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Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD
Before: SMT. P. MADHAVI DEVI
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SMC”, HYDERABAD (THROUGH VIDEO CONFERENCE)
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. No. 1144/HYD/2019 Assessment Year: 2016-17 Rotary Club of Hyderabad The Income Tax Officer, Service Trust, Vs Ward-11(1), HYDERABAD HYDERABAD [PAN: AABTR9060L] (Appellant) (Respondent) For Assessee : Shri S. Rama Rao, AR For Revenue : Shri Kiran Katta, DR Date of Hearing : 17-09-2020 Date of Pronouncement : 29-09-2020 O R D E R This is assessee’s appeal for the AY.2016-17, directed against the order of the Commissioner of Income Tax (Appeals)–5, Hyderabad, dated 13-05-2019, confirming the maximum marginal rate of tax imposed by the CPC on the assessee.
Brief facts of the case are that the assessee is a Charitable Trust, not covered by the exemption u/s.12A of the Income Tax Act [Act], had filed its return of income belatedly on 06-03-2018 u/s.139(4A) of the Act. The CPC has processed the return filed by the assessee and levied tax at maximum marginal rate. The assessee filed its application u/s.154, stating that the assessee should be taxed at the normal rates and not at the maximum rate. The CPC, however, dismissed
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the said application, against which, the assessee filed an appeal before the CIT(A). The CIT(A), however, confirmed the order of the CPC by holding that - the assessee is chargeable at maximum marginal rate and is not eligible for basic exemption u/s.167B of the Act. Against this order of the CIT(A), the assessee preferred this appeal before the Tribunal, raising the following Grounds:
“1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law. 2. The learned Commissioner of Income-Tax (Appeals) erred in holding that tax is leviable at the Maximum Marginal Rate without allowing deduction of the basic exemption of Rs.2,50,000/-. 3. Any other ground that may be urged at the time of hearing”.
The case is taken up for hearing on 17-09-2020 through video conferencing and both the parties were heard.
Ld.Counsel for the assessee submitted that the return of income of the assessee was processed u/s.143(1) of the Act, without giving any opportunity to the assessee as to why it should not be charged and that the assessee’s application u/s.154 of the Act has been rejected by a single line, again without giving any opportunity to the assessee. It is submitted that even the CIT(A) has not considered assessee’s objections and has merely applied the provisions of Section 167B and164(2) of the Act. He has also drawn my attention to both the provisions to argue that the said provisions are not applicable to the assessee.
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Ld.DR, on the other hand, supported the orders of the authorities below.
Having regard to the rival contentions and material on record, I find that the CPC has applied the maximum marginal rate of tax, without examining whether the assessee is liable to be charged under the said section or not. Even when the assessee has filed the application u/s.154 of the Act, the CPC has not given any opportunity to the assessee and the CIT(A) also has confirmed the rate of tax. Therefore, in the interest of justice, I deem it fit and proper to remit the issue to the file of AO to do the assessment u/s.143(3) of the Act and apply the rate of tax as is applicable to the case of the assessee in accordance with law. Needless to mention that assessee should be given a fair opportunity of hearing.
In the result, the appeal of assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 29th September, 2020
Sd/- (P. MADHAVI DEVI) JUDICIAL MEMBER Hyderabad, Dated: 29-09-2020 TNMM
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Copy to : 1. Rotary Club of Hyderabad Service Trust, 12-5-32/5 & 6, Marri Sadan, Vijayapuri, Lallaguda, Secunderabad. 2. The Income Tax Officer, Ward-11(1), Hyderabad.
CIT(Appeals)-5, Hyderabad. 4. Pr.CIT-5, Hyderabad.
D.R. ITAT, Hyderabad.
Guard File.