| The Tax Publishers2019 TaxPub(DT) 8169 (Coch-Trib) : (2020) 180 ITD 0305 INCOME TAX ACT, 1961
Section 263
Where AO was not expected to put blinkers on his eyes and mechanically accept what the assessee claims before him and main object of assessee was to offer relief to the poor, however, assessee was running Kuri business and was a profit making activity and not incidental to the attainment of objects of the Trust, therefore, CIT(E) was justified in setting aside the assessment order as erroneous and prejudicial to the interests of the Revenue.
|
Revision under section 263 - Validity - Exemption claimed under section 11 from income of Kuri business -
During assessment years 2014-2015 and 2015-16, assessee's income from Kuri business was Rs. 24,52,012 and Rs. 36,41,592 respectively. Assessments were made allowing exemption under section 11 on income of Kuri business under the conviction that foreman's commission from Kuri business was less than Rs. 25,00,000 and therefore 1st proviso to section 2(15) did not attract in the case of assessee. CIT(E) observed that AO had only considered foreman's commission out of Kuries. According to CIT(E), as per proviso to section 2(15) receipts out of the business is to be taken for consideration and total receipts out of Kuri business. Therefore, CIT(E) held that assessment order was erroneous and prejudicial to interest of revenue and invoked the provisions of section 263. Held: AO was not expected to put blinkers on his eyes and mechanically accept what assessee claims before him. Order passed by AO becomes erroneous when an enquiry was not made before accepting the genuineness of claim which resulted in loss of revenue. The main object of assessee was to offer relief to the poor. However, assessee was running Kuri business. Hence, it was a profit making activity and not incidental to the attainment of the objects of Trust. Therefore, CIT(E) was justified in setting aside the assessment order as erroneous and prejudicial to the interests of the Revenue with a direction to AO to redo the same after giving sufficient opportunity of being heard to assessee.
REFERRED : CIT v. Excel Industries Ltd. (2013) 219 Taxman 379 (SC) : (2013) 358 ITR 295 (SC) : 2013 TaxPub(DT) 2414 (SC) CST v. Sai Publication Fund (2002) 258 ITR 70 (SC) : 2002 TaxPub(DT) 1304 (SC) ACIT v. Thanthi Trust (2001) 247 ITR 785 (SC) : 2001 TaxPub(DT) 1078 (SC) Parashuram Pottery Works Co. Limited v. ITO (1977) 106 ITR 1 (SC) : 1977 TaxPub(DT) 0725 (SC) and CIT v. Andhra Chamber of Commerce (1965) 55 ITR 722 (SC) : 1965 TaxPub(DT) 0190 (SC)
FAVOUR : Against the assessee
A.Y. :
IN THE ITAT, COCHIN BENCH
 SUBSCRIBE FOR FULL CONTENT
|