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2023 (3) TMI 1107 - AT - Income TaxRevision u/s 263 by CIT - application of section 2(15) - HELD THAT - Any issue which was considered by the AO in the assessment order, such order would be open for revision u/s 263 of the Act, if such order is erroneous and prejudicial to the interest of justice. The controversy related to application of section 2(15) of the Act, has now been set at rest by the decision of ACIT(E) vs Ahmedabad Urban Development Authority ( 2022 (10) TMI 948 - SUPREME COURT by holding that as per provision of section 2(15) of the Act, such advancement of the object would not be considered charitable if an institution is engaged in trade, commerce or business or provides any service relating to trade, commerce or business for which cess, fee or other consideration is received. In the case in hand, the AO despite having recorded that though the assessee trust s activity fall under the ambit of general public utility , they are of commercial in nature and are covered by first and second proviso of section 2(15) - However, he erroneously assessed income of the assessee at Rs.NIL. Thus, the case laws relied by the Ld. Counsel for the assessee would not help as it is the clear case where the assessment order is erroneous and self-contradictory. Under these undisputed facts, there is no infirmity in the order of Ld.CIT(E) in revising the assessment under section 263 of the Act. Thus, grounds raised by the assessee are devoid of merit hence, dismissed.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act. 2. Application of Section 2(15) of the Income Tax Act. 3. Validity of the reassessment order. Summary: Issue 1: Jurisdiction under Section 263 of the Income Tax Act The assessee challenged the order passed under Section 263, arguing that the Commissioner of Income Tax (Exemptions) [CIT(E)], Jaipur, erred in law and on facts by assuming jurisdiction without recording a specific finding that the assessment order dated 12.12.2019 was erroneous and prejudicial to the interest of the revenue. The Tribunal noted that the CIT(E) had issued a show cause notice under Section 263, observing that the assessee had surplus income and claimed capital expenditure, thereby falling under the mischief of Section 2(15). The Tribunal upheld the CIT(E)'s jurisdiction, stating that the assessment order was indeed erroneous and prejudicial to the interest of the revenue. Issue 2: Application of Section 2(15) of the Income Tax Act The CIT(E) argued that the assessee's activities, though falling under "general public utility," were of a commercial nature, thus attracting the proviso to Section 2(15). The Tribunal referred to the Supreme Court's decision in ACIT(E) vs Ahmedabad Urban Development Authority, which clarified that any institution engaged in trade, commerce, or business, even if for general public utility, would not be considered charitable. The Tribunal observed that the Assessing Officer (AO) had initially concluded that the assessee's activities were commercial but erroneously assessed the income at NIL. Therefore, the Tribunal found no infirmity in the CIT(E)'s order to revise the assessment. Issue 3: Validity of the reassessment order The assessee contended that the reassessment was based on specific reasons related to cash deposits, interest income, and property purchases, which were not addressed in the CIT(E)'s order. The Tribunal noted that the AO had indeed assessed the income at NIL despite acknowledging the commercial nature of the assessee's activities. The Tribunal held that the reassessment order was erroneous and self-contradictory, justifying the CIT(E)'s intervention under Section 263. Stay Application: The assessee sought a stay on the operation of the impugned order. The Tribunal dismissed the stay application, stating that the assessee had not made a prima facie case in its favor, especially in light of the Supreme Court's judgment and the clear contradiction in the AO's findings. Conclusion: The Tribunal dismissed both the appeal and the stay application filed by the assessee, upholding the CIT(E)'s order under Section 263 and confirming the applicability of Section 2(15) to the assessee's activities.
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