The Pune bench of the Income Tax Appellate Tribunal (ITAT) held that the error in the assessment order shou be one that it is not debatable or plausible view. In a case where the Assessing Officer examined the claim took one of the plausible views, the assessment order cannot be termed as an “erroneous”.
The appellant is a charitable trust registered under the provisions of section 12A of the Income Tax Act, 1961 (‘the Act’). The Return of Income for the assessment year 2010-11 was filed on 23.11.2011 declaring Rs.Nil income. Subsequently, on receipt of the information that the appellant trust made a cash deposit of Rs.1,31,99,95,101/-, the Assessing Officer reopened the assessment by issuing notice under section 148 on 29.03.2017. Subsequently, the assessment came to be completed under section 143(3) r.w.s. 147 accepting the returned income.
Subsequently, the . CIT (Exemption), on perusal of the assessment records, found three violations i.e. :
(i) The appellant trust had received corpus fund of Rs.20,04,45,600/- during the year under consideration which was claimed to be exempt from tax without verifying whether the donor had donated the amount towards corpus fund or not.
(ii) The appellant trust paid a sum of Rs.4 crores to Sabery Foundation towards the construction of Hospital. However, the said foundation was failed to construct the Hospital instead. In lieu of the donation, the said foundation eventually constructed some flats, which were handed over to the appellant trust, which are contrary to the objects of the appellant trust.
(iii) The appellant trust given loan to some persons from whom no interest being charged. Thus, appellant trust violated the provisions of section 13(1)(c) of the Act.
In the light of above three violations, the . CIT (Exemption) formed an opinion that the appellant trust is not entitled for exemption under section 11 of the Act. Therefore, the CIT (Exemption) formed an opinion that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. Aggrieved, the appellant appealed before the tribunal.
After hearing both the parties, the tribunal noted that the error in the assessment order shou be one that it is not debatable or plausible view. In a case where the Assessing Officer examined the claim took one of the plausible views, the assessment order cannot be termed as an “erroneous”.
With regard to the issue of addition in respect of unsecured loans, admittedly, no addition in respect of cash deposit was made in the reassessment proceedings in respect of which the revision is sought to be made, the bench observed. Therefore, the assessment order passed by the Assessing Officer cannot be termed “erroneous and prejudicial to the interests of the Revenue”.
The two member bench consisting of S.S Viswanethra Ravi (Judicial member) and Inturi Rama Rao (Accountant member) he that he assessment order cannot be termed as “erroneous” amenable for jurisdiction under Section 263 of the Income Tax Act. Thus, the . CIT (Exemption) ought not to have exercised the jurisdiction under Section 263 of the Income Tax Act. Accordingly, the grounds of appeal filed by the assessee were allowed.
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