TMI Blog2022 (8) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Dharmendra Kumar Bansal [ 2014 (2) TMI 1210 - ITAT JAIPUR] it was held that before taking any action Commissioner himself shall apply his mind after examining record of any proceedings and his satisfaction is must. Therefore, where satisfaction was of ITO who proposed action u/s 263 but not of Commissioner, issuance of notice u/s 263 on basis of proposal made by ITO was void ab initio. In view of the well-settled proposition as applied to the instant set of facts, we are of the considered view that in the 263 order the Principal CIT has not applied his mind, by calling for the office records, and independently taking a view that the order passed by the AO in the instant set of facts is erroneous and prejudicial to interest of revenue. Principal CIT has acted only on the proposal sent by AO to initiate 263 proceedings. In our considered view, therefore, the order passed under section 263 of the Act is liable to be set. The assessee has appended copies of the order by Income Tax Appellate Tribunal in his own case for assessment year 2012-13 and also copy of the assessment order under section 143(3) of the Act for assessment year 2013- 14, wherein no addition on the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 3. The learned Commissioner of Income-tax (Exemption)- Ahmedabad failed to appreciate that the impugned issue was duly examined by the assessing officer by way of specific show cause notice and reply thereto, while finalizing assessment proceedings u/s 143(3) of the Act 4. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal. 3. The brief facts of the case are that the assessee trust M/s Gujarat State Lion Conservation Society filed its return of income declaring Nil income. The assessment proceedings were completed under section 143(3) of the Act on 19-12-2017 accepting the returned income of ₹ Nil as declared by the assessee in his return of income. Thereafter Principal CIT issued notice under section 263 of the Act on the ground that the assessee during the impugned year had received government grant amounting to ₹ 8,00,70,630/- from the State government. Since grant received from the government are only as ascertained liability of the government, they cannot be treated either as the voluntary contribution or the income from property held for charitable purposes covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation submitted by the assessee was also analysed but it is observed that assessee has alternatively sought to claim accumulation to the extent of Rs. 84,63,812/- u/s. 11(2) of the I. T. Act on the basis of Form no. 10 filed on 16.09.2016 which is much after the date of filing of return i.e. 29.09.2015. As various preceeding assessment years are involved, this issue needs in-depth verification. 5.3 The assessee has relied upon certain judicial pronouncements but the same are distinguishable on facts as the Assessing Officer has passed order routinely in perfunctory manner. No inquiries have been conducted on important issue relating to quantum of exemption allowable u/s 11(l)(a). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 7. In the light of above facts, the submission made by the assessee needs deeper scrutiny. The claim of the assessee Trust requires verification on the basis of material facts submitted. Hence, the case is set-aside and the restored back to the Assessing Officer for verification of claim(s) made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee), from which it is evident that this issue was raised by the AO during the course of assessment proceedings: 4. On verification of the details submitted by the assessee, it is seen that during the year assessee has received grant from Gujarat Government for specific direction amounting to Rs. 8,0070,630/-. In this regard, it is stated that as the grant receipt from the Govt. are only an ascertained liability of the Govt. towards the assessee. Thus, it cannot be treated either as voluntary contribution or income from the property held by the assessee for charitable purpose. Hence, accumulation/set apart u/s 11(1)(a) of the Act from such grant cannot be allowed to the assessee. In this regard you are requested to show cause as to why an accumulation claimed u/s 11(1)(a) of the act on said grant should not be disallowed? 6. We observe that the AO during the course of assessment proceedings had enquired on this issue twice : firstly vide notice dated 07-09-2017, this query was raised by the AO and again by notice dated 23-11-2017, the AO enquired on this aspect. In response, the assessee had responded by letter dated 21-11-2017 and another letter dated 08-12-2017. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from property held for charitable purpose covered u/s ll(lj 12, hence, the accumulation from the Government Grant is not available to the assesses. These grants are generally given with specific directions with no scope of savings. Thus, it cannot be treated as voluntary in nature and be treated for the purpose of accumulation @15% as it would defeat the intention of the donor, if any. Hence, the allowable accumulation was Rs. 1,22,24,047 only @15% of Rs. 8,14,93,645/- (Rs. 16,15,64,275 - 8,00,70,630) u/s 11(1)(a). as such there was excess allowance of accumulation of Rs. 1,20,09,442/- (2,42,33,489 - 1,22,24,047), therefore, there was excess allowance of relief of Rs. 1,20,09,442/-, Govt. grant received by the assesses trust is neither income of the assesses u/s 11 (I)/ 12(1) of the Act nor corpus fund u/s ll(l)(d) of the Act. As such assessment made by the Assessing Officer has resulted under assessment of Rs. 1,20,09,442/-. 4. In view of the above, here in this case, the AO, while passing order U/s 143(3) on 19.12.2017, has allowed the above extent of Rs. 1,20,09,442/- on account of Government Grant appears to be erroneous and prejudicial to the interest of the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiate 263 proceedings. In our considered view, therefore, the order passed under section 263 of the Act is liable to be set. 9. Without prejudice to the above, further, we note that even for the earlier and subsequent years, the assessee was in receipt of government grant, however, no addition on this aspect has been made by the Revenue. The assessee has appended copies of the order by Income Tax Appellate Tribunal in his own case for assessment year 2012-13 and also copy of the assessment order under section 143(3) of the Act for assessment year 2013- 14, wherein no addition on the assessee has been made by the Revenue in any of the earlier years. The assessee utilises the above grants for the purpose of carrying out the fencing of the railway line to the forest. Though strictly speaking, principle of res judicata does not apply to income tax proceedings, but it is also well-settled principle of law that if there is no change in the facts of the assessee from the previous years, principle of consistency demands that settled issue should not be re-agitated. The counsel for the assessee has submitted that the assessee Trust is in receipt of government grant in the earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X
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