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TMI Blog2025 (2) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... hen specific information was received by the Assessing Officer. Whether it will have any impact or not, is a subsequent matter only when the same is examined and there is due application of mind.
Detailed reasoning given by the Ld. CIT(Exemption) for invoking the jurisdiction u/s 263 acceptable. Appeal filed by the assessee is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ct should not be initiated. 5. The assessee filed a detailed reply. However, the Ld.CIT(Exemption) was not satisfied with the arguments advanced by the assessee and held that the order passed by the Assessing Officer has become erroneous as well as prejudicial to the interest of Revenue for which he set aside the order with a direction to the Assessing Officer to reframe the assessment as per law and after considering the submissions of the assessee by observing as under: "07. The assessee's reply is duly considered. However, the same is not found to be satisfactory, hence not acceptable. Shri M.S.Hiremath is employed by the trust assessee. The trail of money required enquiry by the AO. The AO has not made any enquiry with respect to this aspect of the transaction. The application of money has to be made for the objects of the trust. The AO ought to have enquired as regards the role of Arti Enterprise in sharing the money with the owner Shri Hiremath. Since Shri Hiremath is a senior specialist doctor employed with the assessee, the requirement of routing through Arti Enterprises, which happens to be a proprietorship concern as regards its expertise has not been substantiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer to carry thorough and detailed inquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court 9.1 Reliance can be placed on the decision in the case of Swarup Vegetable Products Vs CIT[1991] 54 Taxman 175 (Allahabad) which confirm the action u/s 263 by the CIT as under: Assessee received certain amount by way of refund of excise duty and claimed that he had placed this amount in suspense account as a large part of this amount was claimed by one G and a suit and also a writ petition filed by G in this regard were pending before Courts and, thus, this amount did not constitute his income. ITO accepted assessee's claim without making proper enquiries Commissioner acting under section 263, set aside assessment order on ground that it was clearly erroneous and also prejudicial to revenue inasmuch as claim of assessee was accepted without proper enquiries and directed ITO to make fresh assessment after making proper enquiries and recording a finding. The Hon'ble court upheld the order of the Commissioner by observing as under "5...... The ITO had accepted the claim erroneously and that too withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial payments to Shri Hiremath which is routed through Arti Enterprise, Without prejudice to the fact that the assessment order passed by the assessee is erroneous insofar it is prejudicial to the interest of revenue and the findings as to why the same is held to be so has already been noted in this order, the case requires to be set aside for ascertaining reasonableness of the outgo so also to visit the money trail whereby an enquiry is warranted to determining as to whether any benefits have been provided to the prohibited persons within the definitions of section 13 of the IT Act, and further for providing assessee opportunities of being heard as a principal of natural justice. 13. Therefore, in view of the above facts, the assessment order u/s 143(3) r.w.s 144B of the I.T. Act on 18.04.2021 is hereby set aside on the above to the file of the assessing officer. The AO is directed to ensure that the assessment is reframed as per the provisions of law, after considering proper fact submissions of the assessee and also for necessary verification in the light observations made above, after affording proper opportunity to the assessee the time allowed under the Income-tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax (Exemption), Pune was not justified in the facts and circumstances of the case to treat amount of Rs. 90,89,134 paid by Grant Medical Foundation to M/s Arati Enterprises as admissible application of income 3. The learned Commissioner of Income Tax (exemption), Pune has erred in treating the assessment order passed u/s 143(3) dt. 08/04/2021 by Income Tax Department, NaFAC as erroneous in so far as that is prejudicial to the interest of the revenue. 4. The learned Commissioner of Income Tax (exemption), Pune has erred in setting aside the assessment order u/s 143(3) to the file of assessing officer with necessary verification in the light of observation and inquiries as per the order. 5. The appellant craves leave to add, alter, delete or substitute all or any of the grounds of appeal. 6. Such other order or orders may be passed as deemed fit and proper. 7. The Ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(Exemption) in invoking the jurisdiction u/s 263 of the I.T. Act. Referring to the order dated 23.09.2024 passed by the CIT(A), copy of which is placed at pages 17 to 34 of the paper book, he submitted that the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd heavily relied on the order of the Ld. CIT(Exemption) assuming the jurisdiction u/s 263 of the Act. Referring to the order passed u/s 143(3) of the Act, he submitted that the Assessing Officer has not made any enquiry about the payments made towards supply of machinery by one of the employees. Since the Ld. CIT(Exemption) has elaborately discussed the issue and has restored the issue to the file of the Assessing Officer for passing the order after making proper enquiry, therefore, the same should be upheld and the grounds raised by the assessee be dismissed. 11. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(Exemption) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that information was received by the Assessing Officer from the Assessing Officer NAFC of M/s. Aarti Enterprises that Ms. Aarti Virendra Shah, proprietor of M/s. Aarti Enterprises has entered into a tripartite MoU with Grant Medical Foundation and Dr. M.S. Hiremath to manage the equipment supplied by Dr. M.S. Hiremath installed at Ruby Hall Clinic. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hiremath by M/s. Aarti Enterprises to manage the equipments installed at Ruby Hall Clinic. 13. So far as the decision of the Ahmedabad Bench of the Tribunal in the case of Arvee Denims and Exports Ltd. vs. PCIT (supra) is concerned, the assessee had filed the requisite details and the Assessing Officer had examined the same. Therefore, this decision is also not applicable to the facts of the present case. 14. So far as the decision of Hon'ble Supreme Court in the case of M/s. The Malabar Industrial Co. Ltd. vs. CIT (supra) is concerned, no doubt the Hon'ble Supreme Court has held that the twin conditions namely the order is erroneous and prejudicial to the interest of Revenue must be satisfied for invoking the revionary power u/s 263 of the Act. Since in the preceding paras we have already held that the order passed by the Assessing Officer is erroneous as well as prejudicial to the interest of Revenue, therefore, this decision is also not applicable to the facts of the present case. In this view of the matter and in view of the detailed reasoning given by the Ld. CIT(Exemption) for invoking the jurisdiction u/s 263 of the Act, we do not find any infirmity in the same. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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