Yashwantrao Chavan Maharashtra Open University Vs CIT (ITAT Pune)
Pending appeal no bar for 263 action on unrelated issues – CIT can revise u/s 263 even if appeal pending – Mercantile System means accrued interest taxable
Assessee, a university functioning as a local authority & engaged in providing education facilities, filed its return declaring nil income after claiming exemption u/s 11. During scrutiny, it admitted a clerical error in Form 9A-reporting ₹42.12 crore instead of ₹15.44 crore as accrued interest income. AO, after considering submissions, excluded the accrued interest income of ₹15,44,74,562/- from gross receipts & completed assessment u/s 143(3) r.w.s. 144B on 28.12.2022, disallowing exemption u/s 11 & determining taxable income at ₹52,63,18,269/-.
On examination, CIT(E) noted the assessee was following the mercantile system of accounting & was required to consider accrued interest in total income. AO had wrongly reduced ₹15.44 crore from gross receipts, leading to under-assessment of income & short levy of tax. Holding the order to be erroneous & prejudicial to the interests of revenue, CIT(E) invoked section 263, set aside the assessment, & directed AO to reframe it after considering all facts & affording due opportunity.
Relying on Smt. Renuka Philip v. ITO (Madras HC) & ITAT Delhi in JKG Construction Pvt. Ltd, Assessee argued that since an appeal against the assessment order was pending before CIT(A), the CIT(E) could not exercise powers u/s 263 on the same order.
