2023 (7) TMI 408 - HC - Income Tax

Revision u/s 263 - assessee obtained registration u/s 12A and u/s 80(G)(5)(vi) - whether the amount, which, to begin with, was given by one of the trustees in the form of unsecured loans, and which was later on converted to contribution, should have formed the basis for exercising revisional powers? - ITAT recorded that the AO had considered the response of the respondent/assessee and then taken a view in the matter - HELD THAT - For exercise of powers u/s 263 it is well established that, not only the order passed by the AO would have to be categorised as erroneous, but it also has to be prejudicial to the interests of the revenue. As noted above, CIT(E) simply took recourse to the provisions of Section 263 of the Act because the AO had acted in a hurried and hasty manner. It is not in dispute that in the previous AYs, i.e., 2006-07, 2007-08, 2009-10, 2010-11 and 2011-12, the Tribunal has allowed the appeal of the respondent/assessee pertaining to the issue concerning denial of exemption under Section 11 of the Act on account of purported violation of provisions of Section 13(1)(c), read with Section 13(3) of the Act. Although Appellant says that the appeal was not preferred to this court against the order of the Tribunal because of low tax effect, it was not stated why was the revenue not alert, as it claims now, in exercising powers under Section 263 of the Act. no substantial question of law arises for consideration in the present appeal. No substantial question of law.

Summary

Issues Involved:
This appeal concerns Assessment Year (AY) 2012-13. The central issue in the case is whether the amount given as unsecured loans by a trustee, later converted to contribution, should have formed the basis for exercising revisional powers.

Details of the Judgment:

Issue 1: Revisional Powers under Section 263 of the Income Tax Act
The Tribunal set aside the order passed by the Commissioner of Income Tax (Exemptions) exercising powers under Section 263 of the Act. The CIT(E) contended that the assessment was done in a "hurried and casual" manner without due application of mind. The Tribunal noted that the Assessing Officer had considered the response of the assessee before making a decision.

Issue 2: Previous Tribunal Decisions
In previous assessment years, the Tribunal had allowed the appeal of the assessee regarding denial of exemption under Section 11 of the Act due to alleged violations of specific provisions. The Tribunal emphasized that the revenue's failure to appeal against these decisions in previous years should not be held against the assessee in the present case.

Conclusion:
The High Court found no substantial question of law for consideration in the appeal and closed the case. The pending applications were also closed, and parties were directed to act based on the digitally signed copy of the order.