Indian Medical Association Vs ITO (Exemption) (ITAT Cochin)
Appellant, a trust duly registered u/s. 12A filed on return of income declaring Nil income after claiming exemption u/s. 11. Assessment was completed by the AO u/s 143(3) r.w.s. 143(3A) & 143(3B) at a total income of Rs. 1,81,81,500/-.
PCIT observed that the schedule ER in the return of income indicates Nil utilisation & schedule EC shows utilisation of only Rs. 7,09,621/- of the outcome accumulated in the earlier years. PCIT formed an opinion that the surplus carry forwarded from earlier years remain unutilised during the current year & therefore, should have been taxed u/s 11(3). Accordingly, formed an opinion that the assessment order passed by the AO is erroneous & prejudicial to the interests of Revenue.
In response to SCN u/s. 263 proposing to revise the assessment order, it was submitted that during the course of assessment proceedings the AO had raised specific queries with regard to receipts of the trust & utilisation of the carry forward surplus money u/s. 11(2). Thus, it was contended that the AO had examined the issue which is sought to be revised by the PCIT & took a plausible view that no addition is called for. Therefore, the order cannot be said to be erroneous. However, PCIT brushing aside the explanation had proceeded to hold that since the AO had passed the assessment order without examining the issue, the assessment order is erroneous & prejudicial to the interests of Revenue. PCIT set aside the assessment order by directing the AO for fresh examination of the issue after affording reasonable opportunity of hearing to the appellant.
