9911796707
TMI Blog2025 (4) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee trust was selected for scrutiny under CASS. Accordingly, the Assessing Officer issued notice u/sec. 143(2) Act dated 04.07.2017 and statutory notices u/sec. 142(1) along with questionnaire on 05.01.2018 and 18.05.2018 which were duly served upon the assessee. In response to the said notice dated 18.05.2018, the assessee trust filed information electronically through e-filing portal of the Department. The Assessing Officer carefully examined the 12A registration certificate of the assessee trust and noted that the said certificate was issued in favour of "Sri Grandhi China Sanyasi Raju Memorial Educational Institute" and as per the return of income the name of the assessee is "GMR Varalakshmi Foundation". Therefore, the Assessing Officer asked the assessee to clarify on this aspect. In response to the above mentioned query, the assessee has filed it's reply dated 26.10.2018 contending inter alia that "Sri Grandhi Chinna Sanyasi Raju Memorial Educational Institute" was established and registered as a Society under the Societies Act, in Rajam on 13.11.1991. Later the name of the assessee society is changed to "GMR Foundation" w.e.f. 15.02.2002 and that the society has converted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses relating to other than charities and donations viz., Mobile bill of P. Janardhana, Punjabn Dairy & Sweets, Shahdol-Towards purchase, Ashwin Sweets etc., and running into numerous entries. Since there were no withdrawals from 'Corpus Fund, the Assessing Officer noted that the excess utilization and the sources explained by the assessee thereof cannot be treated as 'genuine'. Therefore, the assessee was asked to show cause as to why it's claim for the sources for excess utilization should not be treated as anonymous donations received u/sec. 115BBC and are to be taxed in it's hands. In response to the same, the assessee filed it's CD on 20.12.2018. in Tappal and not submitted the explanation through electronic mode which was automatically closed on 28.12.2018. The Assessing Officer completed the assessment by accepting the returned income of the assessee at Rs. NIL vide order dated 30.12.2018 passed u/sec. 143(3) of the I.T. Act, 1961. 3. The learned CIT(E), on perusal of the assessment order dated 30.12.2018 noted that the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue. He, therefore, proposed to revise the said assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 993. Since then the assessee society is enjoying sec.11 exemption. However, for the first time, the Assessing Officer denied exemption u/sec. 11 of the Act, for the impugned assessment year 2016-2017 on account of filing of return of income in the name of assessee i.e., 'GMR Varalakshmi Foundation' instead of "Sri Grandhi Chinna Sanyasi Raju Memorial Educational Institute" which is brought to the notice of the Department by the assessee itself with a request to change the name as 'GMR Varalakshmi Foundation', which is under process with the Department. In such an event, without taking action on the representation/documentary evidences furnished by the assessee society either for change of name or in spending the amounts towards "Charities and Donations", directing the Assessing Officer to re-do assessment by the learned CIT(E) is not in accordance with law and, pleaded that the order of the learned CIT(E) be set aside and restore that of the Assessing Officer in the interest of justice. In support of it's contentions, the Learned Counsel for the Assessee drew the attention of the decision of Hon'ble Supreme Court in the case of Maharishi Institute of Creative Intelligence U.P. Luck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, where any order referred to in this sub-section and passed by the Assessing Officer has been subject matter of any appeal, the powers of the Principal Commissioner or Commissioner under this sub- section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Therefore, once the matter has been sub judice before the CIT(A), the CIT(E) cannot assume jurisdiction on the very same issues and set aside the assessment order. In this regard he relied upon judgement of Hon'ble Madras High court in the case of CIT vs., M/s. Farida Shoes Private Limited, 259 ITR 342 (Mad.) and the decision of Hon'ble Bombay High court in the case of Ranka Jewellers vs. ACIT [2010] 328 ITR 148 (Bom.) (HC). 7. Learned counsel further referring to various issues discussed by the CIT(E) in his order u/sec. 263 of the Act submitted that the CIT(E) denying the benefit of exemption u/sec. 11 of the Act only on the ground that the Registration Certificate issued u/sec. 12A of the Act is not in the name of the assessee even though the assessee has explained the reasons with relevant evidences including original Certificate of Registrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns', he rightly directed the Assessing Officer to re-do the assessment. He accordingly submitted that the order of the learned CIT(E) be confirmed in the interest of justice. In this regard, the Learned DR relied on the decision of Hon'ble Allahabad High Court in the case of CIT vs., Harshit Foundation Sehmalpur Jalalpur, Jaunpur [2022] 139 taxmann.com 55 (All.) which has been upheld by the Hon'ble Supreme Court while dismissing the SLP filed by the assessee reported in [2022] 447 ITR 372 (SC). The Learned DR submitted that there is no merit in the arguments of the Counsel for the Assessee that the CIT(E) does not have any power to revise the assessment order on the points which has been subject matter of appeal before the CIT(A) and decide the said appeal because in the present case the assessee only challenges the assessment order before the CIT(A) by raising various grounds. However, the First Appellate Authority has not considered and