2023 (7) TMI 123 - AT - Income Tax

Revision u/s 263 - Exemption u/s 11 - Receipt of corpus donation - HELD THAT - As in the computation of income, the assessee has specifically mentioned the receipt of corpus donation - balance sheet forming part of the Tax Audit Report reflects the corpus donation. Assessee has furnished the return of income and bank statement of the donor. Perusal of the bank statements of the donor clearly reveals that on 02.04.2014, the assessee had received loan of Rs.1 crore, which was repaid back on 31.03.2015. Whereas, the assessee received an amount of Rs.1 crore towards corpus donation, which is reflected in the bank statement of donor. These are established facts on record, which cannot be ignored. It is also a fact that donor itself is registered as a charitable trust/society under section 12AA of the Act. Therefore, there cannot be any doubt regarding the genuineness of the donor. Thus, the allegation of learned CIT that AO has not made proper inquiry with regard to the receipt of corpus donation is found to be contrary to facts and materials on record. Contention of DR that the corpus donation was received in subsequent financial year, we must observe that though, the cheque was received by assessee in the financial year relevant to the assessment year under dispute, however, the money was realized on 04.04.2015, as reflected in the bank statement of M/s. Suran Protsahan. Therefore, such contention of learned Departmental Representative is not of much relevance. Thus we are of the view that the AO, having passed the assessment order after conducting proper inquiry and applying his mind with due diligence, such assessment order cannot be considered to be erroneous and prejudicial to the interest of Revenue. Accordingly, we quash the impugned order passed under section 263 of the Act and restore the order of Assessing Officer. Grounds are allowed.

Summary

Issues involved:
The judgment involves assessing the correctness of an order passed under section 263 of the Income-tax Act, 1961 by the Commissioner of Income Tax (Exemption) concerning the assessment year 2015-16.

Assessment of Corpus Donation:
The assessee, a registered society with charitable objects, received a corpus donation of Rs. 1 crore from M/s. Suran Protsahan. The Commissioner of Income Tax (CIT) alleged that the Assessing Officer did not inquire into the receipt of the donation, leading to an erroneous assessment order. The CIT set aside the assessment order for further inquiry, citing Explanation 2 to section 263 of the Act.

Contentions and Findings:
The assessee contended that detailed inquiries were made during assessment proceedings, providing all necessary details and evidence, including bank statements and donor information. The Assessing Officer had accepted the income declared after due inquiry. The Departmental Representative argued that the donation was received in the subsequent financial year, making the order erroneous. However, the Tribunal found that the Assessing Officer had conducted a thorough inquiry, and the corpus donation was properly reflected in the records.

Decision and Conclusion:
The Tribunal observed that the Assessing Officer had diligently investigated the corpus donation issue and accepted the return of income after due consideration. The Tribunal found no clear finding of prejudice to the Revenue in the CIT's order under section 263. Even if the donation was considered general, the tax impact would be neutral due to the assessee's charitable activities. Therefore, the Tribunal quashed the CIT's order and reinstated the Assessing Officer's order, allowing the appeal.

Separate Judgment:
The judgment was delivered by Shri Saktijit Dey, Judicial Member, and Shri M. Balaganesh, Accountant Member of the Appellate Tribunal ITAT Delhi.