GALLERIA CONDOMINIUM ASSOCIATION, Gurgaon V. INCOME TAX OFFICER, WARD-1(5), GURGAON, GURUGRAM

ITA 1038/DEL/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8480 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Tangible material; Condonation of delay; Reassessment proceedings
• Section: 147; 250; 194J

Judgement Text

Page 1 of 10 IN THE INCOME TAX APPELLATE TRIBUNAL [DELHI BENCH “SMC”: NEW DELHI] BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AS S.M.C. (Through Video Conferencing) ITA. Nos. 1038, 1052 & 1053/Del/2021 (Assessment Years: 2009-10, 2010-11 & 2011-12) Galleria Condominium Association, Galleria Building, DLF, Phase–IV, DLF City, Gurgaon, Haryana – 122 002. PAN: AAAAG3018P Vs. Income Tax Officer, Ward :1 (5), Gurgaon. (Appellant) (Respondent) Assessee by : N o n e; Department by : Shri Sanjay Kumar, Sr.DR; Date of Hearing : 21/02/2022 Date of pronouncement : 21/02/2022 O R D E R PER AMIT SHUKLA, J. M. : The aforesaid appeals have been filed by the assessee against the impugned order dated 18.10.2017, passed by the ld. Commissioner of Income Tax (Appeals)–2, Gurgaon [hereinafter referred to as CIT (Appeals)] for the quantum of assessment passed under Section 147/143(3) of the Income Tax Act, 1961 (the Act) pertaining to the assessment years 2009-10, 2010-11 and 2011–12. Page 2 of 10 2. At the outset, it is noticed that all the three appeals filed by the assessee are barred by limitation. Appeal for the assessment year 2009-10 is delayed by 965 days. Appeal for assessment year 2010-11 is delayed by 791 days and appeal for assessment year 2011-12 is delayed by 792 days. From the record is seen that the assessee has filed the following petitions for condonation of delay for all the three years:- “ MOST REPECTFULLY SUBMITTED: 1. That the appellant is a mutual concern (Resident Welfare Organization). 2. That the appellant has preferred an appeal against the order u/s 250 of CIT(A)-1, Gurgaon dated 18.10.2017. 3. That the appellant have stated the facts of the case and the grounds arising there from in the accompanying appeal Form 36 and the same may be treated as part and parcel of this application. 4. That the assessee could not prefer the appeal before the honorable Bench of the Income Tax Tribunal, New Delhi, within stipulated time period due to unavoidable circumstances which are stated as below. (i) That one of the main reason for delay in filing of appeal before the tribunal, Gurgaon, is fixation of responsibility amongst the management of the appellant due to frequent change of governing body of Galleria Condominium Association. (ii) That our association landed into severe trouble when the managing body of that time failed to hand over the records and documents related to the affairs of the association. Despite all the efforts and correspondences by association, the members did not respond. Finally, on 28.05.2019 a complaint with Economic Offence Wing was also filed to resolve the matter Page 3 of 10 which is attached herewith. (iii) That our earlier consultant had refused to take up our case due to which assessment proceedings could not be filed on time. (iv) That owing to non-cooperation from the previous counsel, the appellant had to make an application on 09.12.2020 to the Income Tax Department for getting the Certified Copied of the Order passed by the respondent for Assessment Year 2009-10 to complete the appeal filling application before the Hon’ble bench ITAT New Delhi. (v) That we filed a declaration undertaking under section 4(5) of Direct Tax Vivad se Vishwas Act 2020 (3 of 2020), bearing Acknowledgement number 962998601301220 on 30.12.2020, in which our application got rejected. (vi) After that second wave of Covid-19 Pandemic lockdown was initiated in country due to that there is more delay in filing the ITAT Appeal. 5. The due to the above mentioned reasons a delay has occurred in challenging the order passed by CIT (A)-1, Gurgaon u/s 250 dated 18/10/2017 6. That the said delay which has occurred is purely technical, Unintentional and unavoidable in nature. PRAYER: It is therefore most respectfully prayed that the Hon’ble Bench on scrutinizing facts and circumstances in the accompanying application attributing delay may please construe facts and circumstances as "sufficient cause" for condoning the delay. The facts and circumstances elucidated in the accompanying application involves the question of "substantial justice", where gross delay, deserves to be condoned in the overall interest of justice. On the other hand if condoning the delay being denied, Page 4 of 10 it would seriously undermine the cause of justice, resulting into miscarriage of justice for the appellant. “ 3. Along with the petitions, a sworn affidavit dated 2.09.2021 of the President, Galleria Condominium Association and various other documents have been filed showing that there was dispute going on with the management due to frequent change of governing body and there were complaints against Board of Directors filed with the DCP (Economic Offences Wing). 