ARADHANA CO OPERATIVE HOUSING SOCIETY LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX WARD 20(1)(1), MUMBAI

3.1.2.2 If the rectified return is considered a revised return, it fails to comply with the statutory timeline under Section 139(5), which requires a revised return to be filed before the end of the relevant assessment year. The appellant filed the purported revised return on July 20, 2019, well beyond the deadline of March 31, 2019. Consequently, the revised return is invalid in law.

3.1.2.3 An invalid revised return cannot give rise to a fresh claim or alteration in the treatment of income. The claim regarding the Doctrine of Mutuality, which was not properly disclosed in the original return, cannot now be entertained. The appellant's reliance on a procedurally defective return renders the claim inadmissible.

3.1.2.4 The Doctrine of Mutuality requires strict satisfaction of three conditions:

(i) Identity between contributors and beneficiaries. (ii) Absence of commercial intent. (iii) Exclusivity of mutual benefit.

3.1.2.5 In the present case, the records indicate that the appellant's receipts, including contributions and service charges, were credited to the profit and loss account and utilized for general purposes, some of which extended benefits beyond members. These circumstances negate the exclusivity required under mutuality principles.

3.1.3 Based on the above considerations, the addition of Rs. 14,10,031 under the head "Income from Business" by the CPC was validly made. The appellant's reliance on an invalid rectified return, coupled with the inability to substantiate the Doctrine of Mutuality, justifies the confirmation of the adjustment.

In relation to the above captioned subject, the appellant submits that it had filed ground of appeal with Form 36 against the intimation u/s 143(1) of the Income tax Act, 1961 for AY 2018- 19.In this connection, the Appellant is desirous of filing additional grounds in appeal for the above year. The additional grounds in appeal and submission relating thereto are enclosed herewith.

Aradhana Co-operative Housing Society Ltd. (hereinafter referred to as "the Appellant") is a Co- operative Housing Society registered under the Maharashtra Co-operative Societies Act, 1960. The Appellant is also subject to audit in accordance with the provisions of the said Act. The Return of Income for the year under consideration was filed on 28/09/2018, declaring a total income of Rs.19,29,380, and the due taxes were duly paid by the Appellant While filing the original return of income, the Appellant disclosed an amount of Rs.25,75,281 under the head "Income considered under other heads", comprising:

1) Contribution by members and service charges - Rs. 14,10,031 ii) Interest income-Re 1165.250 However, in the "Income from Other Sources" schedule, only the interest income of Rs.11,65,250 was disclosed. The Appellant inadvertently did not claim the balance amount of Rs.14,10,031 (being member contributions and service charges) as exempt income. This amount was, therefore, not specifically excluded from taxable income. It is submitted that such receipts are governed by the Doctrine of Mutuality and, by virtue of judicial and statutory recognition, are not taxable in the hands of a Co- operative Society, as they merely represent cost-sharing or reimbursement among its members.

The Appellant, while filing the appeal before the Hon'ble ITAT, realised that the above error had occurred in the original return of income. The appellant company seeks to raise the additional ground on the above claim made in view of the decision of Hon'ble Supreme Court's decision in case of Jute corporation of India Ltd v. CIT[1991] 187 ITR 688 (SC), National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 (SC) and the decision of Jurisdictional Bombay High Court in case of Ahmedabad Electricity Co. Ltd. v. CIT [1993] 66 Taxman 27 (Bombay).

At present, the issue before your honour is regarding the admissibility of additional ground under the Act. In this respect, your kind attention is drawn to the decision of Hon'ble Bombay High Court, Panaji Bench in the case of Sesa Goa Ltd vs. Additional CIT (2021) 430 ITR 114 (Bom) wherein it has been held that the ITAT (Appeals) has undoubted power to consider a claim for deduction not raised in the return or revised return. The relevant para 10 of the judgement is quoted as below:

"10. According to us, the approach of the Commissioner of the Income-tax (Appeals) and the Income-tax Appellate Tribunal is contrary to the law laid down by this court in CIT v. Pruthvi Brokers and Shareholders P. Ltd. [2012] 349 ITR 336 (Bom), which decision has been followed in Sesa Goa Ltd. v. Joint CIT [2020] 423 ITR 426 (Bom), wherein it has been held thus (page 438 of 423 ITR):

"In CIT v. Pruthvi Brokers and Shareholders P. Ltd. [2012] 349 ITR 336 (Bom), one of the questions of law which came to be framed was whether on the facts and circumstances of the case, the Income-tax Appellate Tribunal, in law, was right in holding that the claim of deduction not made in the original returns and not supported by revised return, was admissible. The Revenue had relied upon Goetze (supra) and urged that the Income-tax Appellate Tribunal had no power to allow the claim for deduction. However, the Division Bench, whilst proceeding on the assumption that the Assessing Officer in terms of law laid down in Goetze (supra) had no power, proceeded to hold that the appellate authority under the Income-tax Act had suf ficient powers to permit such a deduction. In taking this view, the Division Bench relied upon the Full Bench decision of this court in Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 (Bom) [FB] to hold that the appellate authorities under the Income-tax Act have very wide powers while considering an appeal which may be filed by the assessee. The appellate authorities may confirm, reduce, enhance or annul the assessment or remand the case to the Assessing Officer. This is because, unlike an ordinary appeal, the basic purpose of a tax appeal is to ascertain the correct tax liability of the assessee in accordance with law.

The decision in Goetze (supra) upon which reliance is placed by the Income-tax Appellate Tribunal also makes it clear that the issue involved in the said case was limited to the power of the assessing authority and does not impinge on the powers of the Income-tax Appellate Tribunal under section 254 of the said Andhra Co-op Housing Society Ltd, Mumbai. Act. This means that in Goetze (supra), the hon'ble apex court was not dealing with the extent of the powers of the appellate authorities but the observations were in relation to the powers of the assessing authority. This is the distinction drawn by the Division Bench in Pruthvi Brokers (supra) as well and this is the distinction which the Income-tax Appellate Tri bunal failed to note in the impugned order."

and oblige

6. On the other hand, Ld. DR submitted that this ground cannot be raised at this stage and application filed by the assessee deserved to be dismissed.

Andhra Co-op Housing Society Ltd, Mumbai. 8. Now with regard to leading additional evidence is concern, in this regard Ld. AR submitted that copy of audited financial statement for the year under consideration i.e 2018-19 could not be produced before the revenue authorities which has been now placed before the Tribunal at paper book page 120 to 140 and submitted that this document is very vital to decide the controversy in question.

Andhra Co-op Housing Society Ltd, Mumbai. 11. Before parting, I make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the AO independently in accordance with law.