CANE DEVELOPMENT COUNCIL ANOOPSHAHR,BULANDSHAHR V. ITO, WARD-3(1), BULANDSHAHR

ITA 5756/DEL/2019

AI Insights

The Cane Development Council appealed against the order of the CIT(A), Ghaziabad, which had upheld the AO's assessment order. The AO had assessed the Council's income for AY 2015-16, including certain receipts as taxable income, which the Council contested. The main issues revolved around the validity of the assessment order, the taxability of disclosed gross receipts and bank interest, and the disallowance of deduction under Section 57. The Tribunal noted that similar issues had been previously addressed in other cases and had been ruled in favor of the assessee, leading to the decision to remit the matter back to the AO for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34435 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Other Referred Cases: Noida Authority vs CCIT, M/S The Totgar'S Co-Op. Sale vs Income-Tax Officer, CIT Vs. NS Committee
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Keywords: TDS; FORM 26AS
• Section: 143(3); 142(1); 143(2); 22; 13; 20

Judgement Text

"P a g e | 1 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.5756/Del/2019 (A.Y. 2015 -16) Cane Development Council, Anoopshahar, VIII- Anoopshahar, Post- Jahangirabad, Dist. Bulandshahr UP- 203394 Vs. Income Tax Officer, Ward 3(1), Bulandshahr, Dist. Bulandshahr Uttar Pradesh 203001 ̾थायी लेखा सं./जीआइआर सं./PAN/GIR No.: AABAC0483B Appellant .. Respondent Appellant by : None Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 17.02.2025 Date of Pronouncement 12.03.2025 O R D E R PER MADHUMITA ROY: (JM): This appeal filed by the assessee is directed against the order of the Ld. CIT(A), Ghaziabad, dated 19.03.2019 arising out of the P a g e | 2 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) order passed by the ITO, Ward 3(1), Bulandshahar dated 01.1.2017 passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as “Act”) on the following main issues:- 1. Validity of the assessment order making assessment in the ‘status’ other than that in which the return has been filed. 2. Charging disclosed gross receipts of Rs. 55,39,562/- of so called commission (which is included in the assessed taxable income of Rs. 5803701/-) as ‘income’ and that too, taxable. 3. Charging disclosed bank interest of Rs. 264139/- (which is included in the assessed taxable income of Rs. 5803701) as ‘income’ and that too, taxable. 4. Disallowance of deduction claimed under Section 57 at Rs. 5803701/- (relating to the disclosed so called commission and the bank interest).” 2. At the outset, it is noted that since the inception of filing of appeal before the Tribunal i.e. from 01.02.2022 till 17.02.2024 i.e. date of hearing of the appeal, none appeared on behalf of the assessee, despite issues of various notices for hearing. Therefore, we are disposing of this appeal exparte qua the assessee, after hearing the Ld. DR and perusing the records available with us alongwith the written submissions filed by the Ld. Representative of the Assessee. P a g e | 3 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) 3. Brief facts of the case are that assessee filed return of income electronically on 15.12.2015 declaring total income of Rs. NIL. The case was selected under Limited Scrutiny through CASS for the reason Large Deduction claimed under Section 57. Notice under Section 143(2) was issued on 12.08.2016 fixing the date for compliance on 31.08.2016 and was duly served. Further, the notice under Section 142(1) alongwith questionnaire was issued on 14.09.2016 in response whereof the Assessee’s AR submitted reply on behalf of the assessee from time to time and filed written submissions and supporting documents and details alognwith the explanations which were examined by the AO. AO noted that the expression ‘local authority’ means Panchayats and Municipalities as referred to in Article 243(d) and 243P(e) of the Constitution of India, Municipal Committees and District Boards, legally entitled to or entrusted by the Government with the control or management of a Municipal or a local fund and cantonment Boards as defined under Section 3 of the Cantonments Act, 1924. The Marketing Societies and Agricultural Authorities under other Central or State Legislation. Exemption under this clause would not be available to Port Trusts or the Cane Development Councils. AO further noted P a g e | 4 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) that the assessee has filed return on NIL income and observed that assessee has taken credit of TDS, which shows that assessee follows Mercantile System of accounting, but the assessee has not included receipts of Rs. 58,03,701/- in his income. Accordingly, AO completed the assessment under Section 143(3) at an income of Rs. 58,03,700/- against the returned income at Rs. NIL. Aggrieved with the above action of the AO, assessee preferred the appeal before the Ld. First Appellate Authority, who vide his impugned order dated 19.03.2019 dismissed the appeal of the assessee, against which the Assessee is in appeal before us. 4. Ld. DR relied upon the orders of the authorities below. 