INDIAN SOCIETY FOR TECHNICAL EDUCATION,NEW DELHI vs. ADIT (E), NEW DELHI

This appeal by the assessee is directed against order dated 25/05/2016 passed by the Ld. Commissioner of Income-tax (Appeals)- 40(exemption) , New Delhi [in short the Ld. CIT(A)] for assessment year 2010-11 raising the grounds as under: 1. “Under the facts and circumstances of the case, ld. First Appellate Authority has grossly erred in affirming the action of ld. A.O. assuming jurisdiction U/S 154 of the Act, rectifying order passed U/S 143(3) of the Act wherein there was no mistake apparent from record, which is grossly injudicious, unwarranted, without jurisdiction, against the facts of the case and bad at law.

2. Under the facts and circumstances of the case, ld. First Appellate Authority has grossly erred in upholding the rectification order passed u/s 154 of the Act by the ld. A.O., ignoring the ratio of various judicial precedents including the ruling of Hon. Apex Court in the case of T.S. Balaram, ITO vs. Volkart Bros. [1971] 82 ITR 50 (SC), wherein it has been held that issue on which there may be conceivably two opinions cannot be a subject matter of rectification u/s 154 of the Act.

“4. I have carefully and critically examined the aforesaid submissions of the appellant on jurisdictional issue and merits of the controversy. I proceed to record my findings on the two fold issues raised before me. I have carefully considered the arguments of the arguments of Ld. AR, on deeper examination of extent issue I cannot persuade myself with the erudite arguments of Ld. AR. The assumption of jurisdiction u/s 154 and addition of life membership fees etc. is upheld on the basis of reason given to the impugned order. So, the grounds of appeal are jettisoned. So, appeal gets dismissed.”

3. The assessee is aggrieved with the above finding of the Ld. CIT(A) and hence before the Tribunal.

4. Before us the Ld. Counsel of the assessee filed a paperbook containing pages 1 to 139 and submitted that the Ld. CIT(A) has not examined the contention raised before him challenging the jurisdiction of the Assessing Officer in making addition under rectification order. He submitted that the assessee treated life membership and institutional membership fee as corpus fund in previous years and same has been duly accepted by the Department . He drawn our attention to the order passed under section 143 (3) of the Act for assessment year 2005-06 . The Ld. Counsel submitted that the assessee has been consistently following this treatment of fee received right from its inception in earlier assessment years and the Revenue has accepted the membership fee as not taxable. He also submitted that on the issue of the taxability of membership fee two views are available in judicial precedents and thus according to him, the addition in dispute cannot be made under the rectification order.

6. We have heard the rival submissions and perused the relevant material on record. We find that in the rectification order, the Assessing Officer has not mentioned as why the membership fee was held as taxable. Before the Ld. CIT(A), the assessee made detailed presentation, both challenging the action of the Assessing Officer of making addition u/s 154 of the Act, as well as on the merit of the addition. But the Ld. CIT(A) dismissed the appeal of the assessee without assigning any reason for confirming the addition in dispute. The order of the Ld. CIT(A) is not a speaking and reasoned order. The Ld. CIT(A) has not dealt the objections of the assessee on assumption of the jurisdiction u/s 154 of the Act. Accordingly, we feel it appropriate to restore the issue in dispute to the file of the Ld. CIT(A) for deciding afresh in accordance with law after considering the submission of the assessee and providing opportunity of being heard to both the parties. The ground of the appeal are accordingly allowed for statistical purposes. 7. In the result, the appeal of the assessee is allowed for statistical purposes. This decision was pronounced in the Open Court on 16th May, 2019.