INCOME TAX OFFICER-3(1), RAIPUR, RAIPUR V. CHHATTISGARH STATE AGRICULTURAL MARKETING BOARD, RAIPUR

ITA 518/RPR/2024

AI Insights

The case revolves around the Chhattisgarh State Agricultural Marketing Board, which claimed an exemption under section 10(26AAB) of the Income Tax Act for the assessment year 2014-15. Initially, the exemption was denied by the Central Processing Centre (CPC), Bangalore, due to the filing of the income tax return in the wrong form. The Board appealed to the Commissioner of Income Tax (Appeals), who allowed the exemption. The revenue, aggrieved by this decision, filed an appeal with the Income Tax Appellate Tribunal, which upheld the CIT(A)'s decision and directed the CPC to rectify the error.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 106818 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Other Referred Cases: Young Mens Welfare Society vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARANNUM VERMA
• Assessee Lawyers: R. B. DOSHI; ALLOWING
• Keywords: Set aside; Revised return; Period of limitation; Rectification of order; Bonafide mistake; Time period of passing order; Maximum Marginal Rate
• Section: 154; 10

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 518/RPR/2024 (िनधाŊरण वषŊ Assessment Year: 201415) Income Tax Officer-3(1), Aayakar Bhawan, Central Revenue Building, Civil Lines, Raipur-492001, Chhattisgarh V s Chhattisgarh State Agricultural Marketing Board, Beej Bhawan, Telibandha, Raipur-492001, C.G. PAN: AABTC0154C (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : Shri R. B. Doshi, CA राजˢ की ओर से /Revenue by : Smt. Tarannum Verma, Sr. DR सुनवाई की तारीख / Date of Hearing : 24.01.2025 घोषणा की तारीख/Date of Pronouncement : 31.01.2025 आदेश / O R D E R Per Arun Khodpia, AM: The present appeal is filed by the revenue against the order of Commissioner of Income Tax (Appeals), NFAC, Delhi, [in short “Ld. CIT(A)”], u/s 250 of the Income Tax Act, (in short “the Act”), for the AY 2014-15, dated 22.10.2024, which in turn arises from the order u/s 154 of the Act, passed by Central Processing Centre (CPC), Bangluru,(in short “Ld. AO”), dated 18.06.2020. 2 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board 2. The grounds of appeal raised by the revenue, reads as under: (1) Whether on facts and in the circumstances of the case, the ld. CIT(A) was justified in allowing the exemption of Rs.2,12,61,318/- claimed u/s 10(26AAB) of the Act which was disallowed by the CPC, Bangalore?\" (2) \"Whether on facts and in the circumstances of the case, the ld. CIT(A) was justified in allowing the exemption of Rs.2,12,61,318/- by ignoring the facts as brought on record by the CPC, Bangalore. (3) The order of the Id. CIT(A) is erroneous both in law and on facts. (4) Any other ground which may be adduced at the time of hearing. 3. The brief facts of the case, as described by the Ld. CIT(A) in this order are extracted hereunder for the sake of completeness of facts: 1. The appellant is assessed with ITO-3(2), Raipur< The appellant filed return of income declaring Nil income after claiming exemption of Rs.2,12,61,318/- u/s. 10(26AAB). The appellant is agricultural produce marketing board constituted under Chhattisgarh Krishi Upaj Mandi Adhiniyarn,,1972 with effect from 03.12.2000. The appellant is covered within the meaning of Agriculture Produce Market Committee referred in section 10(26AAB) and income of appellant is eligible for exemption 3 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board 2. Due to inadvertence, the appellant filed its return of income in Form no. ITR-7 instead of Form no. ITR-5. The return of income was processed by CPC, Bangalore on 24.12.2016 disallowing the exemption claimed by the appellant and assessing the income at Rs.2,12,61,318. The appellant filed rectification request on 04.11.2019 before CPC Bangalore. In the rectification order passed on 23.11.2019, the total income has been taken at Rs.2,12,61,318- and no exemption was allowed. 3. Thereafter, the appellant again filed rectification request on 04.01.2020 before CPC Bangalore. The appellant has also filed grievance in the portal of Income tax department on 16.01.2020 and which was resolved as under : \"Dear Taxpayer, processing of your e-filed return is in progress. Please wait for intimation u/s.143(1) which will be sent to your email id once the process is completed.\" On 24.01.2020 and 06.02.2020, when the appellant checked the status of rectification, there was no outstanding demand and pending actions in the Income tax portal. On 18.06.2020, the appellant received order u/s 154 by e-mail, but again no exemption was allowed vide rectification order dt. 18.06.2020. 