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2023 (10) TMI 30 - AT - Income TaxRevision u/s 263 - whether or not the AO had caused necessary enquiries in respect of the expenditure claimed by the appellant trust? - HELD THAT - It is an admitted position that during the course of survey proceedings, the appellant could not produce the vouchers in support of the expenditure claimed by the appellant trust. This fact is also made clear by the submissions of the appellant trust that the vouchers in respect of the expenditure incurred by the assessee trust were in the different school premises. Now, the appellant trust worked out the surplus income after disallowing the expenditure, which is not supported by the vouchers, but there is no material on record to indicate that the income offered by the assessee trust represents the entire expenditure not supported by the vouchers. AO had recorded a finding that the disclosure of expenditure was verified on random basis goes to demonstrate that the AO had not verified in full the entire expenditure claimed by the assessee trust. The fact that the vouchers were not found in the premises of the appellant trust at the time of survey proceedings, should have triggered the AO to enquire and verify the evidence of the expenditure incurred on those items such as Bonus, Perks and Allowances, Office Expenses, Tours and Travelling Expenses, Building Repairs Expenses etc , which the AO had failed to do so. Therefore, this fact clearly demonstrates that the AO had failed to conduct necessary enquiries in respect of the above items of expenditure and, therefore, the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. The facts of the case are hit by Explanation 2 inserted to section 263 of the Act. Therefore, we do not find any reasons to interfere with the order passed by the ld. PCIT. The ld. PCIT was justified in the facts of the present case in exercising the power of revision vested with him u/s 263 of the Act. Accordingly, the grounds of appeal raised by the assessee trust stand dismissed.
Issues Involved:
The appeals were filed against the orders of the Principal Commissioner of Income Tax (Central) under section 263 of the Income Tax Act for the assessment years 2013-14 to 2017-18 by two different assessees. Issue 1: Validity of assumption of jurisdiction u/s 263 by the ld. CIT (Exemption) The issue revolved around whether the Assessing Officer had made necessary enquiries in respect of the expenditure claimed by the appellant trust. The ld. PCIT found that the Assessing Officer had not conducted adequate enquiries, leading to the assessment order being deemed erroneous and prejudicial to the interests of the Revenue. The ld. PCIT set aside the assessment order, directing a fresh enquiry and verification of the expenditure claim. The appellant contended that the assessment was completed after due verification, while the ld. CIT-DR argued that necessary enquiries were not made by the Assessing Officer. Decision: The Tribunal held that the Assessing Officer had failed to conduct necessary enquiries regarding the expenditure claimed by the appellant trust, as evidenced by the absence of vouchers during survey proceedings. This failure to verify the entire expenditure rendered the assessment order erroneous and prejudicial to the Revenue's interests. The Tribunal upheld the ld. PCIT's decision to exercise the power of revision under section 263, dismissing the appeal. Separate Judgement: The Tribunal applied the decision made in ITA No.680/PUN/2023 for A.Y. 2013-14 to the remaining nine appeals of the two different assessees in ITA Nos.681 to 689/PUN/2023 for A.Ys. 2013-14 to 2017-18, resulting in the dismissal of all ten appeals collectively.
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