Diamond Beverages Private Limited Vs Pr. CIT (ITAT Kolkata)
Held that Commissioner should not simply relegate the point that the assessment order is erroneous to the AO. The Commissioner, after analyzing the record, ought to have recorded a categorical finding and provided valid reasons as to how the assessment order is erroneous. Revision unsustainable
Facts-
The assessee had incurred a sum of Rs.7,50,000/- as Corporate Social Responsibility (CSR) Expenditure. According to assessee, it suo moto disallowed the CSR expenditure but claimed it u/s. 80G of the Act because the trust and institutions to which the amounts were paid, were already enjoying benefits of registration u/s 80G. Accordingly, 50% of the expenditure was claimed as an allowable expenditure with the aid of Section 80G.
The PCIT had gone through the record carefully and formed an opinion that action u/s 263 of the Act is required to be taken. Accordingly, a notice was issued.
Conclusion-
Held that the Commissioner should not simply relegate the point that the assessment order is erroneous to the AO. The ld. Commissioner, after analyzing the record, ought to have recorded a categorical finding and provided valid reasons as to how the assessment order is erroneous. In other words, the ld. Commissioner should have recorded a finding about the error that had crept in which required action u/s 263 of the Act. There is no such finding at the end of the ld. Commissioner that recipients were not enjoying registration u/s 80G and that this fact was not enquired into by the Assessing Officer. Therefore, in the absence of this finding, we are of the view that the impugned order is not sustainable and hence the same is quashed.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The present appeal is directed at the instance of the assessee against the order of the Learned Principal Commissioner of Income Tax, Kolkata – 2, (hereinafter the “ld. Pr. CIT”) dt. 24/03/2022, passed u/s 263 of the Income Tax Act, 1961 (“the Act’), for Assessment Year 2017-18.
2. Though the assessee has taken five grounds of appeal, but the solitary grievance of the assessee is that the ld. Pr. CIT has erred in exercising the powers u/s 263 of the Act and remitting the issue regarding admissibility of donations claimed u/s 80G of the Act, for re-verification at the end of the Assessing Officer.
3. The brief facts of the case are that the assessee has filed its return of income electronically on 27/10/2017 disclosing income of Rs.2,69,70,230/-. The case of the assessee was selected for scrutiny assessment. Notice u/s 143(2) of the Act was issued and served upon the assessee.
The assessee has incurred a sum of Rs.7,50,000/- as Corporate Social Resposibility (CSR) Expenditure. According to the assessee, it suo moto disallowed the CSR expenditure but claimed it u/s 80G of the Act because the trust and institutions to which the amounts were paid, were already enjoying benefits of registration u/s Section 80G. Therefore, according to the assessee the donations made by it will qualify for claim of deduction u/s 80G of the Act. Accordingly, 50% of the expenditure was claimed as allowable expenditure with the aid of Section 80G.
4. The ld. Pr. CIT had gone through the record carefully and formed an opinion that action u/s 263 of the Act is required to be taken. Accordingly, he issued a showcause notice which is available at page 1& 2 of the paper book, which reads as under:-
“GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX
PCIT, Kolkata-2
