CIT (Exemptions) Vs Impact Foundation (India) (Bombay High Court)
Summary: The Bombay High Court dismissed the Revenue’s appeal and upheld the ITAT order quashing revisionary proceedings initiated under Section 263 against a charitable institution claiming exemption under Sections 11 and 12AA. The dispute concerned utilization of ₹6 crore out of accumulated funds under Section 11(2), which the CIT (Exemptions) alleged was not properly verified during assessment. The Court held that the Assessing Officer had conducted detailed enquiries through notices, examined Form 10, board resolutions, accumulation details, and replies furnished by the assessee before accepting the claim. It observed that Section 263 cannot be invoked merely because the Commissioner believes further or deeper enquiry was required, especially when the Assessing Officer had already taken a plausible view after enquiry. The Court reiterated that revisionary jurisdiction applies only in cases of erroneous orders causing prejudice to Revenue and not for inadequate enquiry. It further held that Explanation 2 to Section 263 could not be invoked without specifically confronting the assessee in the show-cause notice.
Core Issue: Whether revision under Section 263 could be invoked on the allegation of inadequate enquiry regarding utilisation of accumulated funds under Section 11(2), when the Assessing Officer had already conducted enquiry and adopted a plausible view.
