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TMI Blog2021 (5) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... ly mentioned the purpose of donation. This fact has been duly examined by the then assessing officer and mentioned that he is satisfied with the submission and evidences. Even otherwise the directions of the doner a mutual trust has been created between the doner and donee and because of this the donee is bound to use that specific fund into the specifically directed activities for which it was donated. The same has to be kept as liability of the assessee till the utilization of the entire fund into the specified activities. Hence the same is required to be shown in the balance sheet not in the Income and expenditure account. We also observe that the fund in question is a capital fund/corpus fund therefore, it is out of preview of the provisions of section 11(2) of the Act. Section 11 of the Act deals with the utilization of income of a trust. This section is not having any provision about the utilization of corpus donation / fund like general fund or other receipts. The amount so received to the assessee is a Corpus fund / donation, therefore is out of preview of the provisions of section 11(2) of the Act. Therefore, we are of the view that any amount received as donation with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer has examined and considered the matter involved in this order. 2. That the donation so received was received for a specific purpose and use, hence it was Corpus Donation. The corpus donation cannot be treated as part of Income and Expenditure account. 3. That order of Ld. Commissioner of Income Tax (Exemption) is otherwise unjustified because the assessee submitted the sufficient and proper explanation during the course of assessment proceedings and accepted by the Ld. Assessing officer. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. The brief facts of the case are that the A.O. noticed that during the year under consideration, the assessee society had deposited a sum of ₹ 83,95,000/- in its bank account maintained with Axis bank Ltd., Sikar. The assessee society has not filed its return of income for the year under consideration. Notice U/s 148 of the Act was issued to the assessee. In compliance of the notices issued, the assessee filed its return of income on 28/09/2017 declaring NIL income. After detailed enquiry and verification, the A.O. stated that during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue. The order is erroneous as well as the prejudicial to the interest of the revenue is prime conditions for invoking of the provisions of section 263. Now the meaning of the words Prejudicial to the Interest of the revenue is also to be understood. This has been defined in the explanation 2 of the Sub-Section 2 of section 263. For ready reference the same is being reproduced hereunder :- [Explanation 2.-For the purposes of this section it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompleted the assessment after due consideration and examination of all the issues specifically related to the corpus donation and he was satisfied with the evidences and submissions of the assessee as well as the manner in which it was shown in the accounts of the assessee. He mentioned his satisfaction in the office note attached with the assessment order, which is the part of the assessment order. The copy of the certified copy of office note is attached herewith for ready reference at Page No. 12 of Paper book. The relevant portion of the office note is reproduced here under :- (ii) Issue of Corpus donation has been examined carefully and satisfying with evidence produced by the assessee during the course of hearing, no adverse inference has been drawn on this issue. It is also worthwhile to submit that originally the notice u/s 148 was issued on the limited ground which is large cash deposits into the bank account. This means the assessing officer has to see this issue onlput here in this case the assessing officer spread his area of investigation from the limited issue to details issues and raised the queries in detail. The assessee replied the queries raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent Income Tax Officer (Exemption), Ward-2, Jaipur and only on the basis of that proposal this show cause notice dated 03.10.2019 is issued. This amounts to change of opinion of the subsequent Assessing Officer, which is not permitted in the eye of law. There might be difference of opinions of the officers and only because of this the proceedings cannot be questioned. As per the wordings of the Section 263 the Commissioner/Pr Commissioner may call for and examine the record of any proceedings under this act. But here in this case no records were called for the Commissioner. The notice issued only on the basis of the proposal of the subsequent assessing officer. This fact is very well evident from the words of the Note Sheet dated 26.08.2019 in which it is clearly mentioned that the proposal for 263 was received from the ITO(E), Ward-2, Jaipur. The copy of the same provided by the office of the Ld. CIT(E), Jaipur through letter dated 13.01.2020. The copies of the note sheet as well as the letter dated 13.01.2020 are attached herewith at page No. 10 and 11 of paper book. This shows that the proposal was sent by the subsequent assessing officer to the CIT(E) on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Pr.CIT, Ludhiana Vs Venus Woolen Mills, Ludhiana (2019) 105 taxmann.com 287 (P H) 11. Apollo Tyers Ltd. Vs ACIT (1998) 65 ITD 263 (Delhi) 12. Stewarts and Lloyds of India Ltd. Vs CIT 6. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. As per facts of the present case, the ld. CIT(E) noticed that contribution with specific direction for use in land building was received by the assessee which was terms as Corpus Donation and the same was not routed through income and expenditure account but was taken to balance sheet, accordingly, the ld. CIT(E) held that the said receipt was not Corpus Donation . Therefore, proceedings U/s 263 of the Act were initiated and order was passed against the assessee. 