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TMI Blog2022 (12) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... r, afresh in accordance with law, after granting sufficient opportunity to the assessee. 2. That the Ld. PCIT has failed to appreciate the fact that the assessment as framed by the Assessing Officer vide order dated 03.12.2019, was after considering various replies as filed during the course of assessment proceedings and after complete application of mind by the AO on the issues, raised by the Ld. PCIT in the notice u/s. 263. 3. That the Ld. PCIT has erred in setting-aside the issue for verification of the use of the car for the purposes of the school which fact has already been considered by the Assessing officer during the course of assessment proceedings and the AO having taken a possible view and further the Ld. PCIT has ignored the fact that the registration of the car being in the name of the 'Sh. Rajinder Nath Chairman' and, as such, setting-aside the issue on such aspect is against the judgment of various coordinate benches of the ITAT. 4. The Ld. PCIT have erred in assuming the jurisdiction of the assessee on the basis of the audit objection, which is void-ab-initio, as per the binding judgment of Jurisdictional High Court in the case of Sohana Woollen Mills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and deliberations held with the AO, the latter accepted the addition made by the assessee in fixed assets as well as the related operational expenses. 3.1. It was further submitted that before the AO, it was stated that Innova vehicle which has been purchased during the year has been registered in the name of Shri Rajinder Nath, Chairman of the society on account of practical reasons as it was bit difficult to get the registration in the name of the society and subsequently resale as and when required and a copy of the registration certificate was also submitted during the course of assessment proceedings. It was accordingly submitted that matter was duly examined by the AO during the course of assessment proceedings and therefore the findings of the Ld. CIT(E) that no inquiry have been made by the AO is not factually correct. 3.2. Further, our reference was drawn to the submissions made before the Ld. CIT(E) and the contents thereof read as under: "6. we wish to submit that the vehicle in question i.e. Innova car is the sole passenger vehicle and purchase of the car was for the benefit and use of the school. The vehicle is being used for the use of office bearers i.e. Principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not of confirmed view and merely for the purpose of re-verification, matter has been set aside to the file of the AO which cannot be sustained in the eyes of law. 4. Per contra, the Ld. CIT DR supported the order and the findings of the Ld. CIT(E) and our reference was drawn to the findings of the Ld. CIT(E) which are contained in para 3 at pages 4 to 6 which read as under: "3. HELD: I have carefully considered the fact and circumstances of the case and material available on records. The scrutiny assessment in the case of the assessee was completed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") on 03.12.2019 by the Assistant Commissioner of Income Tax (Exemptions), Circle-2, Chandigarh at returned income. The issue in the instant case is that the assessee society's fund were used for the purchase of one Innova car for an amount of Rs. 22,24,343/- during the F.Y. 2016-17. However, it is noticed that this car is registered in the name of Mr. "Rajinder Nath Chairman" (of the assessee society). 3.1 A position therefore that is required to be considered is whether the funds of the society have been utilized for the benefits of specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual). These facts that have been brought on record may be revivified, and if found to be true, there does not appear to be any case to question the purchase of the impugned vehicle as being unrelated to or unused by the assessee. Therefore, until such factual re-verification is carried out and the ownership is reaffirmed to be that of the assessee, the ambiguity in respect of the actual ownership will continue as unresolved; (ii) At this time, there appears to be no evidence available on record to show that there has been any wrong (viz. by anyone other than the assessee) use of the car. However, for reasons being the ambiguity on the actual ownership of the car (as stated above) and those discussed in the paragraphs below, the AO is not precluded or forestalled or denied the opportunity to examine this aspect of wrong (towards non-charitable purpose) use of the vehicle. If the answer to such inquiry is determined to be in the affirmative, the AO may make a proportionate disallowance to the extent of such purported misuse as proved. This proportion can be computed upon a suitable denominator to be determined from the sums of the applicable expenses (such as fuel, maintenance, dri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r there exists a case for cancellation of registration granted u/s. 12AA of the Act or of assessing the overall surplus of income over expenditure of the assessee, necessary computations also need to be made by the AO of whether, when the amount being the Rs. 22,24,343/- spent towards acquisition of the car is left out of total expenditure (viz. application of funds), such reduced total would represent and compute to a proportion in excess of the statutorily stipulated 85% (per Section 11 of the Act). If the answer to this question is in the affirmative that indeed that there has been application of funds received in excess of 85% of such funds received, then the assessee would, ceteris paribus, continue to derive the benefit of the exemption available u/s. 11 of the Act. The AO may unfailingly make the computations and examine this matter." 4.1. It was accordingly submitted that it is a clear case where the inquiry which should have been made have not been made by the AO and in terms of Explanation 2 of Section 263 of the Act, the order is clearly erroneous in so far as prejudicial to the interest of the Revenue. He accordingly supported the order of the Ld. CIT(E) and submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society. Therefore, on this account itself, the impugned order deserves to be set-aside. 7. As far as usage of the vehicle is concerned, we find that the vehicle has been purchased towards the fag end of the financial year on 28/03/2017 and it has been submitted by the assessee that the Chairman who is aged 88 years has his own two vehicles in personal capacity and doesn't require any school vehicle for his personal usage and the said vehicle was not used by him rather the vehicle was used by the Principal and other staff members. The ld. CIT(E) has acknowledged the said explanation of the assessee where he held that there appears to be no evidence regarding any wrong use of the vehicle and the AO must remain cognizant that Shri. Rajinder Nath Chairman already has other vehicles in his personal name, and appears otherwise financially well-endowed and well settled. Therefore, on this account as well, the impugned order deserves to be set-aside. 8. In light of the aforesaid discussions and in the entirety of facts and circumstances of the case, we are of the considered opinion that there is no justifiable basis to invoke the provisions of section 263 as the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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