Commissioner Of Income Tax, Exemption, Jaipur v. Manna Trust, B

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 1/2021 Commissioner Of Income Tax, Exemption, Jaipur. ----Appellant Versus Manna Trust, B-6, Pinkcity Apartment, Akar Marg, Jaipur (Rajasthan). ----Respondent For Appellant(s) For Respondent(s) : Mr. K.K. Bissa through V.C. : Mr. Sidharth Ranka through V.C. HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MS. JUSTICE REKHA BORANA 12/01/2022 Order This appeal has been filed by the revenue to challenge thejudgment of the Income-Tax Appellate Tribunal raising followingquestions for our consideration: 1. “Whether on the facts and circumstances of the caseand law, the Hon’ble Tribunal in justified in stating thatneither Explanation 2(a) nor explanation 2(b) to Section263 is applicable in this case and thus, holding the actionu/s 263 wrong without appreciating the fact that noverification or enquiry was made by the AO even onreasons for scrutiny selection and exemption wasallowed without verification of charitable nature ofactivities of trust?” 2(a) “Whether on the facts and circumstances of thecase and law, the Hon’ble Tribunal is justified in statingthat the AO had examined the aspects relating topayments made to persons specified u/s 13(3) as well ascapital expenditure incurred during the year, byconducting necessary inquiries, when the AO has failedto conduct necessary inquiries?” 2(b) “Whether on the facts and circumstances of thecase and law, the Hon’ble Tribunal is justified in holdingthat the CIT(E) should have conducted necessaryinquiries on above issues during the proceedings u/s 263 and should not have set-aside the assessment to the AOfor conducting necessary inquiries, ignoring theprovisions of Explanation 2(a) to section 263 whichrequire the AO to conduct necessary inquiries and if theAO has failed to do so in assessment proceedings, theCIT is empowered to set aside the assessment for theconduct of necessary inquiries by the AO?” 3. “Whether on the facts and circumstances of the caseand law, the Hon’ble Tribunal is justified by holding thatthe proviso to Section 2(15) is not applicable in the caseof the asseessee ignoring the fact that the assessee,being engaged in the advancement of objects of generalpublic utility and having more than 20% of its receiptthrough contract which falls under the ambit ofcommercial activity in view of the provisions of theIncome Tax Act, 1961?” 4. “Whether on the facts and circumstances of the caseand law, the Hon’ble Tribunal is justified by holding thatthe order of Hon’ble Kerala High Court in case ofAnnadan Trust (citation) is not applicable in the case ofthe assessee inspite of the similar facts that both arerunning mid day meal programme for which the directlyor indirectly receive consideration from governmentunder a contract and this is the main source of income ofthese trusts?” The revenue has challenged the decision of the Income-Tax Appellate Tribunal by which the Tribunal has set aside therevisional order passed by the Commissioner of Income-Tax inexercise of powers under Section 263 of the Income-Tax Act, 1961(for short, ‘the Act’) denying the benefit of exemption in favour ofrespondent-assessee Trust on its income being charitable Trust. The respondent Trust is a registered charitable trust. Theassessing officer for the assessment year 2016-17 accepted thereturn filed by the trust and granted exemption as applicableunder law. The Commissioner, Income-Tax took the said order inrevision under Section 263 of the Act and held that the activitiesof the trust were not charitable in nature but were commercialactivities and therefore denied the exemption. This order wascarried in appeal and Tribunal by the impugned judgment reversedthe judgment of the Commissioner primarily on the ground that The respondent Trust is a registered charitable trust. Theassessing officer for the assessment year 2016-17 accepted thereturn filed by the trust and granted exemption as applicableunder law. The Commissioner, Income-Tax took the said order inrevision under Section 263 of the Act and held that the activitiesof the trust were not charitable in nature but were commercialactivities and therefore denied the exemption. This order wascarried in appeal and Tribunal by the impugned judgment reversedthe judgment of the Commissioner primarily on the ground that the registration of the Trust under Section 12AA of the Act stillcontinues. Meaning thereby, that the revenue does not disputethe nature of the charitable activities. Secondly, that thecommercial activities are not primary activities of the trust andpredominant activity of the trust is charitable. The generation ofreasonable surplus would not indicate that the trust is notengaged in charitable activities. The Tribunal was also of theopinion that the assessing officer having made proper inquiry andhaving taken plausible view, the Commissioner in exercise ofrevisional powers could not have reversed the assessment order. We are broadly in agreement with the view of the Tribunal. Itis well settled through a series of judgments that power underSection 263 of the Act can be exercised only when twin conditionsof the order of assessing officer being erroneous and prejudicial tothe interest of revenue are satisfied. The Jurisdiction of theCommissioner under Section 263 of the Act is restricted andcannot be equated with the appellate jurisdiction. TheCommissioner does not sit in appeal. The Tribunal also correctlynoticed that the registration of the Trust under Section 12 AA ofthe Act has not been disturbed. We also notice that in the earlierorder when the assessing officer had denied the benefit ofexemption to the trust, the Commissioner (Appeals) had reversedthe order of the assessment. In these circumstances, no question of law arises. The appeal is dismissed accordingly. (REKHA BORANA),J 7-a.asopa/- (AKIL KURESHI),CJ