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TMI Blog2023 (2) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax-Appeals, Circle-1, Mumbai. Since, the said issue is already a subject of matter of appeal, Ld. CIT lacks power u/s. 263 of the Act for reverification of an issue which is subject of matter of an appeal. Therefore, your appellant prays to quash the order related to fresh verification of cash deposits in SBNs 3. On the facts and in law, the Ld. CIT has erred in directing for fresh verification of allowance of deduction u/s. 11(1)(d) of the Act which was disallowed by the Ld. A.O. in order u/s. 143(3) of the Act but later on allowed by passing rectification order u/s, 154 of the Act. Since, in the order u/s 143(3) of the Act, the Ld. A.O. has disallowed the claim of deduction u/s. 11(1)(d) of the Act, the said order u/s. 143(3) of the Act cannot be considered as prejudicial to the interest of the revenue and therefore the Ld. CIT lacks power u/s. 263 of the Act in directing fresh verification of claim u/s. 11(1)(d) of the Act. Therefore, your appellant prays to quash the order related to fresh verification of claim u/s, 11(1)(d) of the Act 4. On the facts and in law, the Ld. CIT has erred in directing for fresh verification of allowance of deduction u/s. 11(1)(d) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's total income as per normal provisions of the Act under the head "income from business and profession' as AOP. Further, since the assessee had deposited cash of Rs.1,10,40,950, during the period of demonetisation from 09/11/2016 to 31/12/2016, the assessee was asked to furnish details of the cash deposit made along with the necessary evidence in support of the source of cash deposit. In reply, the assessee submitted that the cash in hand as on 09/11/2016 was Rs.1,15,57,330, and out of these old currency notes/Specified Bank Notes ("SBN") of Rs.1,10,40,950, has been deposited in the bank account maintained with Axis Bank. The assessee further submitted that out of these deposits, a sum of Rs.10,07,000, was declared in the PMGKY. The AO vide assessment order did not accept the submissions of the assessee and held that the assessee has not furnished cash book for the period prior to 09/11/2016 so the source of opening cash in hand and a period of holding as cash in hand could not be verified. The AO also held that there is no justification for keeping such huge cash for more than Rs.1 crore as cash in hand when the assessee is having bank transactions on a date-to-day basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructions issued by the CBDT for treatment of deposits made in the SBN bank account after 08/11/2016. It was further alleged that since the AO has failed to examine the genuineness of cash deposits amounting to Rs.53,43,950, during the period 09/11/2016 to 16/11/2016, and framed an order allowing the same, the order is erroneous in so far as it is prejudicial to the interest of Revenue. Vide 2nd show cause notice dated 17/02/2022, it was alleged that the AO has denied exemption under section 11 of the Act on account of non-filing of the audit report online in Form 10B before the specified date. However, despite the denial of exemption under section 11, at the threshold level, the AO passed an erroneous order in allowing deduction under section 11(1)(d) of the Act amounting to Rs.3,20,11,780. 8. In response thereto, the assessee submitted that the assessment order passed under section 143(3) was rectified by an order under section 154 and therefore the original order under section 143(3) of the Act so passed loses its identity and merges with the rectification order and therefore, learned CIT had no jurisdiction to revise the said order under section 263 of the Act. The learned CIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be given in the consequential order. (ii) The allowance of deduction under Section 11(1)(d) amounting to Rs.3,20,11,780/- may be reversed in the consequential order. 8. The AO may note that the remit of the consequential order is limited to the above issue only and the AO is directed not to travel beyond this scope. No other findings in the assessment order dated 30/12/2019 including denial of exemptions under Section 11 of the Act it may be disturbed. Needless to mention, the AO will accord adequate opportunity to the assessee and pass a well reasoned and speaking order on the issues involved." Being aggrieved, the assessee is in appeal before us. 9. We have considered the rival submissions and perused the material available on record. As noted above, the revision proceedings under section 263 of the Act were initiated on two issues, viz, (i) bifurcation of cash deposits of SBNs in two periods and accepting the explanation of the assessee for the period from 09/11/2016 to 16/11/2016 without inquiring into the merits of the claim; and (ii) even after rejecting the claim of exemption under section 11 of the Act, the AO allowed assessee's claim of corpus donation under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,48,950, deposited in cash in SBN from 09/11/2016 to 16/11/2016, which has been allowed by the AO without making enquiries or examinations/verification of the source of cash deposit, we are of the considered view that the assessment order to this extent is erroneous insofar as it is prejudicial to the interest of Revenue in view of the Explanation 2 to section 263 of the Act. Accordingly, the impugned order passed by the learned CIT to this extent is upheld. As a result, ground no.2 raised in assessee's appeal is partly allowed. 11. As regards the direction to reverse the allowance of deduction under section 11(1)(d) amounting to 3,20,11,780, of the Act, we find that even though the AO has rejected the exemption claimed by the assessee under section 11 of the Act and computed the total income of the assessee as per the normal provisions of the Act under the head "income from business and profession', however, the AO allowed the deduction claimed under section 11(1)(d) of the Act. The learned AR placed reliance upon decisions of the coordinate bench of the Tribunal, wherein it has been held that the corpus donation received by the interest which is not registered is not taxable, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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