Prabodh Centre for Rural Reforms Vs CIT (Exemption) (ITAT Pune)
In this appeal, Prabodh Centre for Rural Reforms, a charitable trust, challenged the revisional order passed u/s 263 by CIT(Exemption), Pune. The reassessment u/s 143(3) r.w.s.144B had taxed interest income arising from alleged impermissible investments at Maximum Marginal Rate, as the trust had invested ₹85 lakh in a concern in which a trustee had substantial interest, attracting section 11(5). The AO, relying on binding precedents including Sheth Mafatlal Gagalbhai Foundation Trust (Bom HC) & Fr. Mullers Charitable Institutions (Kar HC), made addition only of the interest income & not the entire investment.
The Assessee opted for settlement under the Direct Tax Vivad Se Vishwas Scheme, paid the disputed tax of ₹1,83,533 on 13.12.2024, & Form-4 was issued by CIT(E) on 31.12.2024 acknowledging full settlement of tax arrear. Despite this, CIT(E) issued a notice u/s 263, alleging that the entire investment of ₹85 lakh should have been taxed, & treated the assessment order as erroneous & prejudicial to Revenue.
The Tribunal held that once the CIT(E) accepts the assessment outcome for DTVSV purposes & issues Form-4, thereby certifying full settlement, he cannot thereafter invoke revisional jurisdiction u/s 263 on the very same issue. It was further held that the AO had adopted one of the legally sustainable views supported by High Court judgments, & therefore the assessment order was neither erroneous nor prejudicial to Revenue. The invocation of section 263 was therefore unjustified. Accordingly, the ITAT quashed the 263 order & restored the original assessment dated 27.09.2022.
