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TMI Blog2022 (1) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. PCIT cannot be outsourced by the ld. PCIT to the ld. AO. In either case, there is a huge difference between lack of enquiry and inadequate enquiry . It is for the ld. AO to decide the extent of enquiry to be made as it is his satisfaction what is required under law. We find that the ld. PCIT had not invoked Explanation 2 to Section 263 in his entire order passed u/s.263 of the Act. Despite this fact, for academic reasons, we proceed to address the arguments of the ld. DR in this regard. The said explanation does not confer unfettered powers to the ld. PCIT to assume jurisdiction u/s.263 of the Act to revise every order of the ld. AO to re-examine the orders already examined during the course of assessment proceedings. Intention of the legislature could not have been to enable the ld. PCIT to find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law, since such an interpretation will lead to unending litigation and there would not be any point of finality in the legal proceedings. The opinion of the ld. Commissioner referred to Section 263 of the Act has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Accordingly, the appeal of the assessee is hereby admitted and taken up for adjudication. 3. We have heard rival submissions and perused the materials available on record. We find that assessee institution is a charitable organization duly registered with ld. CIT (Exemption), Mumbai u/s.12A of the Act vide Registration No.TR/27461 dated 02/02/1990. The assessee is also registered with the Charity Commissioner, Mumbai vide registration No.12384 dated 08/09/1989. The assessee had electronically filed its return of income for the A.Y.2015-16 on 21/09/2015 declaring total income of Rs. Nil after claiming exemption u/s.11 of the Act. The main activities of the assessee are in the field of slum development, promoting education aid, medical relief, housing for needy, upliftment of destitute women and abandoned children etc., The assessee has branches at Mumbai, Kolkata, Hyderabad, Chennai, Bangalore and Delhi. The gross receipts of the assessee during year under consideration was ₹ 11,16,57,789/-. The ld. AO during the course of assessment proceedings observed on perusal of the objects of the trust and the financial statements of the assessee, that the activities of the tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... primarily, invocation of revision jurisdiction u/s.263 of the Act was objected to by the assessee. It was pointed out that assessee had indeed furnished the details of corpus donations as well as non-corpus donations before the ld. AO together with the details of total expenditure of ₹ 12,64,36,953/-. The ld. PCIT however, observed that the case of the assessee trust was selected only for limited scrutiny to examine the following issues:- a) Accumulation of income by the Trust b) Receipts of the Trust c) Deposits in Co-operative Banks d) Verification of charity expenses. 3.4. Accordingly, the ld. PCIT observed that, apart from the above four items, the ld. AO could not have verified anything other than the above. But we find the aforesaid four items broadly covers the entire assessment of a charitable organization, including whatever items which the ld. PCIT wanted to examine. We find that whatever the ld. PCIT wanted the ld. AO to examine is duly covered in the aforesaid four items itself. Now, what is to be seen is whether the ld. AO had indeed carried out requisite enquiries with regard to the aforesaid four items which had been mandated by the CB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of donation. Similarly, the assessee furnished the details of donations received in various branches from various charitable organisations containing name of the donor, public trust registration details, their PAN and amounts of donation. Similarly, assessee furnished the details of donations received in head office containing the name of the donors, their PAN and amount of donation. Similarly, the assessee furnished the details of donation - support direct containing name of the persons, their PAN and the amount of donations. In the said list, the donations less than ₹ 50,000/- itself amounted to ₹ 3,29,57,098/-, for which the details were not given as it ran into innumerable numbers. Accordingly, the assessee had furnished details of donors who had paid more than ₹ 50,000/- as called for by the ld. AO. Similarly, the assessee had furnished details of donations -retention (head office) containing the name of the donor and their PAN. In the said list, donation less than ₹ 50,000/- amounting to ₹ 60,52,172/- for which list was not provided in view of the innumerable number of parties. Similarly, the assessee furnished the details of online d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 44,075,771.00 2007-08 44,075,771.00 Objects of the Trust Objects of the Trust NIL 2007-08 49,905,096.00 2008-09 49,905,096.00 Objects of the Trust Objects of the Trust NIL 2008-09 43,029,019.00 2009-10 43,029,119.00 Objects of the Trust Objects of the Trust NIL 2009-10 41,5170,057.0 2010-11 41,517,057.00 Objects of the Trust Objects of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26AS with the income reflected in the income and expenditure account. xi) The assessee furnished the copy of scrutiny assessment order passed u/s.143(3) of the Act for A.Y.2014-15 dated 25/06/2016 wherein the returned income was accepted (enclosed in pages 85-86 of the paper book).The assessee furnished the copy of scrutiny assessment order for A.Y. 2012-13 u/s. 143(3) of the Act dated 07/11/2014 (enclosed in pages 184-185 of the paper book); scrutiny