4. Aggrieved with the aforesaid order dated 18.06.2020 u/s 154 passes by the CPC, wherein the rectification request to allow the exemption claimed u/s 10(26AAB) by the assessee board was rejected by the CPC, the assessee preferred an appeal before the Ld. CIT(A) wherein contentions of assessee 4 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board found to be acceptable and, therefore, the appeal of assessee is partly allowed with the following observations: 5. DECISION: 5.1 Ground no.1 is related to rejecting application filed u/s.154 for allowing exemption u/s.10(26AAB) was claimed by the appellant. The appellant is agricultural produce marketing board constituted under Chhattisgarh Krishi Mandi Upaj Adhiniyam, 1972 w.e.f. 03.12.2000. The appellant is covered within the meaning of Agriculture Produce Market Committee referred in section 10(26AAB} and income of appellant is eligible for exemption. 5.2 Due to inadvertence, the appellant filed its return of income in Form no. ITR- 7 instead of Form no. ITR-5. The return of income was processed by CPC, Bangalore on 24.12.2016 disallowing the exemption claimed by the appellant and assessing the income at Rs.2,12,61,318. The appellant filed rectification request on 04.11.2019 before CPC Bangalore. In the rectification order passed on 23.11.2019, the total income has been taken at Rs.2,12,61,318- and no exemption was allowed. 5.3 Thereafter, the appellant again filed rectification request on 04.01.2020 before CPC Bangalore. On 18.06.2020, the appellant received order u/s 154, but again no exemption was allowed vide rectification order dt. 18.06.2020. The present appeal is being filed against the order u/s.154 passed by Assistant Director of Income Tax, CPC. 5.4 It appears that the exemption was denied for the reason of filing ITR in form 7 instead of form 5. The Hon'ble ITAT B Bench Kolkata in the case of Young 5 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board Mens Welfare Society vide order I.T.A Nos.613 & 614/Kol/2022, has held as under:- \"5. Before us, the Id. AR of the assessee has submitted that the appeal filed by the assessee before the CIT(A) is required to be treated within the limitation period as the same was covered by the decision of the Hon'ble Supreme Court in Suomoto Writ Petition (C) No. 3 of 2020 dated 10.01.2022. The Id. Counsel for the assessee has further submitted that the assessee has filed rectification application which has been dismissed by the Assessing Officer in a mechanical manner. However, the claim of the assessee was, therefore, rejected by the CPC and the assessee was taxed at maximum marginal rate without giving deduction of the expenses. However, the assessee filed the M.A which was also rejected by the Assessing Officer. In view of the aforesaid action of the lower authorities without considering the claim of the assessee on merits was not justified. It has been held time and again that the Income Tax Authorities are not supposed to punish assessees' for their bona fide mistake. We, therefore, set aside the impugned orders of the lower authorities and 1restore the matter to the file of Assessing Officer with direction to examine the contentions raised by the assessee and tax the assessee at the rates as· applicable to the assessee considering the revised return filed by the assessee.\" 5.5 The case of the appellant is squarely covered by the above discussed decision of ITAT. Respectfully following the decision it is held that appellant is entitled for rectifying mistake by filing return in correct ITR 5. Here in the case of the appellant the exemption was denied for the sole reason of filing return in ITR 7 instead of ITR 5. Respectfully following the above discussed decision of Hon'ble ITAT, AO is directed to allow filing return in correct ITR 5 and allow exemption u/s.10(26AAB). This ground of the appeal is allowed. 6 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board 5.6 Ground no.2 is related to amend, alter or add any ground of appeal, since no such option has been exercised. This ground of the appeal is dismissed. 6. In the result, the appeal is treated as partly allowed. 5. As the relief is granted by the Ld. CIT(A) to the assessee by allowing exemption u/s 10(26AAB) claimed, aggrieved thereby the revenue assailed the impugned order by filling of the present appeal. 6. At the outset, Ld. Departmental Representative, Smt. Tarannum Verma (in short “Ld. Sr. DR”), placed her strong reliance on the rectification order by CPC u/s 154 of the Act and have submitted that the order of Ld. CIT(A) was not justified in allowing the exemption claimed u/s 10(26AAB) of the Act, which was disallowed by the CPC. 7. On the contrary, Shri. R. B. Doshi, CA, Authorized Representative (in short “Ld. AR”) on behalf of the assessee, to establish the eligibility of the assessee board for exemption u/s 10(26AAB) have submitted that the assessee is a “State Agricultural Marketing Board” set up under the Chhattisgarh Krishi Upaj Mandi Adhiniyam, 1972 for which a notification was issued on 23.12.2000, by order and in the name of Governor of Chhattisgarh, 7 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board copy of the same is placed before us at page no. 236-237. The same is extracted hereunder for the sake of reference and information: 8 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board 9 