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2020 (3) TMI 941 - AT - Income TaxRevision u/s 263 - A.O. failed to take note of the provisions of section 11(2) 11(3) - A.O. failed to take note of the provisions of section 11(2) 11(3) and has not carried out the enquiries as per the provisions of section 263 - HELD THAT - As per the records, it is evident that the show cause notice was issued on 16.3.2018 and the impugned order was passed on 21.3.2018. Therefore, the issue of initiation of the proceedings is concerned, we do not see any infirmity in to the same as the A.O. failed to take note of the provisions of section 11(2) 11(3) of the Act. The contention of the assessee is that the provisions of section 11(3) sub clause (d) of the Act speaks that is credited or paid to any trust or institution registered u/s 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub clause (4) or sub clause (5) or sub clause (6) or sub clause (6A) of clause (23C) of section 10 In the present case, no such sum was credited or paid to any trust or institution. It is contended that amount was merely set apart but not in fact credited or paid to any trust or institution registered u/s 12AA of the Act. We find merit into this contention of the assessee. Therefore, set aside the impugned order and restore the same to the file of the Ld. CIT to decide it afresh after considering the submissions of the assessee and examining the records - Grounds raised by the assessee are allowed for statistical purposes.
Issues Involved:
1. Legality and jurisdiction of the order under section 263 of the Income Tax Act. 2. Error and prejudice to the interest of the revenue in the assessment order under section 143(3). 3. Validity of the claim of accumulation under section 11(2). 4. Justification of the CIT's directive to set aside the assessment for de-novo consideration. Issue-wise Detailed Analysis: 1. Legality and Jurisdiction of the Order under Section 263: The assessee contended that the order under section 263 of the Income Tax Act, 1961, passed by the CIT (Exemption) was "bad in law and without jurisdiction." The provisions of section 263 can be invoked only when the order is both "erroneous and prejudicial to the interest of the Revenue." The assessee argued that the CIT did not satisfy these twin conditions and thus, the order should be cancelled. The Tribunal noted that the CIT issued a show cause notice and passed the order within a short span, indicating a lack of thorough enquiry. 2. Error and Prejudice to the Interest of the Revenue in the Assessment Order under Section 143(3): The CIT (Exemption) found the assessment order dated 3.3.2016, passed under section 143(3), to be erroneous and prejudicial to the interest of the revenue. The assessee argued that the assessment was framed after proper enquiries and verification. The Tribunal emphasized that for invoking section 263, the order must be erroneous and prejudicial to the revenue, citing several judicial precedents supporting this principle. 3. Validity of the Claim of Accumulation under Section 11(2): The assessee claimed an accumulation of ?5.50 crores under section 11(2), which was allowed by the AO after scrutiny. The CIT (Exemption) contested this, stating that the conditions for accumulation under section 11(2) read with rule 17 were not satisfied. The assessee provided evidence that all conditions under section 11(2) were met, including the submission of Form 10, investment in specified modes, and timely submission of the statement. The Tribunal examined these submissions and found merit in the assessee's contention that the claim was validly made and allowed by the AO. 4. Justification of the CIT's Directive to Set Aside the Assessment for De-novo Consideration: The CIT (Exemption) directed the AO to reframe the assessment order de-novo, questioning the method of accounting followed by the assessee. The assessee argued that this directive was beyond the scope of the show cause notice and was not justified. The Tribunal noted that the CIT did not conduct necessary enquiries before passing the order and relied on documents already examined by the AO. The Tribunal held that the CIT should have made further enquiries to justify the revision under section 263. Conclusion: The Tribunal found that the CIT (Exemption) did not follow due process in invoking section 263 and did not provide sufficient grounds to prove that the assessment order was erroneous and prejudicial to the revenue. The Tribunal set aside the impugned order and restored the matter to the file of the CIT for fresh consideration, directing the CIT to decide after considering the assessee's submissions and examining the records. The appeal was allowed for statistical purposes.
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