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2020 (10) TMI 348 - AT - Income TaxRevision u/s 263 - assessee trust is registered u/s 12A declaring income at Nil after availing exemption u/s 11 - AO has not examined this aspect and did not bring to tax the surplus declared by the assessee - HELD THAT - We have gone though the order passed by the AO u/s 143(3) of the Act. We have noticed that the said order is cryptic order without any discussion. It was also not shown to us by the assessee that the AO did examine the taxability or otherwise of the surplus shown by the assessee in its income expenditure account. Since the AO has not examined the issue at all in the asst. order, the impugned asst. order shall be rendered erroneous and prejudicial to the interest of revenue as per the decision rendered by the Hon ble Supreme Court in the case of Malabar Industrial Company 2000 (2) TMI 10 - SUPREME COURT Accordingly we did not find any infirmity in the order passed by ld CIT u/s 263 - Decided against assessee.
Issues:
Challenging revision order passed by CIT(E) u/s 263 for asst. year 2013-14. Analysis: The appeal was filed by the assessee against the revision order passed by the ld CIT(E) u/s 263 of the Income-tax Act for the assessment year 2013-14. The assessee, a trust for the welfare of Milk Federation Employees, had filed a return of income declaring Nil income after availing exemption u/s 11 of the Act. The trust was registered u/s 12A of the Income-tax Act, and the assessment was completed by the AO u/s 143(3) of the Act on 29/2/2016. The ld CIT observed that the assessee had declared a surplus of ?19,25,677 during the relevant year, which was not taxed, and the assessee did not seek accumulation of income as per sec. 11(2) of the Act. Consequently, the ld CIT held the assessment order to be erroneous and prejudicial to the interest of the Revenue, setting it aside and directing the AO to pass a fresh order, which led to the appeal by the assessee. The assessee contended that it did not have sufficient opportunity to present its case before the ld CIT and argued that the direction to pass a fresh assessment order was unjustified. Citing a decision by a coordinate bench, the assessee argued that the AO should have provided an opportunity to accumulate income u/s 11(2) by filing Form No.10 before completing the assessment. On the other hand, the Revenue argued that the AO failed to tax the surplus declared by the assessee, which was taxable, and the assessee did not exercise the option to accumulate income as per sec. 11(2) during the assessment proceedings. The Revenue contended that there was a lack of application of mind by the AO, justifying the revision by the ld CIT. After considering the contentions of both parties and examining the assessment order passed by the AO, the tribunal found that the AO's order lacked discussion and did not address the taxability of the surplus shown in the income expenditure account. Since the AO did not examine this issue, the tribunal held that the assessment order was erroneous and prejudicial to the Revenue's interest, citing the decision in the case of Malabar Industrial Company (243 ITR 83)(SC). Consequently, the tribunal upheld the revision order passed by the ld CIT u/s 263 of the Act, dismissing the appeal of the assessee.
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