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TMI Blog2016 (6) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences filed by the assessee in support of the claim on corpus donation, it cannot be said that the fact of corpus donation has been accepted by the Assessing Officer without verification, more so when the learned CIT(E) has not pointed out any specific discrepancy in the documentary evidences in respect of any donor. It is a settled law that once the quasi judicial power vested in A.O. has been exercised by him in accordance with law and in exercise of such power he has arrived at a conclusion, then merely because the CIT does not feel satisfied with the conclusion it cannot be said that the assessment order is erroneous. In the instant case the A.O. has required the assessee to furnish confirmations of each of the donors along with their PAN number and addresses and the assessee has complied with by filing documentary evidences to prove the identity and credit worthiness of the donors as also the genuineness of the corpus donations given by them. Therefore it cannot be said that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue on this issue. Regarding the issue of room rents, it is found that the assessee society is engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-2016 - Shri H. S. Sidhu, Judicial Member And Shri O. P. Kant, Accountant Member For the Appellant : Sh. Salil Aggarwal, Adv. Sh. Sanjeev Jain, CA For the Respondent : Ms. Sulekha Verma, CIT(DR) ORDER Per H. S. Sidhu, J. M. This appeal has been filed by the assessee against the order dated 23.03.16 passed u/s 263 of the Income Tax Act, 2961 (hereinafter referred as the Act) by the Commissioner of Income Tax(Exemption), New Delhi on the following grounds:- 1. That the learned CIT(Exemptions) has erred in invoking the jurisdiction under section 263 of the Act in the instant case. 2. That the learned CIT(Exemptions) has erred in holding that the assessment order passed u/s 143(3) of the Act on 24.03.14 by the Assessing Officer is erroneous in as much as it is prejudicial to the interest of the Revenue. b) That the learned CIT has erred in holding that the Assessing Officer has not addressed the issues raised in the notice u/s 263 of the Act and that the assessee s claim of exemption of income under various sections and provisions of law has been accepted by the Assessing Officer without application of mind and without bringing on record neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide order dated 14.1.2008. The necessary details were called for and submitted from time to time as per the order sheet entries. The books of accounts alongwith supporting vouchers / bills were produced and test checked. After verification, the AO observed that the assessee society is found eligible for benefits of Section 11 12 of the Act and held that the total application of income was required to be made upto 85% i.e. ₹ 23,54,28,688/-, which stands satisfied and assessment was allowed the benefit of section 11 12 of the Act and assessment was being made at NIL Income. u/s. 143(3) of the I.T. Act on 24.3.2014. 3. Subsequently, on examination of assessment record Ld. CIT(E) has observed that the AO has not properly examined certain issues relating to the assessment of the case. Therefore, a notice u/s. 263 was issued to the assessee on 19.2.2015 requiring it to show cause as to why the assessment order should be set aside u/s. 263 of the Act to be made afresh. In response to the same, Assessee filed its reply dated 11.3.2015 objecting to the proceedings initiated u/s. 263 of the Act. After considering the reply filed by the Assessee-Society, the Ld. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order passed by the Assessing Officer u/s 143(3) was either erroneous or prejudicial to the interest of the Revenue. He drew our attention to the detailed questionnaire issued by the Assessing Officer during the course of assessment proceedings, a copy where of has been placed in the assessee s paper book at pages No. 57 to 61 and pointed out that all required inquiries were duly conducted by the Assessing Officer including in respect of all the four issues raised by the CIT(E) in his notice u/s 263 of the Act for the instant year. The learned Counsel pointed out that regarding the first issue of corpus donations the assessee had submitted its reply to the A.O. vide its reply dated 26.02.14 placed in assessee s paper book at pages No.66-67 along with all the supporting documents including confirmations, complete addresses, PAN numbers, copies of account payee cheques as also acknowledgments of returns, audited accounts, audit reports etc. of all donors, copies whereof are placed at pages No.84 to 169 of the assessee s paper book. It was pointed out by him that all these details had been filed by the assessee before the A.O. in response to the specific query raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any material to show that the view taken by the A.O. was not sustainable in law. The A.R. further contended that any further inquiry/verification could be made by the A.O. in relation to such corpus donations only when he is not satisfied with the documentary evidences filed by the assessee and that in the instant case there was no such material on the basis of which the A.O. could have had any doubts on the material filed before him by the assessee in support of claim of corpus donations. He further contended that even the CIT(E) has not brought on record any such material on the basis of which it could be alleged that any further inquiry was required to be made and therefore the acceptance of the claim of the assessee by the A.O. is neither erroneous nor prejudicial to the interest of Revenue. 5.1 Regarding the second issue relating to room rent receipts amounting to ₹ 41,93,810/- raised by the CIT(E) in his show cause notice, the A.O. submitted that these room rent receipts were in respect of hostel fee received by the assessee society from its own students in the various institutes run by it and was incidental to the activity of education carried out by the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Regarding the third issue raised by the CIT(E) relating to capital work in progress of land at Bahadurgarh, the A.R. pointed out that the A.O. had duly made inquiries in relation to all additions to fixed assets during the instant year when he raised two questions namely Question No.8 and Q. No.21 in his show cause notice dated 23.01.14 requiring the assessee to submit the details of all assets purchased and additions to fixed assets along with bills / vouchers. He drew our attention to the audited accounts of the assessee society filed before the Assessing Officer and referred to page No.45 of the paper book which is a Schedule of fixed assets of the society enclosed with the audited Balance Sheet wherein he pointed out that land at Bahadurgarh had been shown and where addition of ₹ 1,19,03,750/- was declared. It was pointed out by him that addition to the land at Bahadurgarh was made during the instant year when the adjoining land was purchased by the assessee society in addition to the land purchased by it in the same location in the immediately preceeding year for expansion of the assessee s educational activity. The A.R. pointed out that the assessee had duly submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the interest of Revenue. It was further contended by him that it was found by the ITAT in assessment year 2011-12 on similar facts that the A.O. had conducted the required and adequate inquiry and that the order could not be said to be either erroneous or prejudicial to the interest of Revenue. 