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TMI Blog1990 (11) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed to be on scientific research. The income of Rs. 15,97,827 was claimed to be exempt under section 10 of the Act. The assessee was also registered by the Commissioner at Serial No. INS/14970 under section 12A of the Act, obviously for claiming exemption under sections 11 and 12 of the Act, which registration though, not necessary was stated to have been obtained out of abundant caution. The assessee claimed its income to be exempt under section 10 and filed a nil return. The Assessing Officer (AO) assessed the society at 'nil'. His order, which is a very short one, reads as under : " In response to notice under section 143(2) Shri V.K. Agarwal, C.A. attended. Audited copy of income and expenditure account and balance-sheet have been filed. As gross income exceeds Rs. 25,000 form No. 10B under section 12A(b) has been filed. The trust is verified under section 35(1)(iii) vide Notification No. 4265 (F.No. 203/260/80-ITA-II) dt. 16-10-1981. As such, the income of the trust is exempt from tax under section 10(23)(e) of the Act as in last year. Surplus : Nil." 3. As the assessee, was a scientific research association approved under section 35(1)(ii) of the Act, its income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of Shri R.K. Bhandari, at the back of the assessee, with regard to which he observed that matter could be thrashed out in greater details at the level of the AO. Aggrieved by the said order of the Commissioner, the assessee is in appeal before us. 5. The learned counsel for the assessee submitted that in coming to the conclusion that the order of the AO was erroneous, the Commissioner had gone beyond the record and taken into consideration the statement of Shri Bhandari recorded subsequent to the order made by the AO. This, according to him, is not permissible in law. Reference in this connection was made to the decision of the Tribunal (Hyderabad Bench 'A') in the case of Sri Vegi Bhadrachalam v. WTO [1987] 21 ITD 58. It was further submitted that it was not necessary that the income was to be utilised under section 10(21) of the Act in that very year itself and for this proposition, he relied upon the judgment of the Orissa High Court in the case of Dalmia Institute of Scientific Industrial Research v. ITO [1979] 118 ITR 575. He further submitted that the notice was bad as it meant to withdraw the exemption under section 11 which was never allowed to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee submitted that the amended provisions of section 263 incorporating definition of the term "record" would not be applicable to the proceedings prior to 1-6-1986 and, in this connection, reliance was placed on the judgment of the Bombay High Court in the case of Ritz Ltd. v. Union of India [1990] 184 ITR 599. 7. We have heard the parties and considered their rival submissions. Three points are involved in this case : (i) what is record and whether the Commissioner could take into consideration the material came on record subsequent to the making of the assessment by the AO ; (ii) whether the notice issued was such as invalidating the proceedings ; and (iii) whether the receipts of the assessee by way of donations/contributions were in the nature of income. 8. Section 263 of the Act provides that the Commissioner may call for and examine the record of any proceeding under the Act and if he considers that any order passed therein by the AO was erroneous insofar as it was 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 enquiry as he deems necessary, pass such order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner could not revise an order which was correct and could not be said to be erroneous on the material existed at the time it was made by taking into consideration the material came into existence later on. This was the view expressed by the Tribunal in the case of Sri Vegi Bhadrachalam. The statement of the managing trustee, Sri Bhandari, was admittedly recorded after the assessment was made by the AO. In these circumstances in our opinion, the same could not form a part of the record on the basis of which the Commissioner could have exercised his jurisdiction under section 263. It is true that the effect of the Explanation of Mr. Bhandari was that what was stated before the AO at the time of assessment was not true but having this information came into existence after the completion of the assessment by the AO, it was not a part of the record on the basis of which the Commissioner could have based his order of revision. 9. The reliance by the revenue on the definition of the term "record" as was inserted by the Finance Act, 1988 with effect from 1-6-1988, as amended by the Finance Act, 1989 and the statement of the learned author Shri Palkhivala in his Commentary on Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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