Punjab-Haryana High Court
Pr. Commissioner Of Income Tax ... vs M/S Maharishi Markandeshwar ... on 24 September, 2024
Author: Sanjeev Prakash Sharma
Bench: Sanjeev Prakash Sharma
Neutral Citation No:=2024:PHHC:126799-DB
ITA No. 41 of 2021 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
Date of decision : 24.09.2024
1. ITA No. 41 of 2021 (O&M)
Principal Commissioner of Income-Tax (Circle),
Gurugram ... Appellant
versus
M/s Maharishi Markandeshwar University Trust ... Respondent
2. ITA No. 47 of 2021 (O&M)
Principal Commissioner of Income-Tax (Circle),
Gurugram ... Appellant
versus
M/s Maharishi Markandeshwar University Trust ... Respondent
3. ITA No. 57 of 2021 (O&M)
Principal Commissioner of Income-Tax (Circle),
Gurugram ... Appellant
versus
M/s Maharishi Markandeshwar University Trust ... Respondent
4. ITA No. 58 of 2021 (O&M)
Principal Commissioner of Income-Tax (Circle),
Gurugram ... Appellant
versus
M/s Maharishi Markandeshwar University Trust ... Respondent
5. ITA No. 60 of 2021 (O&M)
Principal Commissioner of Income-Tax (Circle),
Gurugram ... Appellant
versus
M/s Maharishi Markandeshwar University Trust ... Respondent
6. ITA No. 71 of 2021 (O&M)
Principal Commissioner of Income-Tax (Circle),
Gurugram ... Appellant
versus
M/s Maharishi Markandeshwar University Trust ... Respondent
1 of 11
::: Downloaded on - 01-10-2024 01:46:49 :::
Neutral Citation No:=2024:PHHC:126799-DB
ITA No. 41 of 2021 -2-
7. ITA No. 90 of 2021 (O&M)
Principal Commissioner of Income-Tax (Circle),
Gurugram ... Appellant
versus
M/s Maharishi Markandeshwar University Trust ... Respondent
CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
HON'BLE MR. JUSTICE SANJAY VASHISHT
Present: Ms. Urvashi Dhugga, Senior Standing Counsel,
for the appellant.
Ms. Radhika Suri, Senior Advocate assisted by
Mr. Abhinav Narang, Advocate, and
Ms. Parnika Singla, Advocate, for the respondent.
SANJEEV PRAKASH SHARMA, J.
These are seven appeals which have been taken up together for
adjudication. However, the facts have been taken from ITA No. 41 of 2021.
2. The Principal Commissioner of Income Tax (Central),
Gurugram has preferred these appeals against the order dated 19.08.2019
passed by the Income Tax Appellate Tribunal, Delhi Bench 'G', New Delhi,
whereby it has set aside the order of the Principal Commissioner of Income
Tax (Central) (hereinafter to be referred as 'the PCIT') passed under Section
263 of the Income Tax Act, 1961 (for short, 'the Act') holding the order
passed by the Assessing Officer to be erroneous and prejudicial to the
interest of the Revenue and issuing directions to the Assessing officer to pass
order accordingly, for the Assessment Year 2009-2010.
3. Brief facts which need to be noticed for adjudication are that
the Deputy Commissioner, Central Circle, Karnal vide order dated
30.12.2016 passed an assessment order relating to the respondent - M/s
Maharishi Markandeshwar University Trust Group of Cases, Mullana,
District Ambala (for short 'MMU Trust'), whereby it assessed the income by
2 of 11
Neutral Citation No:=2024:PHHC:126799-DB
rejecting the contention of the assessee claiming exemption of accumulation
of 15% of the gross receipts and computed the same as under:-
"Income from other sources
Income from other sources
Net surplus as per income & expenditure : 19,58,26,770.17
account
Add: Development fund receipts as discussed
in para 4. : 7.22.96.300.00
26,81,23,070.17
Less: 15% set apart or accumulated
u/s 11(1)(a) : 4.02.18.461.00
Income required to be applied as per 22,79,04,609.17
Section 11(1)(a)
Less: Fixed assets considered as applied
towards income from properties held for
charitable purposes during the year
during the year 65.73.64.136.73 22,79,04,609.17
Total Taxable Income Nil
Unapplied fixed assets expenditure
during the year : 42,94,59,527.56"
3. The PCIT invoking its powers under Section 263 of the Act
revised the assessment order on the premise as under:-
"On perusal of records as well as per the
enquiries/ investigations conducted by the Investigation
Directorate of the Department during the search and
post-search enquiries, many discrepancies and violations
of provisions of Sections 11, 12 & 13 of the Act by the
Assessee trust were found. Accordingly, a show cause
notice dated 23.08.2018 was issued asking the assessee
3 of 11
Neutral Citation No:=2024:PHHC:126799-DB
as to why proceedings u/s 263 of the Act should not be
initiated in its case.