5.3 As regards the fourth issue in relation to expenses of ₹ 20,13,652/- incurred on statue, the A.R. submitted that all documentary evidences relating to the same were duly filed before the A.O. when the A.O. had required the assessee to specifically give details of additions to fixed assets along with bills / vouchers etc. in his questionnaire issued during the course of assessment proceedings. The A.R. pointed out that a copy of the ledger account in respect of the statue and all the bills which are placed at pages No. 192 to 203 of the paper book were duly submitted before the Assessing Officer. It was further submitted by him that the statue of Shri Surajmal was installed by the assessee society during the instant year and all the expenses on statue were incurred in relation to such statue. The A.R. further pointed out that a copy of the Memorandum of Associatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that the assessment was framed by the A.O. without carrying out necessary verification or without application of mind. It was further contended by him that the CIT(E) has alleged that no independent inquiries and verifications were carried out without pointing out any specific discrepancy in the documentary evidences filed by the assessee and also without pointing out any error of law or facts on part of the Assessing Officer in accepting such documentary evidences filed by the assessee in response to specific queries raised by the Assessing Officer during the course of assessment proceedings. It was further argued by the A.R. that the CIT(E) himself had not drawn any conclusive finding on any of the issues raised by him and has merely held the assessment order to be erroneous and prejudicial to the interest of Revenue by directing the A.O. to examine the issues afresh and that it results into an order to carry out roving and fishing inquiries which is not permissible in law. He relied on the decisions of Hon ble Delhi High Court in the case of DIT vs. Jyoti Foundation reported in 357 ITR 388 as also the judgment of Hon ble Supreme Court in the case of CIT vs. Mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2995/D/2009) and Kavadi Narsimha (ITA Nos. 953 to 958 and 960/D/2011) in support of her contentions. The learned D.R. contended that the order passed by CIT (E) u/s 263 of the Act should be upheld. 5.6 The learned A.R. in rejoinder pointed out that it is not a case of no inquiry or lack of inquiry as all relevant and required inquiries that should have been made in this case were infact carried out by the A.O. when he issued questionnaire on all the relevant points including the four issues raised by the CIT(E) in the notice u/s 263 of the Act. It was further submitted by him that once the A.O. was satisfied with the documentary evidences filed by the assessee to support the fact of corpus donations received by it, then it was not the requirement of law that the A.O. will have to issue notices u/s 131 of the Act necessarily to each of the donors. For this proposition he relied on the judgment of Patna High Court in the case of Bahri Brothers reported in 154 ITR 244. He further argued that the source of acquisition of land was verifiable from the registered sale deed filed by the assessee and was also verifiable from the audited accounts of the assessee as also the bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The pharase prejudicial to the interests of the Revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repancy in the documentary evidences in respect of any donor. It is a settled law that once the quasi judicial power vested in A.O. has been exercised by him in accordance with law and in exercise of such power he has arrived at a conclusion, then merely because the CIT does not feel satisfied with the conclusion it cannot be said that the assessment order is erroneous. In the instant case the A.O. has required the assessee to furnish confirmations of each of the donors along with their PAN number and addresses and the assessee has complied with by filing documentary evidences to prove the identity and credit worthiness of the donors as also the genuineness of the corpus donations given by them. Therefore it cannot be said that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue on this issue. 5.9 Regarding the issue of room rents, it is found that the assessee society is engaged in the activity of providing education and therefore the provision of hostel to the students is an incidental activity and therefore the room rent receipts from hostel are found to be covered by section 2(15) of the Act and the order of assessment cannot be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order passed by the Assessing Officer in this case is neither erroneous nor prejudicial to the interests of the Revenue. The learned CIT(E) before holding the assessment order to be erroneous has neither conducted any inquiry or verification to show that the finding given by the Assessing Officer is erroneous nor has found that the view of the Assessing Officer is unsustainable in law. On the contrary it appears that the learned CIT(E) has simply expressed the view that the A.O. should have conducted inquiry in a particular manner as desired by him. Such a course of action of the learned CIT(E) is not in accordance with the mandate of provisions of section 263 of the Act. In this case the A.O. is found to have passed the assessment order after making all inquiries or verifications which should have been made including on all four issues raised by the CIT(E) and therefore the assessment order passed by A.O. cannot be held as erroneous in so far as it is prejudicial to the interest of Revenue . The case of the assessee is found to be squarely covered in its favour by the various decisions of Hon ble jurisdictional High Court including the judgment in the case of CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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