7. From the record, we noticed that the matter in the present case was initially reopened for limited issue on account of large cash deposit in the bank account. The said assessment was completed U/s 143(3) r.w.s 147 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal 9a [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal 9a [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] 10. We observe that the above mentioned explanation has clearly put the conditions in which the order is to be treated as erroneous and prejudicial to the interest of revenue. Now we would like to submit on the conditions mentioned above that :- (a) The order is passed without making inquiries or verification which should have been made. But here in this case the action u/s 148 taken only on reason of large cash deposits in bank accounts. As stated in facts of the case mentioned earlier that the assessing officer raised queries and also examined the records to justify the cash deposits and he is satisfied with evidence submitted by the assessee. During the course of assessment proceedings he also raised query with respect to the Corpus Donation and satisfied with the submission and records of the assessee. This fact is very well evident from the certified copy of the order sheet attached herewith. Therefore, this cannot be proved that the order passed without making inquiry or verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated on account of large cash deposits in the bank account and during the said assessment proceedings also, the A.O. had raised queries in detail and the said queries were satisfactorily replied by the assessee and after examining of the records and submissions, the A.O. found himself satisfied and completed the assessment U/s 143(3)/147 of the Act dated 22/12/2017. In the reopening proceedings itself, no adverse findings were recorded by the A.O. and even the ld. CIT(E) while passing the order U/s 263 of the Act had not found any error or defect in the findings recorded by the A.O. while passing the order U/s 143(3) r.w.s. 147 of the Act. Hence it cannot be said that the assessment was without any enquiry or investigation. Even during the survey U/s 133A of the Act which was conducted on the assessee on 20/02/2019, during the said survey, the assessee no where accepted in clear and unambiguous terms that the said donations received by them are not corpus donations rather a specific reply was given by the assessee that these donations are corpus donations but at that moment of time, the assessee could not produce the said details as those, according to assessee were with account s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not necessary that a voluntary contribution should be made with a specific direction to treat it as 'corpus, If the intention of the donor is to give that money to a trust which they will keep it in trust account in deposit and the income from the same is utilized for carrying on a particular activity, it satisfies the definition part, of the corpus. The assessee would be entitled to the benefit of exemptions from payment of tax levied. The Coordinate Bench of Ahmedabad Tribunal in case of Kantilal Manilal Charitable Trust (2014) reported in 63 SOT 142 (Ahmedabad) had relied on the meaning discussed by the Karnataka High Court in case reported in 205 Taxman 26 (Supra), the relevant portion of the order is reproduced hereunder :- 6. The meaning of corpus has been defined by H'ble Karnataka High Court in the case of .SIT v. Ramakrishna Seva Ashram [2012/ 205 Taxman 26/18 taxmann.com 37 as the capital of an assessee;, a capital of an estate; capital of a trust; a capital of an institution. Therefore, if voluntary contribution is made with a specific direction, then it shall be treated as capital of the trust for carrying on its charitable or religious activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is out of preview of the provisions of section 11(2) of the Act. Section 11 of the Act deals with the utilization of income of a trust. This section is not having any provision about the utilization of corpus donation / fund like general fund or other receipts. The amount so received to the assessee is a Corpus fund / donation, therefore is out of preview of the provisions of section 11(2) of the Act. Therefore, we are of the view that any amount received as donation with specific direction shall be treated as Corpus of the assessee and because of specific directions this is not taxable as per the provisions of section 11(1)(d) of the Act. In this connection the reliance placed on the Judgment of Hon'ble Kerala High Court in case of Commissioner of Income-tax (Exemption) v/s Mata Amrithanandamayi Math reported in (2017) 85 Taxmann.com 261 (Kerala) and Hon'ble Supreme Court dismissed the SLP filed by the Department reported in 94 Taxmann.com 82 (SC). The Hon ble Rajasthan High Court in the case of Pr.CIT Vs Om Rudra Priya Holiday Resort (P) Ltd. 109 Taxman.com 63 (Raj) has held as under: Income Tax: Where Assessing Officer had taken a broad view by accepting cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of hearing, then order of the A.O. cannot be held to be erroneous on the ground of lack of inquiry. 17. The ld AR of the assessee apart from the other grounds as discussed by us in detail, has also submitted before us that the notice issued by the ld. CIT(E) was on the basis of proposal of subsequent ITO, therefore, this act does not provide such powers to the ITO U/s 263 of the Act. The ld AR also submitted that as per provisions of Section 263 of the Act, the Pr.CIT/CIT may call for and examine the proceedings under this Act if he considers that any order passed therein by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue but in the present case, the proposal was sent by the subsequent A.O. to the CIT(E) on the basis of which a show cause notice was issued which is against the provisions of the Act. However, on this proposition, our view is not in favour of the ld AR as we convinced with the arguments of the ld. CIT-DR who had submitted that there is no prohibition U/s 263 of the Act for the Commissioner to act on the basis of proposal by the A.O. if other conditions under the said Section are satisfied. In this regard, the ld. CIT-D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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