assessment order u/s.143(3) of the Act dated 15/02/2016 for A.Y.2013-14 enclosed in pages 186-188 of the paper book; scrutiny assessment order u/s.143(3) of the Act dated 25/10/2016 for A.Y. 2014-15 enclosed in pages 193-194 of the paper book. xii) Apart from the above, the assessee also furnished the reconciliation of investments reflected in AIR with the books of accounts of the assessee and also the summary of major receipts and expenses on the objects of the trust for all the five years as specifically called for by the ld. AO. The assessee also furnished the confirmation letter of donors containing the donor forms duly mentioning their name, address, telephone details, fund raiser s ID, purpose of donation amount togeth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of very same charitable activities had been examined and allowed by the ld. AO u/s.143(3) of the Act. When the activities of the trust and the modus operandi of the assessee in carrying out the said charitable activities had remained unchanged during the year under consideration, when compared with the earlier years, there could be no occasion for the ld. AO to take a divergent stand during the year under consideration by disbelieving the details furnished by the assessee. Then how the order of the ld. AO could be termed as erroneous? In any case, the ld. AO based on the complete details filed by the assessee before him and on due examination of the same, had indeed arrived at a possible view duly taking into account the past conduct and income tax behaviour of the assessee trust. Once, a possible view has been taken by the ld. AO, the same cannot be subject matter of revision u/s.263 of the Act by the ld. PCIT merely because he is not in agreement with the said view. Reliance in this regard is placed on the decision of the Hon ble Jurisdictional High Court in the case of Gabriel India Ltd., reported in 203 ITR 108 and in case of Nirav Modi reported in 390 ITR 292. Moreover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also a fact that assessee had raised several donations through certain marketing agents to whom the brochures together with appellate forms are distributed by the assessee in various branches across the country. Those marketing agents are indeed paid commission after due deduction of tax at source by the assessee for donations procured through them. Pages 231-270 contain the draft marketing commission agreements entered into by the assessee, that these details were not filed before the lower authorities as fairly admitted by the ld. AR. Out of these marketing agreements, the agreement enclosed in pages 261-270 of the paper book would be relevant for the year under consideration and the other agreements were meant for earlier years. 3.7. Infact, we find that assessee had also furnished the detailed explanation of all the points raised by the ld. PCIT in his show-cause notice vide letter dated 07/02/2020 both on the assumption of jurisdiction u/s.263 of the Act and also furnishing the necessary details on merits. This letter dated 07/02/2020 is enclosed in pages VIII to XVIII of the paper book filed before us. In the said letter, the assessee had indeed referred to the page numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch plant and machinery was legally owned by it. It is further contended that since such assets were used for the purposes of Assessee's business, it was entitled to claim depreciation under Section 32 of the Act. 6. It appears that during the original assessment proceedings, the AO issued a questionnaire to the Assessee specific to the above issue. It is only after considering the assessee's replies thereto that the AO framed the assessment under Section 143 (3) of the Act allowing depreciation as claimed by the Assessee. 7. The PCIT, in exercise of powers under Section 263 of the Act, issued a show cause notice (SCN) dated 16th March 2015 to the Assessee pointing out that if the value of these fixed assets were to be amortized evenly over a period of 30 years, the amount to be amortized would only be ₹ 52,01,60,572/- for each year. Therefore, the depreciation allowed to the Assessee was in excess by ₹ 60,28,13,875 and, to that extent, the order passed by the AO was prejudicial to the interest of the Revenue. In reply to the SCN, the Assessee took the stand that, during the AY in question, it had purchased the assets from independent vendors, out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT to undertake an inquiry as regards which of the assets were purchased and installed by the Assessee out of its own funds during the AY in question and, which were those assets that were handed over to it by the DMRC. That basic exercise of determining to what extent the depreciation was claimed in excess has not been undertaken by the PCIT. 12. Mr. Asheesh Jain then volunteered that the PCIT had exercised the second option available to him under Section 263 (1) of the Act by sending the entire matter back to the AO for a fresh assessment. That option, in the considered view of the Court, can be exercised only after the PCITundertakes an inquiry himself in the manner indicated hereinbefore. That is missing in the present case. 13. Therefore, the Court is of the view that the ITAT was not in error in setting aside the impugned or der of the PCIT under Section 263 of the Act. No substantial question of law arises. 14. Liable with the The appeal is dismissed. 3.9. In our considered opinion, the ld. PCIT in the instant case had merely directed the ld. AO to make fishing and roving enquiries on the existing details already available in the assessment recor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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