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Income Tax Appellate Tribunal, “SMC-B” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee which is directed against the order of ld. CIT(A)-4, Bangalore dated 30.11.2017 for Assessment Year 2013-14.
The grounds raised
by the assessee are as under. “1. The order of the Hon’ble Commissioner of Income Tax (Appeals) is opposed to law and facts of the case.
2. The status of the appellant, a registered society, having been determined as an artificial, juridical person by the jurisdictional High Court or even otherwise and its income being below the taxable minimum of Rs.2,50,000/-, the levy of tax is illegal as per the provisions of the Finance Act read with the charging section, when acting u/s 143(1)(a).
3. Without prejudice and in the alternative the communication u/s 143(1) assailed under rectification could not have gone into the question of availability of exemption on grounds of mutuality and levy of tax and such debatable issue that too without hearing the assessee and hence the communication was unsustainable in law. 4. The communication having been made in the status of "any other AOP, BOI, Artificial Juridical" unknown to law is invalid and liable to be set aside. 5. The appellant craves for leave to add, to delete from or amend the grounds of appeal.”
3. The assessee has also raised some additional grounds which are as under. “1. The appellant is a registered society under the Karnataka Societies Registration Act for rendering services to the members of the society with respect to the residences in a small locality where they reside, While processing the return, the A.O. adopted the status of "Any other AOP, BOI, Artificial Juridical Person", not known to law. The resident members of the association being not conversant with the complexity of the I.T. Act, they did not know correct status was "Artificial Juridical Person" as such nor were they properly advised. The appellant was not aware of the nuances in the concept of an 'artificial juridical person' and the distinction between a society and such a person and also was ignorant of the subtleties complex provision of Income Tax law. Neither was it advised by its representatives about such matter in any of the proceedings. a) The appellant's income being below the taxable minimum of Rs.2,50,000/-, the levy of tax is illegal as per the provisions of the Finance Act read with the charging section, when acting u/s 143(1)(a). b) The status of the appellant, a registered society, is not in accordance with law, opposed to the law laid down in the State of Karnataka and therefore the assessment in such a status is invalid as also the demand made on the basis of an order in such a status. 2. Only when the order of the Commissioner of Income Tax (Appeals) was received and we were faced with a huge demand, we consulted advocates specialised in income tax law seeking their advice and came to know from them about the intricacy of the assessment and the decision of the Karnataka High Court written in 358 ITR 373 having a direct bearing on the facts of our case, inasmuch as the status of a society is that of an 'artificial juridical person' and other aspects and entrusted the matter to them to prosecute the case further. We were advised only then that even otherwise no tax was leviable having regard to our income. 3. The failure to adopt these grounds in the original was neither willful nor deliberate. It does not require any fresh investigation into
facts apart from looking into the material already on record. Principles for admission of additional grounds have been laid down repeatedly by Courts and we may refer only to a few of those decisions in 229 ITR 383 (SC), 187 ITR 688 (SC), 199 ITR 351 (Born FB), 193 ITR 624 (Ker). We overlooked this aspect of the issue and the same has now been brought to our knowledge by our counsels. Hence it is prayed that the above ground may be entertained and disposed of in accordance with law.”
In the course of hearing before me, it was submitted by ld. AR of assessee that the additional grounds raised by the assessee are legal grounds which should be admitted and in respect of his contention, reliance was placed on a judgement of Hon’ble Apex Court rendered in the case of CIT Vs. Sinhgad Technical Education Society as reported in 397 ITR 344 and also on an earlier judgement of Hon’ble Apex Court rendered in the case of National Thermal Power Co. Ltd. Vs. CIT as reported in 229 ITR 383. The ld. DR of revenue objected to the admission of additional grounds but respectfully following these two judgements of Hon’ble Apex Court cited by assessee, these additional grounds are admitted.
Regarding the additional grounds, it was submitted by ld. AR of assessee that ground no. 2 of the additional grounds is not pressed and accordingly the same is rejected as not pressed.
For the remaining grounds, both sides were heard. I find that in para 7 at page 7 of its order, it is held by CIT(A) that the assessee is at liberty to approach the AO for rectification after furnishing requisite details with respect to its shareholding, as the reasons for the same as per the impugned order is the indeterminate shareholdings, reflected in the assessee’s return of income filed as AOP.
Learned AR of assessee submitted that if this is directed to the AO that in case, the assessee approaches the AO for rectification u/s. 154, such application should considered and decided without being influenced by various observations and findings of CIT(A) in the impugned order, then the interest of justice will be met. The ld. DR of revenue also had no objection for giving such a direction to the AO. Hence I confirm the order of CIT(A) with this observation that in case, the assessee approaches the AO for rectification u/s. 154 as per law, then the AO should pass necessary order as per law without being influenced by various observations and findings of ld. CIT(A) in the impugned order because these observations and findings are without considering various facts and evidences which the assessee will make available before the AO in case the assessee approaches the AO for rectification u/s.
In view of this, specific grounds raised before the Tribunal do not require any specific adjudication.
In the result, the appeal filed by the assessee is dismissed subject to observations made in the order.
Order pronounced in the open court on the date mentioned on the caption page.