TMI Blog2021 (7) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... IT had exceeded his jurisdiction, and thus, had wrongly observed that as the A.O had accepted the assessee s claim for expenditure of ₹ 11.88 crores without making necessary verifications, therefore, the order passed by him u/s 143(3), dated 28.06.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263. A.O had failed to carry out verifications as regards the expenditurer claimed by the assessee to have been incurred towards furtherance of its objects, therefore, the order passed by him u/s 143(3), dated 28.06.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263. We shall deal with the contention of the ld. A.R that now when the A.O had recognized the assessee s right to exemption of income being a charitable institution, thus, in the absence of any prejudice cause to the revenue, the CIT was precluded from exercising his revisional jurisdiction. We have given a thoughtful consideration to the sad contention of the ld. A.R and are unable to persuade ourselves to subscribe to the same. As the assessee s claim of having incurred the expenses towards furtherance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot sit on judgment of the assessing officer on the assessment order under Sec.143(3) which was passed after submissions of all details as per the questionnaire and the case was fully discussed and requisite details were examined hence the CIT has wrongly assumed jurisdiction under s263 of the income tax act The appellant craves leave to add amend or alter the aforesaid ground's of appeal which are without prejudice to one another. 2. Briefly stated, the assessee which is registered as a charitable organization with the CIT(Exemption), Mumbai under Sec. 12A of the Act had filed its return of income for A.Y. 2015-16 on 29.09.2015 alongwith itsIncome and expenditure account, balance sheet and audit report in Form No. 10B, declaring a total income of Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment as per Computer Aided Scrutiny Selection (for short CASS ) under Sec. 143(2) of the Act. Income returned by the assessee was thereafter accepted by the A.O vide his order passed under Sec. 143(3), dated 28.06.2017. 3. After the culmination of the assessment proceedings the CITinvoked his revisional jurisdiction under Sec. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from that, it was submitted by the assessee that it had furnished the party wise details of the donors in the course of assessment proceedings. In sum and substance, it was the claim of the assessee before the CIT that it was incorrect on his part to say that the A.O in the course of the assessment proceedings had not verified the assessee s claim of expenses, and also, the details pertaining to the donations. Backed by the aforesaid contentions, it was the claim of the assessee that now when the A.O after making necessary verifications in context of the aforesaid issues had only after being satisfied framed the assessment, therefore, the exercise of jurisdiction by the CIT u/s 263 of the Act was clearly ousted. It was further submitted by the assessee that for invoking of the revisional jurisdiction under Sec.263 of the Act, the twin conditions therein envisaged, viz. that the order is erroneous and prejudicial to the interest of the revenue were required to be cumulatively satisfied. It was further the claim of the assessee that now when the A.O had recognized the assessee s right to exemption of income being a charitable institution, thus,in the absence ofany prejudice cause to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts it was submitted by the ld. A.R that the delay in filing of the aforementioned appeal which was for reasons beyond the control of the assessee may therein be condoned. 5. Per contra, the ld. Departmental Representative (for short D.R ) did not object to the seeking of condonation of the delay involved in filing of the appeal by the assessee. 6. Considering the facts that had led to the delay of 60 days in filing of the present appeal, we herein condone the same. 7. Adverting to the merits of the case, the ld. A.R submitted that as the A.O in the course of the assessment proceedings had called for the requisite details and only after making necessary verifications had accepted the assessee s claim for expenses, and also, the donations, both foreign and local, that were received during the year under consideration, therefore, the CIT had traversed beyond the limited scope of his jurisdiction and revised the order in exercise of the powers vested with him under Sec. 263 of the Act. The ld. A.R took us through the relevant pages of the assessee s paper book (for short APB ). Our attention was drawn by the ld. A.R to the notice issued by the A.O under Sec. 142(1), d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 11,90,32,941.65. It was further stated in the reply that the assessee during the year under consideration had also received local donations of ₹ 80,91,848/-. In its aforesaid reply it was further stated by the assessee that the amount of ₹ 11,88,29,498/- was incurred towards furtherance of the objects of the trust, viz. education, medical, natural calamities and marriage aid to the poor i.e kanyadaan. The ld. A.R further took us through the copies of the ledger accounts, viz. Foreign donation A/c: ₹ 11,90,32,941.65; Local cheques donation A/c: ₹ 67,03,352/-; and Local donations A/c :₹ 13,88,496.36. On the basis of his aforesaid contentions, it was submitted by the ld. A.R that the A.O in the course of the assessment proceedings had carried out necessary verifications as regards the expenses that were incurred by the assessee trust,and also, the donations, both foreign and local, that were received by the trust during the year under consideration. Adverting to the validity of the jurisdiction assumed by the CIT u/s 263 of the Act, it was submitted by the ld. A.R that the CIT could validly exercise his revisional jurisdiction only where the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Hon ble High Court in its aforesaid order had observed that a mere non-discussion and non-mentioning of the reply filed by the assessee in the order of the assessing officer would not lead to an assumption that there was no application of mind and the order therein passed was erroneous. It was submitted by the ld. A.R that