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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 ..... ejudicial 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. Allowance of deduction under section 11(1)(d) - Even after rejecting the claim of exemption under section 11 of the Act, the AO allowed assessee s claim of corpus donation under section 11(1)(d) - HELD THAT:- As is evident from the record, the AO on the basis that Form No. 10B was not filed before the due date under section 139(1) rejected the claim of exemption under section 11 - on the contrary, while computing the total income of the assessee, the AO allowed the exemption under section 11(1)(d), and therefore, on this issue, the learned CIT, inter-alia, invoked the provisions of section 263 of the Act. Thus CIT has rightly invoked the provisions of section 263 of the Act on this issue, as once the AO has held the assessee to be not eligible for exemption under section 11 of the Act, the allowance of exemption under section 11(1)(d) of the Act is contradictory to its own finding in the order, which is not only erroneous but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowed 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 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 the order u/s. 154 of the Act itself is order for correcting mistake apparent from records cannot be considered as erroneous 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 5. Your appellant craves leave to add, alter, amend, and/or delete any grounds as mentioned above during the course of appeal hearing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The AO also noted that no justification has been provided for working out the quantum of Rs.10,07,000, declared under PMGKY. Accordingly, the AO held that part of the huge cash deposit of more than Rs.1 crore is out of the unexplained cash, and in absence of evidence to prove the genuineness of the source of the cash in hand it was held that the assessee has provided accommodation for part of the cash deposits made for the unrecorded cash which has been deposited in his bank account. However, the AO considered it fair and reasonable to treat the cash deposits made immediately after the demonetisation period i.e. from 10/11/2016 to 16/11/2016 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, vide impugned order, rejected the submissions of the assessee and held that the issue which is the subject matter of the rectification by the AO under section 154 of the Act and the issue which has been impugned in the present proceedings under section 263 of the Act are entirely distinct. The learned CIT further held that the rectification order under section 154 of the Act was passed since the expenses claimed by the assessee were not allowed while computing the business income. The learned CIT set aside the assessment order only to the extent of bifurcation of cash deposits of SBNs in 2 periods and allowing the claim of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 section 11(1)(d) of the Act. 10. As per the assessee, against the partial disallowance made by the AO in respect of cash deposited during the demonetisation period, the assessee has preferred an appeal before the learned CIT(A) and therefore the learned CIT has no power to pass a revision order under section 263 of the Act on this issue. From the perusal of the grounds of appeal filed before the learned CIT(A), forming part of the paper book, we find that the assessee s grievance before the learned CIT(A) against the assessment order is only restricted to the addition of Rs.56,92,000 as unexplained money under sections 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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, as they assume the nature of capital receipt the moment the donations are given to the corpus of the trust. As per the assessee, late filing of Form No. 10B will not lead to disallowance under section 11(1)(d) of the Act. In this regard, the learned AR, during the hearing, placed reliance upon the decision of the Hon ble Madhya Pradesh High Court in CIT vs Devradhan Madhavlal Genda Trust, [1998] 230 ITR 714 (MP), wherein it was held that filing of audit report in Form No. 10B with the return of income is not mandatory and it would be sufficient compliance with section 12A(b) of the Act if the report is filed during t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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