4. In his order passed under Section 263 of the Act, the PCIT
nowhere mentioned any error committed by the Assessing Officer and relies
on the investigation report which was considered at length by the assessing
officer. Various points highlighted by him in the order passed are (a)
Siphoning of money from the trust by booking bogus expenditure; (b) the
PCIT notices the investigation report and observed that from the report of
the Inspector, genuineness and existence of the persons mentioned was
doubtful. The transactions were not genuine and the payments made by
MMU Trust are bogus and needs to be disallowed. Huge salary being paid to
the trustees by MMU Trust is not genuine. Interest paid to MMU Trust has
been held by the PCIT as diverting of income. Rent paid to individuals by
MMU Trust has been held to be not genuine. Admitting the Indian students
in NRI quota without NRI status of any families held to be wrongful and the
PCIT proceeded to hold MMU Trust violating the provisions of Medical
Council of India. Salary paid to the teachers has been held as not genuine.
The order was passed for various Assessment Years by the PCIT ranging
from 2009-2010 to 2015-2016. The entire order is based on the report of the
Investigating Team which was challenged before the Income Tax Appellate
Tribunal. The appeals were heard together and the ITAT has passed order
dated 19.08.2019 setting aside the order passed by the PCIT holding that the
Assessing Officer has well appreciated the evidence on record properly and
PCIT has not brought anything on record to prove siphoning of money from
the trust by booking bogus expenditure in the form of mess charges and
payments to contractors and allowed the appeals of the assessee.
4 of 11
Neutral Citation No:=2024:PHHC:126799-DB
5. Learned counsel for the Revenue has challenged the order of
the ITAT stating that the order passed by the PCIT under Section 263 of the
Act did not warrant any interference by the ITAT as the PCIT has relied on
the investigation report of the Inspector which was not considered by the
Assessing Officer. She has further submitted that as per the report of the
Inspector, the contractors had been paid amount which were not existing
and, therefore, there was no occasion for deduction of TDS in the payments
and the entire accounts were fraudulent.
6. Learned counsel for the Revenue further submitted that the
mess charges were actually not paid and the amount has been siphoned to
constitute as mess expenses. It is her submission that the ITAT did not even
bother to produce the investigation report prepared by the Inspector for the
purpose of adjudicating the appeals. She has relied on judgments of Supreme
Court reported as The Commissioner of Income Tax 7 vs M/s Paville
Projects Private Limited 2023 AIR (SC) 1950; H.E.H. Nizam's Religious
Endowment Trust, Hyderabad vs Commissioner of Income Tax, Andhra
Pradesh, Hyderabad 1966 (2) SCR 384; Rampyari Devi Saraogi vs
Commissioner of Income Tax, West Bengal and others 1968 (67) ITR 84;
Smt. Tara Devi Aggarwal vs Commissioner of Income Tax, West Bengal,
Calcutta 1973 (3) SCC 482; and Division Bench judgment of this Court in
Commissioner of Income Tax vs Assam Tea House 2012 (344) ITR 507, in
support of her contentions.
7. Learned Senior counsel for the respondent-assessee has,
however, refuted the submissions of learned counsel for the Revenue. It has
been stated that the learned ITAT has perused the investigation report and
5 of 11
Neutral Citation No:=2024:PHHC:126799-DB
also noticed that the so called contractors alleged to be non-existent, had
actually been found during investigation, who have submitted income tax
returns and the only aspect mentioned by the Inspector was with regard to
their addresses not being found as originally mentioned in the registers of
the MMU Trust. It is, therefore, not a case where there was any siphoning of
the funds. It was also submitted that the ITAT had noticed that same queries
with regard to the various points, as noted above, were raised by the
Assessing Officer, who has passed a very detailed order after considering the
replies and the statements recorded during investigation. The Assessing
Officer after noticing all the aspects has reached to the conclusion, as drawn
by him for various years.
