Impact Foundation (India) Vs CIT (ITAT Mumbai)
ITAT Mumbai held that initiated revision jurisdiction under section 263 of the Income Tax Act on mere conjectures, suspicions and surmises, is not permissible in law.
Facts-
The assessee is a non-profit company (charitable institution) and it is registered u/s 12AA of the Act. The assessment in the hands of the assessee for the year under consideration was completed by the AO u/s 143(3) of the Act on 12-12-2019 accepting ROI filed by the assessee. CIT(E), upon examination of assessment record, noticed that the assessee had claimed deduction towards accumulation of income u/s 11(2) of the Act in the immediately preceding year, i.e., in AY 2016-17 for an amount of Rs.14.51 crores. And during the year under consideration [AY 2017-18], the assessee has claimed to have spent a sum of Rs.6.00 crores out of the above said accumulated amount and has duly reported the same in Schedule 1 of the return of income. CIT(E) noticed that the assessee has not submitted the details or any documentary evidence in support of claim of utilization of above said amount of Rs 6 crores. Accordingly, he took the view that the AO has not verified the issue at all and the same has rendered the assessment order erroneous and prejudicial to the interests of revenue. Accordingly, CIT(E) initiated revision proceedings u/s 263 of the Act.
Conclusion-
Held that in the present case AO has discharged the duty of investigator (on the utilization of Rs 6 crores), then before Ld. CIT(E) holds the view of AO as erroneous, it was imperative on the part of Ld CIT(E) to have made necessary enquiries or verification and should have arrived at a conclusion that there was breach/violation of clause (a) or clause (b) or clause (d) of sec. 11(3) of the Act. Admittedly, in the instant case, the Ld CIT(E) has not conducted any such enquiry or verification. In such a scenario, we have to hold that he has initiated revision jurisdiction on mere conjectures, suspicions and surmises, which is not permitted.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This is an appeal preferred by the assessee against the order of the Ld CIT (Exemptions), Mumbai passed u/s 263 of the Income tax Act, 1961 (hereinafter “the Act”) dated 24.03.2022 for assessment year 2017-18. The assessee is challenging the validity of invocation of jurisdiction by Ld CIT(E) u/s 263 of the Act.
2. The facts relating to the issue are discussed in brief. The assessee herein is a non-profit company (charitable institution) and it is registered u/s 12AA of the Act. This organization was formed as an NGO for helping organizations to improve their implementation of programs which help women and children in education, health and livelihoods. The assessment in the hands of the assessee for the year under consideration was completed by the AO u/s 143(3) of the Act on 12-12-2019 accepting the return of income filed by the assessee. The Ld CIT(E), upon examination of assessment record, noticed that the assessee had claimed deduction towards accumulation of income u/s 11(2) of the Act in the immediately preceding year, i.e., in AY 2016-17 for an amount of Rs.14.51 crores. And during the year under consideration [AY 2017-18], the assessee has claimed to have spent a sum of Rs.6.00 crores out of the above said accumulated amount and has duly reported the same in Schedule 1 of the return of income. The Ld CIT(E) noticed that the assessee has not submitted the details or any documentary evidence in support of claim of utilization of above said amount of Rs 6 crores. Accordingly, he took the view that the AO has not verified the issue at all and the same has rendered the assessment order erroneous and prejudicial to the interests of revenue. Accordingly, the Ld CIT(E) initiated revision proceedings u/s 263 of the Act.
3. Before Ld CIT(E), the assessee contended that the assessment order is neither erroneous nor prejudicial to the interests of revenue. In this regard, the assessee relied upon hosts of case laws. The Ld CIT(E) rejected the said contentions by taking support of Explanation 2 to sec. 263 of the Act inserted by Finance Act, 2015 w.e.f. 1.6.2015, as per which if the assessment order is passed without making inquiries or verification which should have been made, it shall be deemed to be erroneous in so far as it is prejudicial to the interests of revenue.
4. On merits, the assessee submitted that the AO has called for details of accumulation of funds in the earlier years, amounts utilized out of those funds etc., during the course of assessment proceedings. The assessee also furnished the details of Rs.6.00 crores spent by it during the year under consideration out of the amounts accumulated in the preceding year as under:-
