on this basis provisions of se .....

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the impugned order we observe that the ld. CIT(E) without any conclusive findings and observation only on the basis of suspicion and doubts held that the assessment order is erroneous and prejudicial to the interest of the Revenue and directed the AO to examine the issue afresh setting aside the order which is not permissible - Decided in favour of assessee - ITA No. 2011/DEL/2015 - Dated:- 2-3-2016 - Sh. G.D. Agrawal V.P. and Sh. C.M. Garg, J.M For The Appellant : Sh. Salil Aggarwal, Adv, Sh. .....

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ant case. 2. That the learned CIT(Exemptions) has erred in holding that the assessment order passed U/s 143(3) of the Act on 29.10.2013 by the Assessing Officer is erroneous in as much as it is prejudicial to the interest of the Revenue. b) That the learned CIT has erred in holding that the Assessing Officer has not addressed the issues raised by her in her notice U/s 263 of the Act and that the assessee s claim of exemption of income under various sections and provisions of law has been accepte .....

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counts, bills, vouchers etc. during the course of assessment proceedings. c) That the learned CIT (Exemp.) has erred in drawing adverse inference against the assessee only on the basis of suspicion without pointing out any specific discrepancy in various details and documentary evidences filed by the assessee before the Assessing Officer in response to questionnaire issued by him and duly examined by him during the course of assessment proceedings. d) That the learned CIT (Exem.) has erred in pa .....

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or all grounds of appeal 3. We have heard arguments of both the sides and carefully perused the relevant materials placed before us on record. The Ld Counsel of the assessee submitted that original assessment for relevant AY 2001-12 was completed on 29.10.2013 and subsequently the CIT(E) issued show cause notice U/s 263 of the Act on 19.01.2015 alleging four issues showing his intention to review the impugned assessment order U/s 263 of the Act copy of the said notice is available at page 134 of .....

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e which are also available at pages 75 to 105 of the assesee s paper book. The Ld Counsel also submitted that the AO for A.Y 2011-12 has allowed exemption u/s 11(1)(d) of the Act to the assessee which is vivid from the copy of the said assessment order dated 29.10.2013 available at page 41 & 42 of the assessee s Paper book. 4 The Ld counsel vehemently pointed out that the CIT(E) at page 4 in para 3 and at page 6 para 5 of the impugned order the ld. CIT(A) has alleged that there was inadequat .....

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e Ld counsel pointed out that the AO raised query by posing question no. 26 of the questionnaire to the assessee and the assessee replied the same in Para 4 in the reply dated 08.08.2013. The Ld Counsel pointed out that in Para 3.1 of the impugned order the CIT(E) wrongly alleged the same without any conclusive finding. The Ld Counsel pointed out that the room rent receipts were regularly allowed to the assessee for previous A.Ys as the same were incidental to the main object of the assessee i.e .....

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to 74 of the assessee paper book. The Ld Counsel vehemently pointed out that the CIT(E) at page no 4 Para 3.2 of the impugned order recorded factually incorrect observations and finding which vitiate the order. The Ld Counsel pointed out that the assessee submitted entire details regarding investment in land and when the registered sale deed in favour of the assessee has been submitted during the original assessment proceedings supporting the transaction in favour of the appellant society then .....

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unsel pointed out that except suspicion no other sound material or allegations could be brought out by the CIT(E) for invoking provisions of section 263 of the Act and there is no allegation against the AO that he accepted the claims of the assessee without any inquiry and on wrong application of fact and law. 8 The Ld counsel also placed his reliance on the judgment of Hon ble Jurisdictional High Court of Delhi in the case of CIT Vs Vikas Polimers 341 ITR 537 (Delhi) and decision in the case of .....

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ted that section 263 of the Act has two elements viz. the order should be erroneous and secondly prejudicial to the interest of the revenue. The Ld CIT DR pointed out that the impugned assessment order was framed without adequate enquiry hence the CIT(E) was quite correct and justified in invoking the provisions of section 263 of the Act. The Ld CIT DR pointed out that there was a serious doubt about allowability and acceptability of all four issues raised by the CIT(E) in the notice under secti .....

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the issue of Corpus Donations proper enquiry was not made and CIT(E) has in Para 3 of the impugned order clearly held that merely because questionnaire was issued and assessee filed its reply to the same does not show the conduct of required enquiry and the enquiry cannot be made by issuing questionnaire and if there is no deliberations or conclusion by the AO on the issue showing that he applied his mind to the facts and material placed before him then it would be a case of lack of enquiry whic .....

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one through the records and then after satisfying himself about the erroneousness and prejudice caused to the revenue legally invoked provisions of section 263 of the Act by issuing notice dated 19.01.2015. the LD CIT DR pointed out that it is case of no enquiry therefore in view of the prepositions laid down by Hon ble Calcutta High Court in the case of CIT Vs Maithan International reported as 375 ITR 123 (Calcutta) the order of CIT(E) is sustainable. The Ld CIT DR lastly pointed out that no ba .....

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d notice U/s 263 of the Act. The Ld Counsel also pointed that after considering the reply of the assessee to the questionnaire filed on 8.8.2013 the AO also enquired about the relevant facts and evidence and after considering the same passed assessment order which cannot be alleged as erroneous of prejudicial to the interest of the revenue. The Ld Counsel also contended that merely because the AO did not adjudicate the issues in so many words as expected by the CIT(E) the order cannot be labeled .....

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s function by perfunctory or inadequate investigation. Such a course is bound to result in erroneous and prejudicial orders. Where the relevant enquiry was not undertaken, as in se, the order is erroneous and prejudicial too and, therefore, revisable. Investigation should always be faithful and fruitful. Unless all fruitful areas of enquiry are pursued the enquiry cannot be said to have been faithfully conducted. In a different context the apex court observed "contra veri- lex nunquam aliqu .....

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59 and 60 it is clear that the assessee filed its reply along with all documents relevant to the issues, therefore we are unable to agree with the contentions of LD CIT(E) that it is a case of no enquiry on the issues reviewed by the CIT(E). Further more, if the impugned order is logically tested on the point of view of inadequate enquiry then we note that the AO considered confirmation of the donors which were filed by the assessee with its reply to the questioners and the same cannot be held a .....

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contrary to the facts and law, then the allegations of inadequate enquiry cannot be placed merely because as per the reviewing authority the enquiry should have been done on other angles also. 15 So far as the issue of room rent receipts are concerned admittedly and undisputedly the appellant is engaged in the charitable object of dispensing education and room rent receipt from the students using hostel facilities have direct nexus with the main object of the society, therefore receipts from roo .....

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careful consideration of third issue of investment in land the assessee replying to the questioner submitted the copy of the registered sale deed which was executed in favour of the society and all details of payments contained therein were found in order then it was not necessary to conduct any further enquiry regarding prevalent market rate and the collector rate of the area or surrounding area so as to ascertain if there has been any under statement or overstatement in the land purchase. It .....

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and no allegation about wrong or unsustainable conclusion in the assessment order has been brought out by the CIT(E). 17 In view of above discussion we are of the considered opinion that the AO conducted required and adequate enquiry regarding all four points and after considering the reply of the assessee and all relevant material, evidence and explanations of the assessee and by following the rule of consistency as well as provisions of the Act rightly passed impugned assessment order which c .....

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on careful consideration of the fact of the present case we respectfully observe that the benefit of the ratio of this dicta is not available for the revenue in the present case as there was not only a questionnaire issued to the assessee but the AO after considering the reply and enclosed documentary evidence and explanations of the assessee drawn conclusion which cannot be held as unsustainable or against the provisions of the Act. At the same time, we observed that the present case of assesse .....

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