Best judgment assessment made by the AO under section 144 cannot be substituted by the judgment of CIT exercising revisionary powers under section 263.

41. (2025) 176 taxmann.com 819 (Mum Trib)

Bhagwan Vardhman Shwetamber Murtipujak Tapagacch Jain Sangh vs. CIT

ITA No.: 2378/Mum/2024

A.Y.: 2012-13 Dated: 23.07.2025

Sections: 144,263

Best judgment assessment made by the AO under section 144 cannot be substituted by the judgment of CIT exercising revisionary powers under section 263.

FACTS

The assessee was not registered under section 12A. It filed its return of income. The return was selected for scrutiny assessment and accordingly, notices were issued and served upon the assessee. None attended the proceedings and the AO framed the order ex-parte to the best of his judgment under section 144. In the order, the AO allowed corpus expenditure of ₹ 10,97,699 against the corpus donation of ₹ 38,42,558 received during the year and treated the balance of ₹ 27,44,859/- as income of the assessee.

Invoking revisionary powers under section 263, CIT held that AO did not make any enquiry and because of which the expenditure claimed by the assessee was allowed and only the balance corpus was as