decided the issues and, therefore, the arguments of the assessee in light of provisions of section 263(1) Explanation (1)(c) does not holds good. In this regard, he realied upon the decision of Hon'ble High Court of Kerala in the case of Prestige ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arities and donations which are in the nature of telephone expenses to individuals and other entertainment expenses which is nothing to do with the stated objects of the assessee-trust/society. The Assessing Officer, although verified the issues during the assessment proceedings, but, has not rejected or denied exemption u/sec. 11 of the Act and or made any additions to the total income. Therefore, the learned CIT(E) was of the opinion that the assessment order passed by the Assessing Officer dated 30.12.2018 is erroneous in so far as it is prejudicial to the interest of the revenue because the Assessing Officer has failed to examine the issues in light of relevant provisions of the Act on the basis of evidences submitted by the assessee, which resulted in lawful taxes payable to the Government has not been paid. 10. The provisions of section 263 of the Act deals with revisionary powers of the Principal Commissioner or Commissioner. As per section 263 of the Act, the Ld. CIT(E) may conduct enquiry or call for relevant information and after giving opportunity of being heard to the assessee, pass order enhancing or modifying the assessment or cancelling the assessment and directing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT must give reasons to come to a conclusion that the issues in question were not examined by the Assessing Officer, in light of relevant provisions of the Act and evidences placed on record. 11. In light of above factual and legal background, if we examine the reasons given by the learned CIT(E) to invoke jurisdiction u/sec. 263 of the Act and set-aside the assessment order passed by the Assessing Officer, we need to understand, whether the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue and the reasons given by the learned CIT(E) has brought out the fact of an erroneous order passed by the Assessing Officer which causes prejudice to the interest of the revenue. Admittedly the CIT(E) has questioned three issues in order passed u/sec. 263 of the Act. As we have already narrated all those three issues, the first and foremost issue questioned by the learned CIT(E) is eligibility of the assessee for claiming benefit of exemption u/sec. 11 of the Act in light of Certificate of Registration issued u/sec. 12A of the Act in the name of "Sri Grandhi China Sanyasi Raju Memorial Educational Institute". Admittedly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion), Hyderabad and granted provisional registration to the assessee-trust vide Certificate dated 26.02.2021. From the evidences filed by the assessee-trust, it is undoubtedly clear that the change in the name of the assessee-trust/society and it's constitution has been intimated to the Department way back in the year 2004 and the same has been taken on record by the Commissioner of Income-tax (Exemption) which is evident from the fresh Certificate issued u/sec. 80G of the Act for granting approval u/sec. 80G from time to time. The assessee-trust had also brought out another important evidence in the form of assessment order passed by the Assessing Officer for the assessment year 2017 2018 which is subsequent to the assessment order passed by the Assessing Officer for the year under consideration where the Assessing Officer has allowed exemption to the assessee-trust u/sec. 11 of the Act, after examining the evidences filed by the assessee- trust including Registration Certificate issued u/sec. 12A of the Act in the name of erstwhile society ""Sri Grandhi China Sanyasi Raju Memorial Educational Institute". From the above, it is undisputedly clear that, the Department was in the kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). 12. Coming back to the issue of excess application of income and explanation of assessee with regard to source for such excess application of income for the objects of the Trust. There is no dispute with regard to the fact that the assessee-trust has applied excess income for the objects of the trust to the extent of Rs. 26,68,95,381/- and the assessee-trust has explained the inflow of funds in the form of cash flow statement and as per the cash flow statement filed by the assessee, the gross receipts of the Trust for the year under consideration was at Rs. 69,92,38,750/-, whereas, the utilisation of income for the objects of the Trust including capital expenditure and repayment of loan was at Rs. 96,61,34,131/- and thereby there is excess application of income to the extent of Rs. 26,68,95,381/-. The assessee has filed cash flow statement along with return of income and also filed relevant cash flow statement before the CIT(E) during revision proceedings. The assessee has explained excess application of income out of loan borrowed from banks, receipt of corpus funds and increase in sundry creditors for the year. The assessee-trust has also filed relevant evidences in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. 