4. After considering the aforesaid petitions which were duly supported by sworn affidavit and appended documents, we find that the delay in the filing of appeals was due to various disputes between the erstwhile management and the appellant Association and the orders passed by the ld. CIT (Appeals) were not made available so as to file the appeals and accordingly fresh application was made on 9.10.2020 for getting the certified copies of the orders passed by the ld. CIT (Appeals) and thereafter the appeals have been filed before the Tribunal. In these circumstances as detailed above, we find that there was sufficient cause in filing the appeals belatedly and there was no intention not to pursue legal remedy. Accordingly, the delay in filing the appeals in all the three years is condoned. 5. The facts and issue raised in all the three appeals are arising out of identical set of facts, therefore, common order is passed in all the three appeals. Page 5 of 10 6. None appeared on behalf of the assessee. Accordingly, the appeals are decided ex-parte after hearing the ld. Departmental Representative and considering the material available on record. In all the three years the common grounds have been raised (except for the variation in the figures of estimation) and, therefore, for the sake of ready reference the grounds for assessment year 2009-10 are reproduced hereunder: 1. That the assessment order passed is illegal, invalid and void. 2. That the reasons recorded u/s 147 of the I.T. Act,1961 by the Ld. A.O. were merely based on the suspicion and without any tangible material so as to suggest any escapement of income. Hence the reassessment proceedings are liable to be quashed. 3. Whether the Ld. AO justified in disallowing the claim of Interest income on the basis of concept of mutuality of Rs. 2,91,155/- under section 80P(2)(d) of the Income Tax Act, 1961. As interest income is disbursed to members who had contributed to it. 4. Further as per verdict of Bangalore Club Vs. Commissioner of Income Tax, Interest income is not taxable as concept of mutuality has been extended to define groups of people who contribute to a common fund, controlled by the group, for a common benefit. Any amount surplus to that needed to pursue the common purpose is said to be simply an increase of the common fund and as such neither considered income nor taxable. 5. That the Ld. Assessing Officer is not justified in computing the additional income of Rs. 7,56,370/- as house property, as amount received by AOP is for maintenance charges and common charges which is further paid by AOP for common expenses and is not chargeable on the basis of concept of mutuality. Page 6 of 10 6. That the assessment order is void and invalid in law as Assessing Officer not take effect of Tax deducted at source under Section1941, 194A, 194J and 194C, amount Rs. 3,90,843/- as per computation, which is attached as Annexure-B and 26AS which is attached as Annexure-C. 7. That the assessment order is void and invalid in law as Assessing Officer not take effect of self-assessment tax paid u/s 140 as per computation attached. 8. That the appellant reserves the right to amend, delete, add, substitute, modify or alter any one or more of the grounds of appeal at the time of hearing. “ 7. From the perusal of the assessment order, it is seen that no return was filed by the assessee in any of the years and proceedings under Section 147/148 of the Act have been issued on 29.03.2016 though the reasons have not been incorporated in the assessment order. However, summary of such reasons are as under:- “ It has come to notice from 26AS that:  The assessee has earned interest income of Rs.2,91,155/- from Axis Bank Limited during the year under consideration.  The assessee has earned rental income from the following parties:- (i) DLF Cable Network Rs. 44,944 (ii) DEN Digital Cable Network Pvt. Ltd.: Rs.4,94,384 (iii) Out of Home Media (India) Pvt. Ltd. Rs.1,71,600 (iv) Out of Home India Pvt. Ltd. Rs.3,69,600 Rs.10,80,528 Page 7 of 10  The assessee has earned Professional fee amounting to Rs.5,727/- from M/s Access Mobile India Pvt. Ltd. During the year.  