ARAV CO-OPERATIVE HOUSING SOCIETY LTD. ,AHMEDABAD vs. THE ACIT, CIRCLE 3(1)(1), AHMEDABAD

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ITA 2172/AHD/2025Status: DisposedITAT Ahmedabad19 May 2026AY 2019-207 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeals before the CIT(A), stating that the assessee had sufficient cause due to its ignorance of the law and relevant judicial pronouncements. The matter was restored to the CIT(A) for a decision on merits.

What were the facts?

The assessee, a co-operative housing society, initially did not file a return. Upon reopening, it declared interest income, which was accepted by the AO. However, the appeal against this assessment was filed belatedly before the CIT(A) due to the assessee's ignorance of the law regarding the taxability of such income for co-operative housing societies.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) was justifiable due to the assessee's ignorance of the law regarding the taxability of interest income for co-operative housing societies.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 148,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA

For Appellant: Shri Sakar Sharma, AR, Shri Girish Parihar, Sr.DR
For Respondent: Shri Girish Parihar, Sr.DR
Hearing: 05/03/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. Nos. 2170 to 2173/Ahd/2025 (िनधा�रण वष� / Assessment Years : 2018-19 & 2019-20) Arav Co-operative Housing बनाम/ Assistant Commissioner Society Ltd. of Income-tax Vs. Parishkaar-1 (Office), Circle 3(1)(1), Khokhra Circle, Amraiwadi Ahmedabad S.O., Ahmedabad, Gujarat - 380026 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AACAA7928G (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Sakar Sharma, AR ��यथ� क� ओर से/Respondent by : Shri Girish Parihar, Sr.DR Date of Hearing 05/03/2026 19/05/2026 Date of Pronouncement (आदेश)/ORDER All four appeals relate to the same assessee and pertain to the Assessment Year (A.Y.) 2018-19 & 2019-20; while two appeals are against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”) (in short “CIT(A)”), Delhi dated 19.09.2025 & 23.09.2025 in quantum proceedings in appeal against assessment order passed under Section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as the “Act”),

ITA Nos.2170 to 2173/Ahd/2025 [Arav Co-operative Housing Society Ltd.] - 2 – the other two appeals lie against order of the Ld. CIT(A) confirming the levy of penalty under Section 270A of the Act.

2.

The brief facts relating to the case are that the assessee had initially not filed any return of income. The assessee was a co- operative Housing Society. Thereafter, on the basis of information in the possession of the AO that the assessee had earned interest income during the year and there was cash deposits in his bank account, the case of the assessee for the impugned years before me i.e. A.Y. 2018-19 & 2019-20 was reopened. In response to notice issued u/s.148 of the Act, the assessee filed return of income declaring therein the interest earned by it during the year. Thereafter, assessment was framed and the AO accepted the return of income filed by the assessee making no addition on other counts in the hands of the assessee.

3.

The assessee, however, filed appeal before the Ld. CIT(A) seeking deletion of the interest income returned to tax. The appeals however were belated for filing. The delay being 183 days in A.Y. 2018-19 and in A.Y. 2019-20. The assessee explained the reason for the delay being that it was only subsequently after passing of the assessment order that the assessee became aware that Courts in a number of decisions had held assessee being Co-operative Housing Society not liable to tax at all recognizing them as a mutual benefit society. The assessee became aware of the same only when it was told so by the Consultant and, therefore, it resulted delay in filing of appeal

ITA Nos.2170 to 2173/Ahd/2025 [Arav Co-operative Housing Society Ltd.] - 3 – before the Ld. CIT(A). The Ld. CIT(A), however, refused to condone the delay stating that no reasonable cause had been adduced by the assessee for the delay and delay was entirely on account of the fault of the assessee. In the meanwhile, the AO passed order u/s.270A of the Act levying penalty on account of interest income, which was initially not disclosed by the assessee, but, was subsequently disclosed only in the return filed in response to notice u/s.148 of the Act. The penalty so levied was confirmed by the Ld. CIT(A).