as per the settled position of law, the CIT, while assuming jurisdiction under Sec. 263 of the Act cannot merely state that the A.O had failed to conduct a complete enquiry but remained under a statutory obligation to conduct an independent enquiry on his own, failing which, the order passed by the A.O could not be held to be erroneous. It was, thus, submitted by the ld. A.R that as in the present case the A.O during the course of the assessment proceedings was satisfied with the details that were furnished by the assessee quaboth the issues in question, therefore, it was incumbent upon the CIT to conduct his own independent inquiry before stamping the order passed by the A.O as erroneous. It was submitted by the ld. A.R that as the A.O in the course of the assessment proceedings had made necessary verifications as regards the assessee s claim for expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avily relied upon by the assessee s counsel for driving home his claim that the complete donor wise details of the foreign contributions were furnished in the course of the assessment proceedings revealed a different story. Taking us through the copy of Form FC 6 forming part of the APB, it was submitted by the ld. D.R that a perusal of the same revealed beyond any scope of doubt that the complete details of the donors could not be gathered therefrom. It was submitted by the ld. D.R that in majority of the cases only the country of the donors was mentioned. It was further submitted by the ld. D.R that the simpliciter fact that the payments were received by the assessee through cheques could not be taken as sacrosanct for establishing the genuineness of the aforesaid transactions in question. In support of his aforesaid contention the ld. D.R had relied on the certain judicial pronouncements, viz. (i). Naresh K. Pahuja Vs. ITAT (2015) 375 ITR 526 (Bom); (ii). CIT vs. Saravana Construction (P) Ltd. (2012) 72 DTR 258 (Kar); and (iii). CIT Vs. P. Mohankala Ors. (2007) 291 ITR 278 (SC). It was further submitted by the ld. D.R that the reconciliation of the bank statements of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to why the assessment order may not also be revised for the reason that the A.O had failed to make necessary verificationsas regards the local donations. It was further submitted by the ld. D.R that the assessee despite specific directions by the A.O had failed to furnish the complete details of the foreign donations in the course of the assessment proceedings. As regards the assessee s claim of having incurred an expenditure of ₹ 11.88 crores, it was submitted by the ld. D.R that the same too was summarily accepted by the A.O while framing the assessment without making any verifications, cross checks or even test checks. Apart from that, it was submitted by the ld. D.R that certain specific details that were called for by the A.O with respect to the expenditure of ₹ 11.88 crores were never furnished by the assessee. It was, thus, submitted by the ld. D.R that in the backdrop of aforesaid facts the CIT had rightly assumed jurisdiction u/s 263 of the Act and observing that the order passed by the A.O u/s 143(3), dated 28.06.2017 was erroneous insofar it was prejudicial to the interest of the revenue, had thus,rightly set-aside the assessment order with a direction to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that was arrived at by the A.O while framing the assessment. As regards the judgments that were relied upon by the ld. counsel for the department, it was submitted by the ld. A.R that the same were distinguishable on facts, and thus, were not applicable to the case of the assessee. It was, thus, submitted by the ld. A.R that as the CIT by wrongly assuming jurisdiction u/s 263 of the Act had set-aside the assessment order passed by the A.O u/s 143(3), dated 28.06.2017, therefore, the same be vacated and the order passed by the A.O be restored. 10. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. As is discernible from the order passed by the CIT u/s 263 of the Act, we find that the assessment order passed by the A.O u/s 143(3), dated 28.06.2017 was revised by him for the reason that the assessment had been completed in a perfunctory and routine manner without any verification, cross checks or even test checks. As observed by us herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issues in question, the order passed by the A.O u/s 143(3), dated 28.06.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act. 11. On a perusal of the records, we find that it is a matter of fact borne from the record that the assessee during the year in question is stated to have received donations of ₹ 12.84 crores (including foreign donations of ₹ 11.90 crores). During the course of the assessment proceedings, the A.O vide his notice issued u/s 142(1) of the Act, dated 04.01.2017 had inter alia directed the assessee to furnish the party wise details of foreign donations received, if any. For the sake of clarity the specific queries raised by the A.O vide his aforesaid notice are reproduced as under: 7. Details of Corpus/Non-Corpus Donation received during the year, if any, in the following format : Name. Address PAN No. of Donor Amount involved in (Rs.) Mode of Payment (Cheque/DD No. Bank if) Nature of donation (Corpus or Non-Corpus) 8-14................................................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee that it had not received any corpus donation during the year under consideration. As regards furnishing of the requisite details qua the non-corpus donations that were received during the year, the assessee vide its reply dated 16.01.2017 had sought some further time for furnishing the same.Thereafter, the assessee had vide its reply dated 14.06.2017 stated that it had during the year received foreign donations of ₹ 11,90,32,941/-; and local donations of ₹ 80,91,848/-. Alongwith its aforesaid reply the assessee had placed on record the copy of Foreign donation a/c as was appearing in its books of account. Insofar the details qua the foreign donationswere concerned, it was submitted by the assessee that the details of the foreign donors were mentioned in the FCRA Form (copy of which was enclosed alongwith its reply dated 16.01.2017). As regards the local donations of ₹ 80,91,848/- the assessee failed to furnish the details of the donors in the