THE BAR ASSOCIATION CITY CIVIL COURT HYDERABAD,HYDERABAD vs. ITO, WARD - 9(1), HYDERABAD

Succinctly stated, the AO observed that as the assessee society during the subject year had carried out substantial financial transactions, viz., (i) cash deposits of Rs.10,00,000/- or more in its savings bank account with State Bank of Hyderabad, Gunfoundry Branch: Rs.58,52,943/-; and (ii) time deposits exceeding Rs.2,00,000/- with State Bank of Hyderabad, City Civil Court Branch: Rs.1,16,10,663/- , but had not filed its return of income for the subject year, initiated proceedings under section 147 of the Act. Thereafter, the AO passed an order under section 148A(d) of the Act, dated 20/03/2023. Notice under section 148 of the Act, dated 23/03/2023 was issued to the assessee

The AO, on perusal of the details furnished by the assessee society and those gathered from the bank under section 133(6) of the Act, observed that it had during the subject year made cash deposits of Rs.1,16,10,663/-. As the assessee society had failed to come forth with any explanation regarding the source of the aforesaid investment aggregating to Rs.1,77,99,986/-, the AO called upon it to explain as to why the same may not be treated as having been sourced out of its unexplained money under section 69A of the Act. In reply, it was the claim of the assessee society that as the submission of return of income in response to notice under section 142(1) of the Act was disabled in its login credentials, it could not for the said reason furnish its return of income for the subject year. In response, the AO vide his letter, dated 20/02/2024 advised the assessee society to contact with e-filing portal,

The AO observed that the assessee society, despite having been issued notice under section 148 of the Act, dated 23/03/2023 had failed to file its return of income in compliance thereto. However, it was observed that the assessee society had though submitted before him, financial statements, cash books, copies of bank statement, but failed to place on record the computation of income despite specific direction. Also, the assessee society had filed before the AO its receipt and payment account for the subject year. The AO in absence of computation of income computed the income of the assessee as per the details available on his record at Rs.33,09,635/-. Accordingly, the AO based on his deliberations vide his order under section 147 r.w.s 144 r.w.s 144B of the Act, dated 08/03/2024 determined the income of the assessee at Rs.33,09,635/-.

Aggrieved, the assessee society carried the matter in appeal before the CIT(A). As the assessee society, despite having been afforded sufficient opportunity, had failed to participate in the appellate proceedings, the CIT(A) finding no infirmity in the well-reasoned speaking order passed by the AO upheld the same and dismissed the appeal.

Per contra, Shri Vamshi Krishna, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) relied upon the orders of the authorities below.

We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record.

Admittedly, it is a matter of fact discernible from the record that the income of the assessee society as computed by the AO at Rs.33,09,635/- had been subjected to tax as per the Maximum Marginal Rate (MMR) of 30%, i.e., Rs.9,92,892/-. Ostensibly, the AO while computing the tax liability in the case of the assessee society had treated it as an Association of Persons (AOP) wherein the individual