4.

Aggrieved by the orders of the Ld. CIT(A), the assessee has come up in appeal before me.

5.

In the quantum appeals in ITA Nos.2170 & 2172/Ahd/2025, the contention of the Ld. Counsel for the assessee was that the delay before the Ld. CIT(A) needed to be condoned and the assessee be heard. Ld. Counsel for the assessee pointed out that even the interest income disclosed by the assessee was not liable to tax and there were several decisions of the Jurisdictional High Court and the Jurisdictional Tribunal recognizing Co-operative Housing Society as entities for mutual benefit whose income were not liable to tax. In this regard, he drew my attention to the following decisions: i. CIT vs. Manekbaug Co-operative Housing Society Ltd., [2012] 22 taxmann.com 220 (Guj.) ii. ACIT vs. Manekbaug Co-op. Housing Society Ltd. in ITA No.2133/Ahd/2006 & CO No.262/Ahd/2006, dated 05.03.2010

ITA Nos.2170 to 2173/Ahd/2025 [Arav Co-operative Housing Society Ltd.] - 4 –

iii. Gulmarg Association & Anr. Vs. ITO, [2004] 90 TTJ (AHD) 184 iv. Sohamnagar Co-Operative Housing Society Ltd. vs. ITO, [2024] 165 TAXMANN.COM 508 (Ahmedbad-Trib.) v. Kalhar Co-op. Housing Society Limited vs. ITO in ITA No.802/Ahd/2023, dated 31.01.2024.

6.

He contended that there was reasonable cause for the delay in the filing of the appeal, since, the assessee was not aware of the proposition of law in its favour and becoming aware of the same, therefore, had filed appeals with delay before the Ld. CIT(A) for the exclusion of even interest income earned by the assessee for taxation purposes. My attention in this regard was drawn to the reasons for the delay reproduced in the order at para 4 of as under:

“The appellant is a co-operative housing society managing property of its members. It collected deposit from the members to meet maintenance expenses, deposited the same in the bank account, earned interest which was used for meeting maintenance expenses of the society. Appellant also collected funds from the members by way of contribution as and when there was short fall in meeting maintenance expenses from the interest eamed on deposits placed with the banks for specific purposes. Appellant was issued nolice u/s 148 for the reason that the appellant had not offered interest income in the return of income or when no return of income was filed when there was no surplus on which tax was to be paid. The appellant no knowledge about the decision of jurisdictional Tribunal in the case of Gumarg Association & Anr vs ITO [2004] 090 TTJ 0184 (Ahd) and judgment of the jurisdictional High Court in the case of CIT vs Manekbaug Co-op Housing Society Ltd [2012] 22 taxmann.com 220(Guj) as well as wherein issue had been decided long back. The appellant due ignorance of the aforesaid judgment decisions offered interest income for taxation in return fumished u/s 148 of the Act even though there was no surplus with the appellant which was liable to be taxed. The appellant, however, to avoid implications arising