specified format and instead placed on record a copy of the Local donations a/c (₹ 13,88,496/-); and Local Cheques donation a/c (₹ 67,03,352/-). On a perusal of the Form FC 6 that was furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order u/s 263, and rightly so, the addresses of the aforesaid donors could not be gathered from the details filed by the assessee. At this stage, we may herein observe, that not only the assessee in the course of the assessment proceedings had defied the directions of the A.O andfailed to divulge the complete details of the donors as were called for by him, but even in the course of the revisional proceedings no effort was made on its part to dispelall doubts and irrefutably substantiate the identity of the donors to the hilt. In fact, the assessee, as in the course of the assessment proceedings had in the revisional proceedings too merely harped on the fact that the details of the donors could be gathered from the Form FC 6 . However, as observed by us hereinabove, from a conjoint perusal of the details of the donors as can be gathered from Form FC 6 r.w Foreign donation a/c , it can safely or in fact inescapably be gathered that the identity of donor squa both the Institutional and Individual donors was not discernible therefrom. At this stage, it would be pertinent to point out that when the aforesaid fact was brought to the notice of the assessee in the SCN u/s 263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as were called for by the A.O in the course of the assessment proceedings, the acceptance of the foreign donations by the A.O speaks for itself that the same had been accepted without carrying out necessary verifications. Although we concur with the ld. Senior Counsel that an inadequate inquiry on the part of an A.O cannot form a basis for assumption of jurisdiction by the CIT u/s 263 of the Act, however, the facts as have unfolded in the case before us do not lead to a case of an inadequate inquiry, but clearly points out to a case of no verification qua the issue in question by the A.O.It is not a case where the CIT had sought to dictate the manner in which the A.O ought to have verified the facts qua the issue in question, viz. foreign donations received by the assessee, but is a case where the A.O vide his Notice u/s 142(1), dated 04.01.2017 after calling for certain details in order to verify the foreign donations in question, had there after abandoned his verifications, and despite non-furnishing of the requisite details and information by the assessee, had summarily accepted itsaforesaid claim. In our considered view, acceptance of the issue qua the foreign donations that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. As observed by us hereinabove, the A.O had vide his Notice u/s 142(1), dated 04.01.2017 directed the assessee to furnish the requisite details as regards the corpus/non-corpus donations that were received by it during the year under consideration, viz. name, address PAN of the donors; amount of donation received; mode of payment (cheque/DD No. Bank); nature of donation (corpus or non-corpus). On a perusal of the records, we find, that though the assessee had submitted before the A.O that it had received local donations of ₹ 80,91,848/- during the year under consideration, however, the details of the local donors as was called for by the A.O in the specified format were not provided by it. As is discernible from the records, the assessee had vide its replydated 14.06.2017 filed with the A.O copies of the Local cheques donation a/c (₹ 67,03,352/-); and (ii) Local donations a/c (₹ 13,88,496.36). On a perusal of the Local donation a/c , we find that there is not a whisper as regards the names of the persons from whom the donations are claimed to have been received, what to talk about their addresses; PAN nos; or the mode of receipt of donatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee dehors filing of the requisite details by the assessee, specifically when the same were called for by the A.O, can only lead to the conclusion that there had been an absolute failure on the part of the A.O to carry out necessary verifications qua the issue in question. We are afraid, that the failure on the part of the A.O to carry out the aforesaid verifications by no means would fall within the realm of an inadequate inquiry, but is a clear case of having failed to carry out any verification. We, thus, in the backdrop of our aforesaid deliberations concur with the view taken by the CIT that as the A.O had failed to carry out verifications as regards the local donations of ₹ 80,91,848/- stated to have been received by the assessee during the year under consideration, therefore, the order passed by him u/s 143(3), dated 28.06.2017 was erroneous insofar it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act. 13. We shall now advert to the grievance of the assessee that the CIT had erroneously assumed jurisdiction u/s 263 of the Act, and observed, that the A.O while framing the assessment had allowed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red therefrom. We, thus, find that though the A.O had specifically directed the assessee to furnish the details of expenses which were incurred by it towards furtherance of its objects, however, the assessee in compliance thereto had furnished only part reply and placed on record half baked details from which the complete details of the recipients could not be gathered. However, the A.O despite failure on the part of the assessee to furnish the details that were specifically called for by him vide his Notice u/s 142(1), dated 04.01.2017 summarily accepted the aforesaid claim of expenses of the assessee. In our considered view, not much is required to be said about the verification carried out by the A.O in context of the aforesaid issue in question, specifically when the details that were called for by him itself had not been furnished by the assessee. We hold a strong conviction that in a case where the A.O in order to satisfy himself about the genuineness and veracity of a claim raised by the assessee had raised a query and called for certain details/information, then, the acceptance of such claim dehors furnishing of the reply and the requisite details that were called for by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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