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Facts
The assessee, an apartment owners association, filed its return declaring AOP/BOI status. The CPC processed the return under section 143(1) and treated the assessee as a Co-operative Society, raising a demand. A rectification application and subsequent appeal were rejected.
Held
The Tribunal held that changing the assessee's status from AOP/BOI to Co-operative Society during processing under section 143(1) was beyond the scope of permissible adjustments. Such a change requires a thorough examination, which is not permitted under section 143(1).
Key Issues
Whether the CPC can alter the assessee's status from AOP/BOI to Co-operative Society while processing the return under section 143(1) of the Income Tax Act.
Sections Cited
143(1), 154
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is directed against the order dated 21.07.2025 passed by the Add./Joint Commissioner of Income Tax (Appeal), Panaji [hereinafter referred to as ‘Addl. CIT(A)’] for the Assessment Year (A.Y.) 2022-23 in the proceeding u/s. 154 of the Income Tax Act.
The brief facts of the case are that the assessee had filed its return of income for A.Y. 2022-23 declaring income of Rs. 1,87,110/-. The return was processed u/s. 143(1) of the Act by the CPC on 16.03.2023 raising demand of Rs. 97,690/-. The demand was raised for the reason that the Kailash Appartment Flat Owners Association. Vs.ITO, AY- 2022-23 2 assessee had claimed its status as AOP/BOI and the total income being below the taxable limit, there was no tax liability. The CPC, while processing the return, had treated the status of the assessee as Co- operative Society and accordingly raised the demand of Rs. 97,690/-. The assessee had filed a rectification application u/s. 154 of the Act vis-à-vis intimation u/s. 143(1) of the Act, which was rejected vide order dated 12.05.2023.
Aggrieved with the rectification order passed by the CPC, the assessee had filed an appeal before the first appellate authority, which was decided by the learned Addl. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th
Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:
The CIT (Appeal has erred in law in treating status of the assessee as a co op society instead of AOP (Non Trading organization).
The CIT (Appeal) as erred in law in considering that the assessee has not filed the proof of registration of Non trading Association which is registered under Non-Trading Corporation Gujarat State, Ahmedabad. The said certificate has already ben submitted along with appeal memo to the learned CIT(Appeal).
The assessee has right to add amend alter any grounds of appeal before final hearing.
Shri Rajendra K Shah, the Ld. AR of the assessee submitted that the assessee has been filing the returns regularly under the status AOP/BOI which was duly accepted by the Department. Under the circumstances, the CPC was not correct in treating the status of the assessee as a Co. Op. society in the current year and raising the demand.
Kailash Appartment Flat Owners Association. Vs.ITO, AY- 2022-23 3 The Ld. AR submitted that the assessee is a non-profit owner’s association and not a Co. Op. Society and, therefore, the action of CPC in treating the assessee as Co. Op. Society was erroneous and contrary to law.
Per Contra, Smt. Ananya Kulshresth, the Ld. SR-DR, supported the order of Ld. Addl. CIT(A). She submitted that the assessee did not submit its registration certificate, governing bye-laws, memorandum of association or any other documentary proof to substantiate that it was a non-profit association falling outside the purview of a Co. Op. Society.
We have considered the rival submissions. As per provision of section 143(1) of the Act, the adjustments can be made only on account of arithmetical mistake, incorrect claim and the prima facie adjustments as stipulated therein. The assessee has been all along showing its status as AOP/BOI in the return of income. In view of this fact, the CPC was not correct in suo moto changing the status of the assessee from AOP/BOI to Co. Op. Society, particularly when the status of the assessee as AOP/BOI was accepted in other years. The adjustment as made by the CPC is thus found to be beyond the scope of provision of section 143(1) of the Act. The change in the status of assessee could have been subjected only after thorough examination of the issue, which was beyond the scope of adjustment u/s. 143(1) of the Act. It is not the case of the Revenue that the assessee had shown its status as Co. Op. Society in the earlier years but claimed its status as AOP/BOI in the current year. In view of this fact the adjustment as made by the CPC in the status of the assessee while
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 09/04/2026 at Ahmedabad.