5. We have heard the Ld. DR and perused the records especially the orders of the authorities below and the written submissions filed by the assessee. The written submissions filed by the Assessee are reproduced hereunder:- P a g e | 5 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 6 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 7 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 8 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 9 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 10 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 11 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 12 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 13 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 14 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 15 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 16 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 17 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 18 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 19 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 20 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 21 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 22 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 23 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 24 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 25 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 26 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 27 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 28 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 29 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 30 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 31 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) P a g e | 32 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) 5.1 We can gainfully refer here the findings of the Ld. CIT(A) given in para no. 5.1 in his impugned order, which is reproduced hereunder:- “5.1 Ground nos. 1 to 15: The appellant has challenged the addition of Rs.58,03,701/- made by the AO on account of receipts as per Form 26AS not accounted for in its ITR. During the course of P a g e | 33 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) appellate proceedings, it has been argued that the appellant claimed the status of local authority. However, examination of facts reveal that the term local authority as defined us section 10(20) means panchayat, municipality, municipal committee, cantonment board only. The appellant fails to qualify the definition of bodies referred to in the definition of local body. Reliance is placed on the decision of Hon'ble Apex Court in the case of Noida Authority vs CCIT CIVIL APPEAL NOS.792-793 OF 2014 order dt. 02.07.2018. Further, it has been argued that the appellant declared commission of Rs. 55,39,562/- and bank account of Rs. 2,64,139/- and also claimed deduction u/s 57. The appellant placed reliance on section 6 of UP Sugar Cane Regulation (Supply and Purchase) Act 1953 to claim that it has been established for carrying out only specified development activities in the area assigned to it by Cane Commissioner UP on no profit and no loss basis. However, the appellant failed to substantiate how and why the receipts, on which TDS has been claimed, amounting to Rs. 58,03,701/- have not been Included while declaring income. The appellant's claim that entire commission received have been claimed as deduction us 57, without any evidence, is non maintainable. In so far as interest is concerned no reason for non chargeability of the same has been given by the appellant. Reliance is placed on the decision of Hon'ble Supreme Court in the case of M/S The Totgar'S Co-Op. Sale ... vs Income-Tax Officer, (SC) dt. 08.02.2010 in this regard. The appellant failed to draw factual similarity between facts and circumstances of the appellant's case and the case laws relied upon. Keeping in view above facts it is held that there is no aberration in the action of the AO in charging commission and interest, being income from other sources chargeable to tax especially, considering the fact that no audit has been carried out us 44AB. Thus, these grounds of appeal are dismissed.” 5.2 Having heard the Ld. DR and careful consideration of the written submission filed by the assessee it appears that the identical issue has already been considered by the Coordinate Bench in ITA No. 7133/Del/2018 for Assessment Year 2015-16 in P a g e | 34 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) the matter of ITO, Ward 1(4) Shamli Vs. M/s Cane Development Council Shivganj Mandi, Shamli and also in ITA No. 6922/Del/2019 in the case of Cane Development Council Agauta Vs. ITO, Ward-3(1) Bulandshahar and the issue has been held to be not falling in the category of income for the purpose of Section 2(24) of the Act and that being the case of the status of the assessee for local authority or otherwise was not the consequence. In fact, decision of identical issue in ITA No.1541/Del/2018 was challenged before the Hon’ble High Court of Allahabad by the Revenue which stood dismissed by and under its judgment dated 16.11.2018 in ITA No. 7512 (CIT Vs. NS Committee) upholding the decision of the Ld. Tribunal. Thus, having regard to this particular aspect of the matter as emanates from the written submissions placed on record by the assessee contents has not been able to be controverted by the Ld. DR in our considered opinion, the issue is, therefore, needs to be reexamined at the level of the AO in view of such order dated 27.09.2023 passed in ITA No. 7133/Del/2018 for Assessment Year 2015-16 order dated 25.04.2024 in ITA No. 6922/Del/2019 for Assessment Year 2015-16and also order passed by the Hon’ble Allahabad High Court dated 16.01.2018 afresh. Thus, the appeal is P a g e | 35 ITA No.5756/Del/2019 Cane Development Council (AY: 2015-16) disposed of by remitting the issue to the file of the Ld. AO with a direction upon him to decide the same in terms of the observation made hereinabove and to pass a reasoned order. Thus, assessee’s appeal is allowed for statistical purposes. 6. In the result, the Assessee’s appeal is allowed for statistical purposes. Order pronounced in the open court on 12.03.2025 Sd/- (M. Balaganesh) Sd/- (Madhumita Roy ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated12.03.2025 PS: Rohit Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "