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TMI Blog2022 (12) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. PCIT examined the record of assessment-proceeding and observed that the assessment-order passed by Ld. AO is erroneous in so far it is prejudicial to the interest of revenue. The reasons of framing such a view, as mentioned by Ld. PCIT in the show-cause notice dated 28.02.2022 are as under: "The assessee has received donations to the tune of Rs. 32,93,111/- during the FY 2016-17 relevant to A.Y 2017-18. These donations, in excess of Rs 10,000/-. are received in cash from various donors during the demonetization period. The assessee has claimed these to be corpus donations and hence non-taxable. The Assessing Officer has passed the assessment order overlooking and without examining the following points emanating tram the records a. The donations are received coinciding with demonetization period. b. The donations are received in cash except Rs.1,70,111/- which have been claimed to be received through cheque. c. In some of the receipts, issued by assessee-trust to donors, the names and addresses of the so called donors are incomplete /unclear. Lack of complete particulars makes such persons pseudonymous/anonymous donors. d. A chart containing so called list of donor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act to present yourself in person or through an authorized representative and submit your reply and explain your case on 11.0~2J72 at 11:30 A.M. You can also submit your reply through On line submission." 4. By the aforesaid show-cause notice, the assessee was asked to explain as to why the assessment-order may not be revised. In response thereto, the assessee made a reply to Ld. PCIT which is re-produced in Para No. 6 of the revision-order. 5. However, the Ld. PCIT was not impressed by the submission of assessee. The Ld. PCIT further observed that since the section 263 has been amended and Explanation 2, as reproduced below, had been introduced therein, the assessment-order is deemed to be erroneous-cum-prejudicial to the interest of revenue if the same had been passed without inquiries or verification which should have been made: "Explanation 2 - "For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if in the opinion of the Principal Commissioner or Commissioner - (a) The order is passed without making inquiries or verificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of the donor, Address, PAN, Amount of donation, Cheque No./date, to the extent available with assessee. (iv) Paper Book Page 61 to 80 - Confirmation-letters of certain donors containing the details of donations as also a certification to the effect that the donations have been given for corpus towards Bhawan Nirman Fund. (v) Paper Book Page 81 to 95 - Copies of sample receipts issued to the donors which contain complete details including a specific mention that the donations had been received for building. 11. Regarding issue No. (ii), Ld. AR submitted that it is true that the assessee was registered with "Registrar of Public Trust" vide registration No. 113/2015-16 dated 14.10.2016 but not registered u/s 12A of Income-tax Act, 1961. In fact, this factual aspect is clearly informed to and noted by Ld. AO in the assessment-order itself. Having submitted so, the Ld. AR carried us to Page No. 24 to 26 of the Paper-Book where a copy of the Order of Registration u/s 12AA of the act, issued by Ld. CIT(Exemption), Bhopal is placed. Ld. AR submitted that the said Order is dated 20/09/2019 by which the department has granted registration to assessee w.e.f. A.Y. 2019-20. Then Ld. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted." Ld. AR argued that by virtue of the above legal provisions, the Ld. AO has rightly allowed the exemption u/s 11 / 12 to assessee. 12. Clearly therefore, the Ld. AR contended, the Ld. AO was satisfied on both of the issues raised by Ld. PCIT and it is not a case of "no enquiry" as understood by Ld. PCIT. Therefore, the order passed by Ld. AO is neither erroneous nor prejudicial to the interest of revenue. Ld. AR prays to quash the revision-order hence. 13. Per contra, the Ld. DR vehemently supported the revision-order and requested to uphold the same. 14. We have heard the rival contentions, perused the material on record and duly considered the facts of the case in the light of applicable legal provisions. On a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook where the copy of the notice under section 142(1) of the Act was placed. Likewise, the learned AR also drew our attention on pages 154 to 157 of the paper book where the reply of the assessee in response to the notice issued under section 142(1) of the Act was placed. Thus, the learned AR contended that there cannot be said that the assessment order is erroneous and causing prejudice to the interest of Revenue in the given facts and circumstances on account non-verification. 6. On the contrary, the learned DR before us contended that reconciliation of the amount shown in the service tax return and financial statement was not available before the AO during the assessment proceedings. Accordingly the learned DR vehemently supported the order of the learned PCIT. 7. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates whether the assessment order has been passed by AO without making inquiries or verification with respect to the difference in the figures as discussed above and hence the assessment is erroneous insofar prejudicial to the interest of the Revenue. Thus, requiring revision by Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant." 7.5 The Hon'ble Supreme Court in recent case of Principal Commissioner of Income-tax 2 v. Shree Gayatri Associates*[2019] 106 taxmann.com 31 (SC), held that where Pr. CIT passed a revised order after making addition to assessee's income under section 69A in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come arose from other sources, he could and ought to have so held in the order of revision. There was simply no necessity to remand the proceedings to the Assessing Officer when no further inquiries were called for or directed" 7.7 From an analysis of the above judicial precedents, the principle which emerges is that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Assessing Officer adopts one of the course permissible in law and it has resulted in loss of revenue; or where two views are possible and the Assessing Officer has taken one view with which the Commissioner of Income-tax does not agree, it cannot be treated as an erroneous order causing prejudice to the interests of the Revenue unless the view taken by the Assessing Officer is unsustainable in law, or the AO has completely omitted to make any enquiry altogether or the order demonstrates non-application of mind. 7.8 Now in the facts before us, in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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