9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 936 - AT - Income TaxRevision u/s 263 - exemption u/s 11 - Non - compliance of clause 2(i) of explanation 1 to section 11(1) at the relevant time - HELD THAT - In response to notices issued u/s 143(2) the appellant made written submission inter-alia copy of income tax return accompanying statement of computation of total income audited financial statements copy of audit report issued in form No 10B r.w.r. 17B of the Act etc. And after considering the same the claim of exemption u/s 11 was worked out by the Ld. AO. Insofar as the exercise of option is concern the disclosure with their respect was first made in the computation of total income (placed at page 1 of P/B) followed by return of income at clause 6(iii) of Part-B-TI (placed at page 6 of P/B) and further in Form No 10B (audit report) Clause 2 of Annexure to audit report 2 (placed at page 33 of P/B). Nota bene these all evidential documents were submitted during the course of original assessment proceedings and invariably part of assessment records. This establishes that during the course of assessment proceedings explicit queries were raised and unreserved submission were matured before the Ld. AO consequent to which inquiries into the claims u/s 11 were conducted in the light of documentary evidence and thereupon in the light of supportive material drawing even-handed conclusions the assessment was carried out leaving no air in the assessment. Revisionary action and order u/s 263 of the Act both entirely marshal out of a Revenue Audit Objection communicated and there was complete material absentia supporting the assumption of revisionary jurisdiction vis- -vis conclusion reached by Ld. CIT(Exemption). It is trite law that while exercising revisional jurisdiction it must be bear in mind that the principles of natural justice do not permit the decision of a revisionary authority to be influenced by any other authority or agency which indeed unfortunately the case squarely is therefore we are of the view that this revisionary proceedings initiated on the thin ice of revenue audit objection report and concluded in absence of deprecative material is untenable in law. In no case mere audit information renders the order of assessment erroneous and the very absence of material before the revisionary authority itself sufficient to hold the action as unsustainable in law and our view is invigorated by the Hon ble Kolkata High Court in Jeewanlal limited Vs ACIT 1975 (12) TMI 34 - CALCUTTA HIGH COURT - Further the Hon ble High of Court of Bombay in CIT Vs Gabriel India Ltd 1993 (4) TMI 55 - BOMBAY HIGH COURT has also taken similar view that unless the revisionary authority forms a conclusion on the basis of concrete evidential material it cannot reach to the conclusion rendering the order of assessment erroneous and prejudicial to the interests of the Revenue. In the light of aforestated reasoning since the Ld. CIT(Exemption) solely acted upon the audit objection in absentia of contrary material we neither find any infirmity with the order of assessment nor any merits in the revisionary order ergo we quash the revisionary order thus the legal ground of the appellant is answered in favour of assessee and against the revenue.
Issues Involved:
1. Validity of the order under section 263. 2. Compliance with clause 2(i) of Explanation 1 to section 11(1) at the relevant time. Detailed Analysis: 1. Validity of the Order under Section 263: The appellant challenged the revisionary order passed by the Commissioner of Income Tax - Exemption (CIT) under section 263 of the Income Tax Act, 1961. The CIT's order dated 11/01/2018 for the assessment year 2013-2014 was based on the assessment order dated 26/02/2015 passed by the Assessing Officer (AO) under section 143(3) of the Act. The appellant contended that the CIT erred in assuming revisionary jurisdiction under section 263, arguing that the conditions precedent for passing an order under this section were not satisfied. The appellant claimed that the original assessment was not erroneous or prejudicial to the interest of the revenue, and the AO had duly considered the facts before framing the assessment. The Tribunal emphasized that for the CIT to invoke section 263, the order must be both erroneous and prejudicial to the interests of the revenue. The Tribunal noted that the CIT's revisionary action was based solely on a Revenue Audit objection, without any independent material to support the assumption of jurisdiction. The Tribunal cited judicial precedents emphasizing that revisionary jurisdiction must be exercised with an unbiased mind and cannot be influenced by external authorities. The Tribunal concluded that the CIT's order was invalid, as it was based on an audit objection without concrete evidential material. The Tribunal quashed the revisionary order, holding that the original assessment was neither erroneous nor prejudicial to the interests of the revenue. 2. Compliance with Clause 2(i) of Explanation 1 to Section 11(1): The appellant also challenged the CIT's conclusion that the AO erroneously allowed a reduction from the total income without the assessee exercising the option for deemed application in writing in Form No. 10. The appellant argued that there was no prescribed form for exercising the option in writing for AY 2013-14 and that the necessary disclosures were made in the Computation of Income, Form 10B, and Return of Income. The Tribunal noted that the law prescribing the form for procedural compliance came into force from AY 2016-2017. For the year under consideration, there was no specific form required. The Tribunal held that the written communication through disclosures in the income tax return and audit report was sufficient to comply with the law. The Tribunal concluded that the appellant had duly communicated the deemed application of income in accordance with the prevailing law for the year under consideration. Thus, the Tribunal quashed the revisionary order on this ground as well. Conclusion: The Tribunal allowed the appeal of the assessee, quashing the revisionary order passed by the CIT under section 263. The Tribunal held that the original assessment was neither erroneous nor prejudicial to the interests of the revenue and that the appellant had complied with the procedural requirements for the deemed application of income.
|
