TMI Blog2022 (5) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... the opportunity accorded to it. AR has successfully demonstrated that the assessee filed reply to the show cause notice dated 26.3.2021 and no further opportunity beyond 30.3.2021 was given to the assessee. Therefore, these observations of the CIT(E) are also not sustainable in law. CIT is required to direct the AO only after coming the conclusion that the earlier finding of the ITO was erroneous and prejudicial to the interests of the revenue. In the present case, the Ld. CIT(E) has taken into consideration the incorrect and irrelevant facts to allege that there is no enquiry by the AO and thus the impugned assessment order is erroneous and prejudicial to the interest of the revenue without considering the reply of the assessee to show cause notice u/s. 263 of the Act and keeping aside the basic principles of tax jurisprudence relevant for assessing income of a charitable trust. We, therefore, in view of foregoing discussion, reach to a logical conclusion and compelled to hold that the revisionary order passed u/s. 263 of the Act by the Ld. CIT(E) is not sustainable and valid. - Decided in favour of assessee. - ITA No. 60/CTK/2021 - - - Dated:- 7-4-2022 - Chandra Mohan Garg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as found in the record. So, a conclusion can be drawn that this corpus fund is a fictitious one and it must be investigated thoroughly. 4. As this is a complete scrutiny, the AO must have investigated and verified the corpus fund, the investments in land and buildings and the expenses on charity in further assessments. 5. The AO had called for each and every document pertaining to complete scrutiny on 12.02.2018. However, the new incumbent did not ask for any detail regarding either income or expenditure, thus helping the assessee. 6. The assessee trust has engaged itself only upon the purchase and sale of immovable properties. The AO has not found whether the trust is doing any charitable work towards education or not. 7. It is not mentioned in the trust deed that the trust can engage itself in purchase and sale of land. Hence, the transactions of the trust must be treated as business income and business investments. 8. In the absence of substantial details, the AO should have added the whole of the corpus fund out which all investments on land buildings are made and expenses on charity to the declared income of the assessee. Hence, the corpus fund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing passed in violation of principles of natural justice by applying incorrect facts. Ld. A.R. also drew our attention to para 9 at page 5 of the impugned order, which reads as under: 9. In the absence of substantial details, the AO should have added the whole of the corpus fund out of which all investments on land building are made and expenses on charity to the declared income of the assessee. Hence, the corpus fund of Rs. 3,41,42,000/- investments on land and buildings of Rs. 3,11,63,550/- and expenditure on charity of Rs. 34,10,6670/- are required to be added to the total income of the assessee. Ld A.R. submitted that against the principles of accountancy and tax jurisprudence, the CIT(E) observed that the corpus fund, investment in land and building and expenses on charity are required to be added to the total income of the assessee. Ld. A.R. pointed out that first of all during relevant financial period 2015-16, pertaining to assessment year 2016-17, the assessee did not receive any corpus donation and did not make any investment in land and building. Therefore, these observations are misconceived and irrelevant to present assessment year 2016-17, hence, the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry. Ld. A.R. pointed out that when there was no receipt of corpus donation and no purchase of land and building during the relevant financial period, then, there is no need of any enquiry on this point. Ld. A.R. vehemently pointed out that the Assessing Officer through notice dated 12.9.2017 called for audited report, computation of income, certified copy of registration, hard copy of the income tax return, details of membership of trust alongwith their profession PAN and address, copy of Form No. 26AS, which were submitted by the assessee alongwith reply dated 12.1.2018. He further explained that the AO vide his notice dated 24.5.2018 again called computation of income, certified copy of the trust deed, details of members alongwith their address, PAN, profession, etc and payment by way of salary referred in section 13(3), details of activities, details of organization and institutions running under the trust and other details were filed before the AO and after considering the reply of the assessee to the said notice, the AO found that there was no receipt of corpus donation and no purchase of land and building during the relevant financial period and thereafter, he accepted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects, therefore, it cannot be alleged that the assessee is doing business of sale and purchase of land in the garb of charitable activities. 10. On careful consideration of rival submissions, we clearly observe that the CIT issued notice on 26.3.2021 calling reply of the assessee on 30.3.2021 and in response to same, the assessee filed its reply on the date fixed but without keeping in mind and considering the reply of the assessee to show cause notice, the CIT(E) passed the impugned order on next date i.e. 31.3.2021 without giving any further opportunity to the trust. We may also point out that in para 5 of the impugned order, the CIT(E) wrongly observed that the assessee did not submit any reply either to show cause notice or in response to opportunity accorded to it but as the copy of the reply of notice available at pages 59 to 65 clearly reveals that the assessee filed reply to notice u/s. 263 of the Act on fixed date of hearing on 30.3.2021 but the same was not considered by the Ld. CIT(E) while passing the order u/s. 263 of the Act. This factual position has not been controverted by Ld. CIT DR during the hearing before this Bench. 11. As we have noted above, Ld. CIT D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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