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TMI Blog2022 (12) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the AO to re-examine the issues already examined during assessment-proceeding. It is judicially interpreted in several decisions that the intention of legislature behind introduction of Explanation 2 could not have been to enable the PCIT to find fault with each and every assessment-order in unlimited terms, since such an interpretation would lead to unending litigation and there would not be any point of finality of assessment-proceeding done by Ld. AO. Hon ble ITAT, Rajkot in M/s Pramukh Realty, Junagadh [ 2022 (7) TMI 384 - ITAT RAJKOT] has extensively dealt a case where the AO raised queries during assessment-proceeding and the assessee filed details / documents. After a thorough analysis, the Hon ble Bench has held that in such circumstances, revision u/s 263 cannot be done. Thus we are persuaded to hold that the facts of the present case do not warrant application of section 263. - Decided in favour of assessee. - ITA No.102/Ind/2022 - - - Dated:- 26-12-2022 - Ms. Suchitra Kamble, Judicial Member And Shri B.M. Biyani, Accountant Member For the Assessee : Shri S.N. Agrawal, AR For the Revenue : Shri P.K. Mishra, CIT-DR ORDER PER B.M. BI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. As per the said section 12A of the Act, one of the conditions for claiming benefit of exemption under sections 11 and 12 was registration of the trust as per subsection (aa) of section 12A; that on a conjoint reading of the provisions, it is clear that the income of any trust, including voluntary contributions received with a specific direction, was not includible in the total income of the trust, only if such trust was registered u/s 12A /12AA and the registration was a condition precedent for claiming exemption u/s 11, including for voluntary contributions. Reliance is placed on the recent decision of hon'ble Chennai Tribunal in Veeravel Trust vs. ITO [2021] 129 taxmann.com 358. Thus the condition precedent for claiming exemption u/s 11 was registration of the trust u/s 12AA and hence, in the absence of such registration, exemption claimed towards corpus donations could not be allowed. Reliance can be placed on the decision of the hon'ble Supreme Court in the case of U.P. Forest Corpn, vs. Dy. CIT [2008] 297 ITR 1. Evidences on record show that the Assessment order dated 23/12/2019 was passed shortly after receiving assessee's submissions. Obviously no e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interest of revenue. Accordingly, the Ld. PCIT passed revision-order u/s 263 whereby the assessment-order was set aside to the file of Ld. AO with a direction to reframe assessment de novo. 7. Aggrieved by such revision-order, the assessee has filed this appeal. 8. By means of various grounds raised in the Appeal Memo which are not being reproduced for the sake of brevity, the appellant-assessee requires us to adjudicate whether or not the revision-order passed by Ld. PCIT u/s 263 is valid in the eyes of law? 9. Ld. AR appearing on behalf of assessee analysed the contents of the show-cause notice dated 28.02.2022 reproduced earlier and submitted that the revision-action has been taken on two issues, viz. (i) the Ld. AO has not examined corpus donations of Rs. 32,93,111/-; and (ii) the Ld. AO has wrongly allowed exemption u/s 11 / 12 despite the fact that the assessee was not registered u/s 12AA and hence not eligible for exemption. 10. Regarding issue No. (i), the Ld. AR straightaway carried us to a Paper- Book filed by him and submitted that during the course of assessment-proceeding, the Ld. AO has made specific queries to assessee qua the claim of corpus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment-year immediately following the financial year in which such application is made. Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the object and activities of the trust or institution remain the same for such preceding assessment year: Analyzing the above Proviso, Ld. AR submitted that once the registration has been granted u/s 12AA, the exemption u/s 11 and 12 shall apply in respect of any preceding assessment-year for which the assessment-proceeding is pending before the AO on the date of registration. Ld. AR submitted that in the present case, the scrutiny-assessment of AY 2017-18 with which we are concerned in present appeal, was pending on the date of registration. Hence the benefit of the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / submissions. To this extent, there is no dispute or rebuttal by revenue. Clearly, therefore, it is discernible that the Ld. AO has considered those replies / submissions. Regarding non-registration of assessee u/s 12A, we are convinced with the legal provisions of section 12A(2) as well as CBDT Circular according to which the Ld. AO has rightly allowed the exemption u/s 11 / 12 to assessee. Regarding introduction of Explanation 2 to section 263, as claimed by Ld. PCIT in his order, we only need to state that it is by now well-settled in several decisions that the said Explanation does not give unfettered power to the PCIT to assume revisional-jurisdiction to revise every order of the Assessing Officer to re-examine the issues already examined during assessment-proceeding. It is judicially interpreted in several decisions that the intention of legislature behind introduction of Explanation 2 could not have been to enable the PCIT to find fault with each and every assessment-order in unlimited terms, since such an interpretation would lead to unending litigation and there would not be any point of finality of assessment-proceeding done by Ld. AO. 15. Hon ble ITAT, Rajkot in M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the Assessing Officer. It is Assessing Officer s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various Hon ble High Courts in this regard. 7.2 Delhi High Court in the case of CIT Vs. Sunbeam Auto 332 ITR 167 (Del.), made a distinction between lack of inquiry and inadequate inquiry. The Hon ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. The relevant observation of Hon ble Delhi High Court reads as under: 12. .. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter passed the assessment order. The grievance of the Commissioner was that the Assessing Officer should have made further inquires rather than accepting the explanation. Therefore, it cannot be said that it is a case of lack of inquiry . 7.3 The Hon ble Bombay High Court in case of Gabriel India Ltd. [1993] 203 ITR 108 (Bom), discussed the law on this aspect in length in the following manner: The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed. The facts of this case were that pursuant to search proceedings, assessee filed its return declaring certain unaccounted income. The Assessing Officer completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revised order under section 263 on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's on-money transactions and Tribunal, thus, set aside the revised order passed by Commissioner. The Hon ble High Court upheld Tribunal's order. The Hon ble Supreme Court while dismissing the SLP filed by the Department held as under:- We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Act without making the addition of the amount as note above. This fact can be verified from the notice under section 142(1) of the Act by the AO and submission in reply of the assessee against such notice. XXX 7.9 From the above it is revealed that it is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of cash deposited during the demonization period. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of materials placed on record accepted the genuineness of the claim of the assessee. 7.10 At this juncture, it is also important to note that the learned PCIT in his order passed under section 263 of the Act has made reference to the explanation 2 of section 263 of the Act. It was attempted by the learned PCIT to hold that there were certain necessary enquiries which should have been made by the AO during the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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