ITA Nos.2170 to 2173/Ahd/2025 [Arav Co-operative Housing Society Ltd.] - 5 –

from the re-assessment proceedings disclosed interest earned on FDRS specifically placed in the banks to meet maintenance expenses of the society in return furnished u/s 148 of the Act and the same were laxed in assessment made u/s 147 by the Assessing Officer. The Assessing Officer though accepted the returned income but Initiated penalty proceedings u/s 270A of the Act despite appellant being assessed for the amount which was not liable to be assessed. The Assessing Officer passed the order u/s 147 on 23/02/2024 accepting the return of income filed by the appellant issuing demand notice u/s 156 for Rs. 23,78,692/- without giving credit of TDS and Self assessment Tax paid while filing return u/s 148. The appellant has filed application for rectification u/s 154 to the Assessing Officer for the unwarranted demand which has been accepted by the AO and nullify the demand. The appellant filed Form No. 68 within time with a view of drop proceedings uls 270A of the Act which was not accepted by the Assessing Officer and who proceeded to levy penalty u/s 270A of the Act. Under these circumstances, appellant had been left with no option but to prefer an appeal against the order passed u/s 147 as well as penalty order passed u/s 270A of the Act. For this purpose appellant is placing reliance on the following: 1. Circular No 14 (XL-35) dated 11/04/1955, which states that Assessing Officer should not take advantage of the ignorance of the assessee about the correct provisions of the Act. 2. Hon'ble Gujarat High Court in the case of Choksi Metal Refinery vs. CIT 107 ITR 63 (Guj) relying upon the above mentioned circular has held that ITOs should follow the aforesaid circular and to draw the attention of the assessee concerned to all the reliefs and refunds to which the assessee seems to be entitled on the facts of the case even though the assessee might have omitted to claim refund or relief in the return. 3. Identical view is also taken by Hon'ble Gujarat High Court in the case of S R Koshti vs CIT 276 ITR 165 (Guj) by observing in Para 20 of the judgement. 4. Similar view was observed in Hon'ble Supreme Court's decision in case of National Thermal Power Corporation Ltd vs. CIT [229 ITR 383). 5. In addition to the above, appellant further submits that law on the point is very well. settled. Article 265 of the Constitution of India specifically provides that "No tax shall be levied or collected except by authority of law".

ITA Nos.2170 to 2173/Ahd/2025 [Arav Co-operative Housing Society Ltd.] - 6 –

6.

5. The appellant is entitle to relief even at appellate stage when relief sought is denied by the Assessing Officer following judgements of Hon'ble Supreme Court in the case of Jute Corporation of India Ltd vs CIT 187 ITR 688 (SC) holding that if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made....' or 'that the ground became available on account of change of circumstances or law, does not curtail the ambit of the jurisdiction of the appellate authorities stipulated earlier. They do not restrict the new/additional grounds that may be taken by the assessee before the appellate authorities to those that were not available when the return was filed or even when the assessment order was made. The appellate authorities, therefore, have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the retum was filed. The first part viz.,'if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made...’ clearly relate to cases where the ground was available when the return was filed and the assessment order was made but 'could not have been raised’ at this stage. The words are 'could not have been raised’ and not ‘were not in existence’. Grounds which were not in existence when the return was filed orwhen the assessment order was made fall within the second category viz.. where ‘the ground became available on account of change of circumstances or law’. 7. Decision of jurisdictional Tribunal in the case of The Venus Parkland Co operative Housing Service Society Ltd vs ITO in ITA No. 1039/Ahd/2023 dated 07-08-2024.” 7. Having heard the Ld. Counsel for the assessee and on going through the order of the Ld. CIT(A), I am in agreement with the Ld. Counsel for the assessee that the assessee had adduced sufficient cause for the delay in the filing of the appeal before the Ld. CIT(A). The assessee fairly submitted that it was unaware of the position of law that interest income had been wrongly returned to tax by it and same was not liable to tax in its hand, which view was supported by the decisions of the Jurisdictional High Court and the Jurisdictional Tribunal in its case. As rightly pointed out

ITA Nos.2170 to 2173/Ahd/2025 [Arav Co-operative Housing Society Ltd.] - 7 –

by the Ld. Counsel for the assessee, the CBDT itself vide its Circular No. 14 (XL-35) dated 11/04/1955 has stated that the Assessing Officer should not take advantage of the ignorance of the assessee about the correct provisions of the Act and even as per Article 265 of the Constitution of India, no tax shall be levied or collected except by authority of law. In the interest of justice, therefore, I condone the delay of 183 days in the filing of both the quantum appeals before the Ld.CIT(A) and restore the matter back to the Ld. CIT(A) to decide the appeals after hearing the assessee. The penalty appeals also stand restored back, accordingly, to the Ld. CIT(A) to be decided alongwith quantum appeals.

8.

In effect, all appeals of the assessee are allowed for statistical purposes.

This Order pronounced on 19/05/2026 Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 19/05/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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