14. We have gone through the relevant details submitted by the assessee along with the relevant evidences and we find that, the assessee-society is engaged in the activity of imparting education by running various educational institutes and hospitals for the poor people. The assessee-trust/society is also engaged in various community activities including providing Health and livelihood to various poor people and the various activities carried-out by assessee for the year under consideration has been listed in pages 11 to 13 of the CIT(E) order. On perusal of various activities carried out by the assessee across the country, in our considered view, all these activities carried- out by the assessee-trust/society are in the nature of charitable activities, i.e., either in the field of imparting education or relief to the poor and advancement of any other object of general public utility. Therefore, in our considered view, once the activities conducted by the assessee are charitable in nature, merely for the reason of spending certain expenditure which are in a nature of general administrative expenses necessary for achieving the main objects of the Trust, the benefit of exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Donations and Charities" and, therefore, in our considered view, the learned CIT(E) having the benefit of said evidences should have examine the case in light of the evidences filed by the assessee-trust before coming to the conclusion that the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue. In the present case, going by the evidences filed by the assessee-trust, in our considered view, the reasons given by the learned CIT(E) is contrary to evidences available on record and, therefore, we cannot appreciate the reasons given by the learned CIT(E) to set-aside the assessment order passed by the Assessing Officer in terms of sec.263 of the Income-tax Act, 1961. This principle is supported by the decision of Hon'ble Supreme Court in the case of South India Steel Rolling Mill vs. CIT [1997] 224 ITR 654 (SC) wherein it has been clearly held that in terms of Explanation-1 to sec.263 Explanation clause-(b) records shall include and shall be deemed always to have included as all records relating to any proceedings under this Act available at the time of examination by the Commissioner. Therefore, we are of the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of section 263(1) of the Act and Explanation (1) are reproduced below: "Under 263. (1) of the Income Tax Act, the Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, (a) an order passed on or before or after the 1st day of June, 1 988 by the Assessing Officer shall include (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A: (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two points alone, while a number of High Courts have held that there is only partial merger and not the merger of the whole order in case where only one or some particular aspects have been contested. To eliminate litigation and to clarify the legislative intent in respect of the provisions in the three Direct Tax Acts, it is proposed to clarify the legal position in this regard in the Explanation to the relevant sections. The proposed amendments are intended to make it clear that "record" would include all records relating to any proceedings under the concerned direct tax laws available at the time of examination by the Commissioner. Further, as held by several High Courts, the Commissioner will be competent to revise an order of assessment passed by an Assessing Officer on all matter except those that have been considered and decided in appeal." 19. From plain reading of provisions of section 263(1) of the Act and Explanation (1)(c) provided therein and also notes on clause to Finance Bill, 1988 and Memorandum to Finance Bill, 1988, it is evident that the powers of PCIT u/s. 263 extends to such matters which had not been considered and decided in an appeal. The use of the word " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer has been made a subject matter of any appeal, the powers of the Commissioner under the sub-section shall extend to such matters as had not been "considered and decided" in the appeal. In other words, the exercise of power under Section 263(1) is in respect of an order passed by the Assessing Officer, where the order is regarded as being erroneous and prejudicial to the interest of the Revenue. Where an order passed by the Assessing Officer is subject to an appeal that has been filed, the power of the Commissioner to invoke his revisional jurisdiction under Section 263 can only extend to such matters which have not been considered and decided in the appeal. The words which have been used in Explanation (c) to Sub-section (1) of Section 263 are "considered and decided". In other words, it is not merely a consideration that disables, but the matter has to be considered and decided in the appeal. The submission of Counsel appearing on behalf of the Revenue that the CIT(A) has not decided the issue, while dealing with the question of enhancement, cannot be accepted. The submission which has been urged on behalf of the Revenue is that the CIT(A) was requested to exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Farida Prime Tannery (supra), is that the powers of the PCIT u/s. 263 of the Act are limited to those issues which has not been considered and decided in the appeal by the First Appellate Authority. Once, the issue has been considered and decided by First Appellate Authority, then there is no scope for the CIT(E) to assume his jurisdiction u/sec. 263 of the Act on said issue. This issue is further supported by the decision of Hon'ble Bombay High court in the case of CIT vs., K. Sera Sera Productions Ltd., [2015] 374 ITR 503 (Bom.) (HC) and the decision of Hon'ble Supreme Court in the case of CIT vs., Nirma Chemical Works Private Limited [2009] 309 ITR 67 (SC). 22. In this view of the matter and considering the facts of the case and also in the light of ratio of various case laws discussed hereinabove, we are of the considered view that, the assessment order passed by the Assessing Officer u/sec. 143(3) of the Income Tax Act, 1961 dated 30.12.2018 is neither erroneous nor prejudicial to the interest of revenue on three issues questioned by the learned CIT(E). The learned CIT(E) without appreciating the relevant facts has simply set-aside the assessment order passed by the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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