Tribunal confirms CIT(E) jurisdiction under Section 263, denies assessee's appeal citing Section 2(15) activities.

The Tribunal upheld the Commissioner of Income Tax (Exemptions) [CIT(E)], Jaipur's jurisdiction under Section 263, finding the assessment order erroneous and prejudicial to revenue due to the assessee's activities falling under Section 2(15) of the Income Tax Act. The Tribunal cited the commercial nature of the activities, denying the assessee's appeal and stay application, thus confirming the CIT(E)'s order for reassessment.

---

---

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.

---