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Facts
The assessee, an AOP, filed its return for AY 2021-22, computing tax with 15% surcharge. The CPC processed it, but levied surcharge at the Maximum Marginal Rate (MMR) of 37%, which was upheld by the CIT(A). The assessee challenged this levy, arguing surcharge should be based on slab rates, especially since members of the AOP had no taxable income.
Held
The Tribunal observed that critical evidence regarding the taxable income of the AOP's members was not considered by the lower authorities. Consequently, the Tribunal restored the disputed issue of surcharge levy to the file of the Assessing Officer for fresh adjudication on merits, with a directive to provide the assessee an adequate opportunity of hearing.
Key Issues
Whether surcharge on income of an AOP should be levied at the Maximum Marginal Rate (37%) or based on normal slab rates, particularly when its members have no taxable income.
Sections Cited
143(1), 250
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Income Tax Appellate Tribunal, PANAJI BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI G D PADMAHSHALIShri.Laxminarayan alias Balaji
सुनवाई क� तार�ख/Date of Hearing 26.06.2025 घोषणा क� तार�ख/Date of Pronouncement 30.06.2025 ORDER
PER PAVAN KUMAR GADALE, JM:
The appeal is filed by the assesse against the order of the ADDL/JCIT (A)-4 Kolkata passed u/sec 143(1) and u/sec 250 of the Act. The assesse has raised the grounds of appeal
challenging the order of the CIT(A) sustaining the levy of surcharge @37% by the Assessing Officer/CPC.
2. The brief facts of the case are that, the assesse is a AOP. The assesse has filed the return of income for A.Y.2021-12 on 11-03-2022 disclosing a total income of Rs.1,76,72,890/- and computed the tax on total income Shri.Laxminarayan alias Balaji Devasthan. @30% and surcharge computed@15% on tax payable. Subsequently the return of income was processed under section 143(1) of the Act by the CPC accepting the returned income but the Surcharge was computed at Maximum Marginal Rate (MMR)@37% on the total tax payable and determined demand payable of Rs.14,47,420/- vide order dated 2-11-2022.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts, and submissions but has confirmed the levy of surcharge @37% by the AO/CPC and dismissed the assesse appeal. Aggrieved by the order of the CIT(A), the assesse has filed an appeal before the Hon'ble Tribunal.
4. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the Assessing Officer/CPC on the applicability of surcharge rate overlooking the facts and submissions of the assesse in the proceedings. The Ld.AR mentioned that where the total income is chargeable to tax at Maximum Marginal Rate (MMR), the surcharge has to computed on the income tax in reference to slab rates prescribed in the finance act. The Ld.AR also submitted that the assessee has a good case on merits and shall substantiate with the material evidences and prayed for an opportunity to explain before Shri.Laxminarayan alias Balaji Devasthan. the lower authorities and relied on the judicial decisions and factual paper book. Per Contra, the Ld.DR supported the order of the CIT(A).
5. We heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.DR that the CIT(A) has erred in confirming the levy of surcharge @37% by the AO/CPC and sustaining the action of the A.O though the assesse has supported the submissions with the documentary evidences and explanations dealt at para5 of the order.Further the evidences in respect members of A.O.P, were uploaded and none of the members have taxable income in the A.Y.2021- 22. Evidences play a important role in decision making in the adjudicating proceedings which was not considered. The Ld.AR relied on the on the decision of the Honble Tribunal in dated 9.04.2025 on similar issue, where the total income is chargeable to tax at Maximum Marginal Rate (MMR), the surcharge has to computed on the income tax in reference to slab rates prescribed in the finance act. The return of income was processed u/sec 143(1) of the Act and details with respect to taxable income of members are not verified. Therefore we considering the facts, circumstances, evidences and to meet the ends of justice, for limited purpose restore the disputed issue to the file of the Assessing Officer to adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall
In the result, the appeal filed by the assesse is allowed for statistical purposes.