2013 (10) TMI 1224 - HC - Income Tax

Revision u/s 263 - technical educational trust - AO allowed the exemption - CIT revised the assessment order and disallowed the exemption o the ground that information collected by the Assessing Officer was not considered by him after due application of mind - Held that - Families of the trustees have been paid interest whereas in terms of the deed of trust, the members of the trust are not to be paid any benefit or profit from the trust. It was also found that the Assessing Officer has failed to examine the issue of deduction of tax at source while crediting interest to the family members of the trustees. Similarly, it was found that 50 per cent. of the development fund has been utilised whereas the balance was to be utilised after ten years. The Commissioner found that there is no data of creation of development fund and the year-wise break up of opening balance is also not available Therefore, no exemption u/s 11 Decided against the Assessee The assessee has disputed the show-cause notice justifying the return filed. It was never the stand of the assessee that even if the said aspects are taken into consideration, still the income of the assessee would be nil. In the absence of any plea that the additions made will not cause loss to the Revenue, we find that the appellant cannot be permitted to raise such questions in appeal without there being any factual basis. - Decided against the assessee.

Summary

Issues:
1. Appeal under section 260A of the Income-tax Act, 1961 against the order dated March 14, 2012, for the assessment year 2004-05.
2. Justification of not setting aside the order under section 263 of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal.
3. Confirmation of the order of the Commissioner of Income-tax under section 263 of the Act by the Tribunal.
4. Examination of information collected by the Assessing Officer and its consideration.
5. Revision of the assessment order by the Commissioner of Income-tax under section 263 of the Act.
6. Discrepancies found in the assessment related to expenditure, interest payment to trustees, development fund utilization, student contributions, depreciation, and term loan repayment.
7. Argument regarding the tax effect being nil despite additions made.
8. Reference to a Division Bench judgment of the Gujarat High Court in support of the argument.

Analysis:

The case involved an appeal under section 260A of the Income-tax Act, 1961 against an order dated March 14, 2012, for the assessment year 2004-05. The appellant, a technical educational trust, had its assessment finalized by the Assessing Officer at nil income due to expenditure exceeding 85%, allowing exemption under sections 11 and 12A of the Act. However, the Commissioner of Income-tax revised the order under section 263 of the Act on March 26, 2009, after finding discrepancies. These included interest payments to trustees' families, development fund utilization, student contributions, depreciation, and term loan repayment.

The appellant disputed the show-cause notice and argued that even with the additions, the tax effect remained nil. Reference was made to a Gujarat High Court judgment in support of this argument. However, the Court found no merit in the appeal, stating that the appellant did not claim that the additions would not cause loss to the Revenue. As such, the Court dismissed the appeal, concluding that no substantial question of law arose for consideration.

In essence, the Court upheld the Commissioner's revision under section 263 of the Act, emphasizing the importance of factual basis in raising questions on appeal. The judgment highlighted the necessity for appellants to demonstrate potential loss to the Revenue when disputing assessment discrepancies, ultimately leading to the dismissal of the appeal in this case.