RIVER HEIGHTS PHASE-1 ASSOCIATION OF APARTMENT OWNER,GHAZIABAD vs. ITO, WARD - 2(2)(2), GHAZIABAD

PDF · subscribers
ITA 2801/DEL/2023Status: DisposedITAT Delhi17 January 2024AY 2017-18Bench: the Ld. AO which enabled the Ld. AO to add the entire cash River Heights Phase-1 Association of Apartment Owner vs. ITO4 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee's income, collected as maintenance charges from members and used for their benefit, is exempt on the principle of mutuality. Therefore, the additions made by the AO were inappropriate.

What were the facts?

The assessee, a Residential Welfare Association, received cash deposits during demonetization and other credit entries in its bank account. The AO made additions based on these deposits, and the CIT(A) confirmed the AO's order.

What were the issues?

Whether the income of a Residential Welfare Association collected from its members for maintenance is taxable or exempt under the principle of mutuality. Whether the AO's additions were justified without considering the mutuality principle.

Which sections of the Income-tax Act were involved?

Section 144,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’: NEW DELHI

Hearing: 17/01/2024Pronounced: 17/01/2024

ORDER This appeal of the Assessee arises out of the order of the

1.

Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘Ld. CIT(A)’] in DIN & Order No. ITBA/NFAC/S/250/2023-

24/105495345(1) dated 08/08/2023 against the order passed by Income Tax Officer, Ward-2(2)(2), Ghaziabad (hereinafter referred to as the ‘Ld. AO’) u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 18/12/2019. Page 1 of 4 River Heights Phase-1 Association of Apartment Owner vs. ITO 2. The assessee has challenged the addition made on account of cash deposit of Rs.20,82,000/- in the bank account during the demonetization period and addition made on account of other credit entries in the bank account @ 8% thereon.

3.

I have heard the rival submissions and perused the materials available on record. The assessee is a Residential Welfare Association (RWA). The assessee collects maintenance charges from the flat owners and utilizes the same for the purposes of maintenance of the flats through its association. Since, the amounts received are from the members and services are in turn rendered also to the members, income earned by the association would be exempt on the principle of ‘Mutuality’. There was no taxable income for the assessee and, accordingly, no return of income was filed voluntarily by the assessee for the year under consideration. The Ld. AO stated that notices u/s 142(1) of the Act were issued on two occasions as mentioned in page-2 of the assessment order electronically and the assessee claimed that those notices were not received by them. Hence, no compliance was made before the Ld. AO which enabled the Ld. AO to add the entire cash River Heights Phase-1 Association of Apartment Owner vs. ITO deposits made during the demonetization period in the bank account of the assessee in the sum of Rs.20,82,000/-.

4.

Apart from this, in respect of other credit entries, the Ld. AO added the estimated profit at 8% and brought to tax the same. No appearance was made by the assessee before the Ld. CIT(A) which led the Ld. CIT(A) to confirm the order of the Ld. AO.

5. Considering the fact that assessee is a Resident Welfare Association where its income is exempt on the principle of ‘Mutuality’, I deem it fit and appropriate to restore the entire appeal qua the issues raised before us, to the file of Ld. AO for denovo adjudication in accordance with law. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.

5.

In the result, the appeal filed by the Assessee is allowed for statistical purposes.

Order pronounced in the open court on 17th January, 2024.

More judgments on Section 142(1)

All 17,244 judgments and leading authorities on Section 142(1) →

Recent GST High Court judgments

Search GST case law →