8. Learned Senior counsel for the assessee also submitted that the
powers under Section 263 of the Act can be invoked only where the PCIT
holds the order passed by the Assessing Officer to be erroneous of such
nature which causes prejudice to the interest of the Revenue. It is submitted
that on both counts, the PCIT has not given any findings nor it states that the
Assessing Officer has not conducted enquiries.
9. It is also submitted by learned Senior counsel for the assessee
that while passing the order under Section 263 of the Act, the PCIT directed
to the Assessing Officer to make more enquiries, however, he does not
mention as to what enquiries are required to be further done by him. She also
submitted that the order passed by the PCIT was rightly held to be vitiated in
law and the ITAT order does not warrant any interference. No substantial
question of law arises from the order passed by the ITAT as the law stands
already settled and followed by this Court.
6 of 11
Neutral Citation No:=2024:PHHC:126799-DB
10. Learned Senior counsel for the respondent has relied on
judgments of Delhi High Court in Commissioner of Income Tax vs
Hindustan Marketing and Advertising Company Limited (2012) 341 ITR
180; Commissioner of Income Tax vs Anil Kumar Sharma (2011) 335 ITR
83; Commissioner of Income Tax vs Sunbeam Auto Limited (2011) 332
ITR 167; Commissioner of Income Tax vs Nagesh Knitwears (P) Limited
(2012) 345 ITR 135; ITA No. 116 of 2021- Principal Commissioner of
Income Tax-01, New Delhi vs M/s Brahma Centre Development Private
Limited decided on 05.07.2021; judgments of this Court in Commissioner
of Income Tax vs Deepak Mittal (2010) 324 ITR 411; and ITA No. 205 of
2019 - The Pr. Commissioner of Income Tax (Central) Ludhiana vs M/s
Kanin (India) decided on 21.04.2022, in support of her submissions.
11. We have carefully considered the submissions and also the law,
as noticed above.
12. The sine qua non for interference with the order passed under
Section 263 of the Act are two folds (a) that the Assessing Officer has passed
an erroneous order; and (b) that the Assessing Officer's order which is
erroneous has resulted in causing prejudice to the interest of the Revenue.
Thus, if it is noticed that an enquiry, which was already conducted, had not
been noticed at all by the Assessing Officer, one can reach to a proper
conclusion that the order is erroneous. However, if the Assessing Officer has
noticed the complete investigation conducted by the Inspector after search
and seizure were initiated under Section 138 of the Act; he also issues
questionnaire to the assessee and after considering the reply, the relevant
documents, he reaches to a conclusion, such an order cannot be said in any
7 of 11
Neutral Citation No:=2024:PHHC:126799-DB
manner to be erroneous. Merely because the PCIT may hold a different
opinion on the same set of evidence and the same set of circumstances, it
would not mean that the order can be revised. The power of revision is only
limited to the extent where the order has been passed erroneously and not
like an appeal where a different opinion may be taken by the appellate
authority. It is now a settled law that merely on change of opinion the order
of the Assessing Officer would not be set aside.
13. We have also noticed the order passed by the ITAT which takes
into consideration each and every aspect, as noticed above. Before the
Tribunal, the Department of Revenue also produced the investigation report
prepared by the Inspector after the search and seizure. The report of the
Inspector was perused by the Tribunal and it has reached to the conclusion
that the findings of the PCIT, which are relied on the Inspector's report and
gave a finding of the contractors being not genuine and non-existent, are
found to be wrongful. It concurred with the Assessing Officer's order
wherein he noticed the income tax return having been filed by the concerned
contractors which has not been challenged. Thus, having noticed all the
aspects, we do not find any substantial question of law on which we would
entertain the present appeals.
14. The findings of the ITAT are wholly and factually based on the
record where it noticed that payments have been made to the mess
contractors and the same were reflected in their returns too.