The income earned from interest, rental and professional fees by the assessee is taxable income, keeping in view the decision of Hon’ble Supreme Court in the case of Bangalore Club. The assessee has not offered the income from bank interest, rental income and professional fees for taxation. “ 8. The ld. Assessing Officer noted that assessee had shown interest income of Rs.2,91,155/- in the assessment year 2009-10; Rs1,10,476/- in assessment year 2010-11 and Rs.2,92,089/- in assessment year 2011-12. Similarly, income from house property has been earned of Rs.7,56,370/- in assessment year 2009-10; Rs.5,92,715/- in assessment year 2010-11 and Rs.6,70,010/- in assessment year 2011-12. Similarly, there was marginal professional fee earned by the assessee of Rs.5,727/- in assessment year 2009-10; and Rs.33,633/- in assessment year 2010-11 and Rs.49,411/- in assessment year 2011-12, received from M/s. Access Mobile India Pvt. Ltd. and Cimigo India Pvt Ltd. and also brokerage and commission of Rs.5,000/- in all the three years. It appears that before the Assessing Officer, assessee had agreed that it is not covered by Section 80P(2)(d) of the Act. However, it has claimed the principal of mutuality as assessee is a resident welfare association. The ld. Assessing Officer has taxed the interest income from the deposit from the bank and stated that it is not covered under principal of mutuality following the judgement of the Hon’ble Supreme Court in the case of Bangalore Club Vs. Commissioner Page 8 of 10 of Income Tax (2013) 350 ITR 509 (SC) and also has computed income from house property under Section 23 and also taxed the professional fee as business income. 9. The ld. CIT (Appeals) in its consolidated order has noted that assessee has not pressed the grounds relating to taxing of income under the house property, interest income and income from professional charges, albeit had requested to allow the proportionate expenses against any Income charged to tax. However, the ld. CIT (Appeals) held that income of the house property was computed under Section 24 of the Act and, therefore, no further deduction can be allowed and in so far as bank interest hardly any expenditure has been made. He held that, in the absence of other details of expenditure, the expenses cannot be allowed. Similar submissions were made for the other two years. 10. From the perusal of both the orders, we are unable to appreciate the facts of the case nor there is any proper explanation or reply filed by the assessee. Before the Ld. CIT(A) it appears that substantive grounds were not pressed but now in the grounds of appeal assessee has challenged not only the validity of re-opening, but also contending that principle of mutuality is applicable in the case of the assessee and deduction of common expenses incurred from the rental income received from house property has not been provided and also the fact that tax deducted at source has not been given due credit of. It appears that due to non-cooperation by the erstwhile management of the association and internal disputes the Page 9 of 10 case of the assessee was not represented well either before the Assessing Officer or before the CIT (Appeals). Even the orders of the ld. CIT (Appeals) and the Assessing Officer are very cryptic without high-lighting the facts of the case as to why the principle of mutuality is not applicable or why certain expenses incurred by the assessee cannot be allowed which has been raised before us in the grounds of appeal. Before the ld. CIT (Appeals) the assessee has not pressed the grounds whereas before us same grounds have been challenged. Looking to the entirety of facts and circumstances that that assessee could not represent the case, therefore, in the interest of justice, we feel that the grounds raised in all the three years are remanded back to the file of the Assessing Officer to make fresh assessment, after hearing and giving due opportunity to the assessee and assessee should also substantiate its case before the Assessing Officer. 11. In the result, all the appeals filed by the assessee are remanded back to the file of the Assessing Officer for fresh assessment. Consequently, the appeals are allowed, for statistical purposes. Order pronounced in the open court on : 21/02/2022. Sd/- ( AMIT SHUKLA ) JUDICIAL MEMBER Dated : 21/02/2022. Page 10 of 10 *MEHTA* Copy forwarded to 1. Appellant; 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, New Delhi Date of dictation 21.02.2022 Date on which the typed draft is placed before the dictating member 21.02.2022 Date on which the typed draft is placed before the other member 21.02.2022 Date on which the approved draft comes to the Sr. PS/ PS 21.02.2022 Date on which the fair order is placed before the dictating member for pronouncement 21.02.2022 Date on which the fair order comes back to the Sr. PS/ PS 21.02.2022 Date on which the final order is uploaded on the website of ITAT 21.02.2022 date on which the file goes to the Bench Clerk 21.02.2022 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the order