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board 8. Ld. AR further drew our attention to CBDT Circular 18/2017, dated 29.05.2017, the same is culled out hereunder: 10 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board 11 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board 12 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board 9. Referring to para 4 of the aforesaid circular by the CBDT, Ld. AR advanced his argument that as per the clause no. (xiii) of para 4 of the aforesaid circular “any agricultural produce marketing committee referred to in clause 26AAB of section 10 of the Income Tax Act, cannot be subjected to taxations according to the provisions of the Income Tax Act. As per aforesaid clause, the authorities or boards or bodies, by whatever name called, referred to in section 10 of the Income Tax Act, whose income is unconditionally exempt under that section and who are also statutorily not required to file return of income under the provisions of Income Tax Act, there would be no requirement for tax deduction at source, since their income any way is exempt under Income Tax Act.” 10. With such contention, Ld. AR submitted that the assessee board was not even require to file return of income under the provisions of Income Tax Act, as the same is covered u/s 10(26AAB) and according to the CBDT’s Circular No. 18/2017 (supra), its income is unconditionally exempt. 11. For a proper evaluation of the aforesaid contentions, the provisions of section 10(26AAB) are culled out as under: 13 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board “Section 10: In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- … … … (26AAB): Any income earned by the agricultural produce marketing committee for regulating the marketing of agricultural produce is exempt from tax.” 12. Based on aforesaid submissions, it was the prayer by Ld. AR that since the income of assessee board is unconditionally exempt as per CBDT Circular No. 18/2017 dated 29.05.2017, which is binding on the authorities of Income Tax Department, under such circumstances mere filing of return of income under wrong Form should not be the sole reasons for denying the exemption to the assessee board, who is eligible for exemption under the provisions of section 10(26AAB) of the Act. 13. We have considered the rival submissions, perused the material available on record and case laws referred to by the Ld. AR. Admittedly, there is no dispute that the assessee board i.e., “Chhattisgarh State Agricultural Marketing Board” is an authority or board covered under the provisions of section 10(26AAB) of the Act, however the exemption claimed by the assessee is denied by the CPC on account of assessee’s filing of return in Form No. ITR- 7 instead of Form No. ITR-5 for which the reasons stated by the Ld. AR was 14 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board that, the assessee board is having Alphabet T in their PAN No., the extant Income Tax Portal / system had not permitted the assessee to file the return in Form No. ITR-5. This was an inadvertent error on the part of assessee, which was very mechanically dealt with by the CPC and have disallowed the exemption without going through the merits of the claim of the assessee. On this issue, Ld. CIT(A) had rightly taken the support from the order of Coordinate Bench of ITAT, i.e., “B” Bench, Kolkata in the case of Young Mends Welfare Society in ITA No. 613 &614/Kol/2022, wherein it is categorically observed that the action of lower authorities in mechanical manner, without considering the claim of assessee on merits was not justified. It has been held time and again that the Income Tax Authority was not supposed to punish assessee for their Bonafide mistakes. 14. Further, we find support to the contention raised by the Ld. AR, from the CBDT’s Circular No. 18/2017 referred to (supra) that the assessee board’s income is unconditionally exempt, and the board is not statutorily liable to file the return of income. 15. In backdrop of aforesaid facts and circumstances, we do not find any infirmity in the order of Ld. CIT(A) in allowing the exemption claimed by the 15 ITA No. 518/RPR/2024 ITO-3(1), Raipur Vs Chhattisgarh State Agricultural Marketing Board assessee u/s 10(26AAB) of the Act, therefore, we do not see any reason to interfere with the said decision of the Ld. CIT(A). 16. Resultantly, the appeal filed by the revenue in absence of any contention contradicting the arguments of Ld. AR or the case laws or the directions under Circular No. 18/2017 of CBDT referred to supra, therefore the appeal of department in ITA No. 518/RPR/2024, being bereft of merits, stands dismissed. Order pronounced in the open court on 31/01/2025. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 31/01/2025 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- ITO-3(1), Raipur 2. ŮȑथŎ / The Respondent- Chhattisgarh State Agricultural Marketing Board 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाडŊ फाईल / Guard file. // सȑािपत Ůित True copy // "