8 of 11
Neutral Citation No:=2024:PHHC:126799-DB
15. In a recent judgment delivered by us in Pr. Commissioner of
Income Tax-1, Chandigarh vs The Ropar District Coop. Milk Producers
Union Limited decided on 18.09.2024, we have held as under:-
"5. We have carefully considered the submissions and
found that apart from considering the order earlier
passed by it, the ITAT also examined the order of the
PCIT and found that merely on account of change of
opinion entertained by the PCIT, the order of the
Assessing Officer could not have been interfered with
under Section 263 of the Act. The provision of Section
263 of the Act can be invoked by the PCIT only when it
finds that the order passed by the Assessing Officer is
erroneous and that it is prejudicial to the interest of the
revenue.
To find that the order is erroneous, it has to give a
finding that no inquiry was conducted before the
Assessing Officer and that even non application of mind.
However, we find that the PCIT in its order dated
27.03.2023, has made the following observations:-
"...... It is amply and expressly clear that the
investigation/inquiry carried out by the Assessing
Officer is unsatisfactory, superficial and
incomplete along several of these
matters/dimensions including the due and
necessary and complete examination of the
documentary particulars/details mandated."
Thus, it reflects that there was an investigation and
inquiry carried out by the Assessing Officer before
passing of the assessment order. Thus, it cannot be said
that the order passed is erroneous."
16. A Co-ordinate Bench of this Court in M/s Kanin (India) (supra)
has held as under:-
9 of 11
Neutral Citation No:=2024:PHHC:126799-DB
"10. Trite it is that in order to attract Section 263 of the Act,
twin conditions are to be satisfied namely :-
(i) The order of the Assessing Officer sought to be
revised is erroneous, and
(ii) It is prejudicial to the interest of the Revenue.
11. The contention of Ld. Senior Standing Counsel that the
order passed by the Assessing Officer will fall within the ambit
of Explanation 2 (a) appended to Section 263 of the Act, cannot
be accepted till it is pointed out as to which inquiry or
verification was not made by the Assessing Officer before
passing the order.
12. Ld. Counsel for the appellant is not in a position to point
out as to what are those inquiries or verification which should
have been made but have not been made by the Assessing
Officer in the present case so as to make the present case fall
within Explanation 2 attached to Section 263 of the Act."
17. The Apex Court in M/s Malabar Industrial Co. Ltd. vs.
Commissioner of Income-tax, Kerala, 2000 (2) SCC 718, has held that -
"The phrase prejudicial to the interests of the revenue
has to be read in conjunction with an erroneous order passed
by the Assessing Officer. Every loss of revenue as a
consequence of an order of Assessing Officer cannot be treated
as prejudicial to the interests of the revenue, for example, when
an Income-tax Officer adopted one of the courses permissible
in law and it has resulted in loss of revenue, or where two views
are possible and the Income tax Officer has taken one view with
which the Commissioner does not agree, it cannot be treated as
an erroneous order prejudicial to the interests of the revenue
unless the view taken by the Income-tax Officer is
unsustainable in law."
10 of 11
Neutral Citation No:=2024:PHHC:126799-DB
18. In the judgments cited by learned counsel for the Revenue, we
find that the order of the PCIT passed under Section 263 of the Act was
directly challenged before the High Court and the Supreme Court, therefore,
held that the power was available with the Commissioner and he exercised
the jurisdiction, which was vested in it.
19. In the present cases, however, we are examining the scope of
powers under Section 263 of the Act and keeping in view the judgment in
M/s Malabar Industrial Co. Ltd. (supra), we are satisfied that merely
because the PCIT does not agree with the view taken by the Assessing
Officer, who had also issued the same queries to the assessee, it cannot be
said that the order is erroneous or that the Assessing Officer passed orders
without application of mind. A different view expressed by the PCIT is
beyond the scope of Section 263 and the ITAT has, therefore, rightly set
aside the order of the PCIT upholding the order of the Assessing Officer. We,
therefore, do not find any reason to entertain these appeals.
20. The appeals are, accordingly, dismissed.
21. All pending applications stand disposed of accordingly.
22. No costs.
(SANJEEV PRAKASH SHARMA)
JUDGE
24.09.2024 (SANJAY VASHISHT)
vs JUDGE
Whether speaking/reasoned Yes/No
Whether reportable Yes/No
11 of 11
