9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 1066 - AT - Income TaxRevision u/s 263 - As per CIT Corpus Donation received by a Charitable Institution is required to be used as per the specific condition for receiving such donation. The assessee has passed on/transfer the money to other Organisation without utilising the same for the purpose for which donation was received - HELD THAT - Assessee -Trust has taken an object of establishing Schools and Universities, Libraries and other Educational Institutions for the development of education. It has used major contribution of Rs.1,41,00,000/- out of the alleged Rs.1,76,00,000/- for constructing Smt. Kamla Devi Budhia Government School. If the details brought to our notice are fitted against the finding of ld. Commissioner recorded in the last paragraph, then it would reveal that ld. Commissioner has not applied his mind to any of the information given by the assessee. The above finding is factually incorrect. It suggests the power under section 263 has been exercised without evaluating the material available on record. Hence, the impugned order is not sustainable in the eyes of law. It is quashed. - Decided in favour of assessee.
Issues Involved:
1. Legitimacy of invoking Section 263 of the Income Tax Act, 1961. 2. Assessment of the utilization of corpus donations by the assessee. Detailed Analysis: Legitimacy of Invoking Section 263 of the Income Tax Act, 1961: The assessee challenged the order of the Commissioner of Income Tax (Exemptions), Kolkata, who invoked Section 263 of the Income Tax Act, 1961, to set aside the assessment order dated 25.08.2021. The Commissioner believed the assessment order was erroneous and prejudicial to the interest of the revenue. The Commissioner issued a show-cause notice under Section 263, citing discrepancies in the utilization of corpus donations amounting to Rs. 1,45,00,000/- and other related funds. Assessment of the Utilization of Corpus Donations by the Assessee: The assessee, a society registered under Section 12A of the Income Tax Act, filed its return declaring a total income of 'NIL'. The Assessing Officer (AO) determined the taxable income as 'NIL' after scrutiny. The Commissioner, however, noted that the corpus donations were not utilized as per the specific conditions, leading to the issuance of a show-cause notice. The assessee provided detailed submissions, including the utilization of the corpus fund for maintaining a hospital and constructing a government school. The Commissioner was not satisfied with the explanation, stating that the funds were transferred to other organizations without fulfilling the specific conditions for which the donations were received. The Commissioner's order emphasized that corpus donations must be used for the trust's objectives and not transferred without utilization. The assessee argued that the donations were used in line with the trust's objectives, providing evidence of contributions made for the construction of a government school and other charitable activities. The Tribunal examined the records and the trust deed, which included provisions for establishing educational institutions. Tribunal's Findings: The Tribunal analyzed Section 263 and relevant case laws, including the principles laid down in the case of Malabar Industries and Sun Beam Auto. It emphasized that the Commissioner must record satisfaction that the AO's order is erroneous and prejudicial to the revenue's interest. The Tribunal noted that the Commissioner had not applied his mind to the information provided by the assessee and had incorrectly concluded that the funds were transferred without proper utilization. The Tribunal found that the assessee had indeed utilized the corpus donations for the intended purposes, such as constructing a school, which aligned with the trust's objectives. The Commissioner's finding that the funds were transferred without utilization was factually incorrect. Consequently, the Tribunal quashed the Commissioner's order under Section 263, deeming it unsustainable in law. Conclusion: The appeal of the assessee was allowed, and the Commissioner's order invoking Section 263 was quashed. The Tribunal concluded that the assessee had appropriately utilized the corpus donations in line with its objectives, and the Commissioner had not adequately evaluated the material on record before passing the order.
|
