The Vijay Coop. L & C Society Ltd., Faridkot V. The Deputy Commissioner of Income tax, Ferozepur

ITA 120/ASR/2014

• Counselvise Citation: 12020914 RSA 2014
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-03-2015
• Assessment Year: misc
• Appeal Filed On: 26-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J K GUPTA
• Keywords: Rectification of order; Opportunity of being heard; Maximum Marginal Rate; Rule of consistency
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.120(ASR)/2014 ASSESSMENT YEAR:2007-08 PAN :AAAAT9329A THE VIJAY CO-OP. L & C SOCIETY LTD. VS. DEPUTY COMM R. OF INCOME TAX, FARIDKOT. CIRCLE-3, FEROZEPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.J.K.GUPTA, ADVOCATE RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING:09/03/2015 DATE OF PRONOUNCEMENT:17/03/2015 ORDER PER B.P.JAIN,AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), BATHINDA, DATED 16.12.2013 FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE RECTIFIC ATION ORDER PASSED BY THE AO U/S 154 OF THE INCOME TAX ACT, 196 1. 2. THAT THE PROVISIONS OF SECTION 167B(1) ARE NOT A PPLICABLE TO THE FACTS OF THE ASSESSEES CASE BEING A CO-OPERATIVE SOCIETY. SO, ITA NO.120(ASR)/2014 2 THE RECTIFICATION ORDER PASSED U/S 154 OF THE ACT I S LIABLE TO BE QUASHED. 3. THAT THE LD. AO HAS APPLIED THE RATE OF TAX AS A PPLICABLE TO THE CO-OP. SOCIETY IN THE PREVIOUS ASSESSMENT YEARS AND LATER ASSESSMENT YEARS OF THE ASSESSMENT YEAR UNDER APPEA L. SO, THE RECTIFICATION ORDER IS LIABLE TO BE QUASHED KEEPING IN VIEW THE RULE OF CONSISTENCY. 4. THAT THE DEPARTMENT IS CHARGING THE RATE OF INCO ME TAX AS APPLICABLE TO THE CASE OF CO-OPERATIVE SOCIETY INST EAD OF MAXIMUM MARGINAL RATE U/S 167B(1) IN OTHER CO-OPERA TIVE SOCIETIES OF THE AREA. SO THERE CAN NOT BE ANY DISC RIMINATION UNDER ARTILE14/16 OF THE CONSTITUTION OF INDIA, 195 0 AS THE ASSESSEE CO-OPERATIVE SOCIETY IS SIMILARLY PLACED. ACCORDINGLY, THE ORDER OF RECTIFICATION IS LIABLE TO BE QUASHED. 5. THAT ANY OTHER GROUND MAY KINDLY BE GRANTED TO T HE ASSESSEE TO WHOM IT IS FOUND ENTITLED AT THE TIME OF HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE AS ARISING FROM THE ORDER OF THE AO U/S 154 OF THE ACT, ARE REPRODUCED FOR THE SAKE OF CONVENIE NCE AS UNDER: THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY 207- 08 ELECTRONICALLY ON 26.09.2007. THE STATUS OF THE ASSESSEE HAS BEEN MENTIONED AS AOP IN THE RETURN. THE RETURN WAS PROCESSED U/S 143(1) ON 23.01.2009 IN THE STATUS OF CO-OP. SOCIETY AND IT WAS RECTIFIED U /S 154 OF THE ACT ON 29.01.2009. THEREAFTER, IT WAS NOTICED THAT WHILE COMPUTING THE TAX LIABILITY OF THE ASSESSEE, NORMAL RATE OF TAX WAS A PPLIED WHEREAS AS PER THE RETURN, SHARES OF THE MEMBERS OF THE AOP AR E NOT DETERMINABLE AS IN THE RELEVANT COLUMN, THE % OF SH ARES HAS BEEN MENTIONED AS 0.00% . SO AS THE SHARES OF THE MEMBE RS OF THE AOP ARE NOT DETERMINABLE, NOTICE U/S 154 WAS ISSUED TO THE ASSESSEE ON 09.09.2009 THROUGH SPEED POST, IN RESPONSE TO WHICH THE ASSESSEE FILED ITS REPLY ON 06.11.2009 VIDE WHICH HE FURNISHED A L IST SHOWING THE CONTRIBUTIONS MADE BY THE MEMBERS OF THE AOP. THE A SSESSEE WAS AGAIN GIVEN AN OPPORTUNITY VIDE THIS OFFICE LETTER NO. NIL DATED 24.11.2010 DULY SERVED ON THE ASSESSEE ON 25.11.200 9 IN RESPONSE TO WHICH THE ASSESSEE DID NOT SUBMIT ANY REPLY. A LETT ER WAS AGAIN ITA NO.120(ASR)/2014 3 WRITTEN ON 06.12.2010 TO THE ASSESSEE ON THE ISSUE BUT TILL DATE NO REPLY HAS BEEN RECEIVED. THEREFORE, IT IS PRESUMED THAT THE ASSESSEE HAS NOTHING TO SAY ANYTHING AND AS SUCH NECESSARY R ECTIFICATION IS MADE U/S 154 TAKING THE STATUS OF THE ASSESSEE AS A OP U/S 167B(1). 3. BEFORE THE LD. CIT(A), THE ASSESSEE AGITATED THA T DCIT, FEROZEPUR I.E. THE AO HAS WRONGLY APPLIED MAXIMUM RATE OF TAX INST EAD OF NORMAL RATE AND THE NOTICES DATED 09.09.2009, 24.11.2010 & 06.12.20 10 WERE FILED BEFORE THE AO AND PERCENTAGE OF SHARE OF MEMBERS WAS ALSO FIL ED WHICH WAS NOT CONSIDERED BY THE AO. 4. THE LD. CIT(A) DISMISSED THE GROUNDS OF THE ASSE SSEE IN HIS OBSERVATIONS AT PAGE 3, WHICH ARE REPRODUCED FOR TH E SAKE OF CONVENIENCE AS UNDER: FOR THE SAKE OF CONVENIENCE AND TO AVOID REPETITIO N OF FACTS, THE GROUNDS OF APPEAL AT S. NO.2,3,4 & 5 ARE TAKEN UP T OGETHER FOR ADJUDICATION. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME PERTAINING TO THE ASSESS MENT YEAR 2007-08 ON 26-09-2007 IN THE STATUS OF AOP. HOWEVER, THIS RETURN WAS PROCESSED U/S 143(1) ON 23-01-2009 IN THE STATUS OF CO-OP SOCIETY. THIS MISTAKE WAS ACCORDINGLY RECTIFIED VIDE ORDER U /S 154 ON 29-01- 2009. THEREAFTER, IT WAS NOTICED THAT WHILE COMPUTI NG THE TAX LIABILITY, NORMAL RATES OF TAX WERE APPLIED WHEREAS FOR CALCUL ATING THE TAX, MAXIMUM MARGINAL RATE SHOULD HAVE BEEN APPLIED BECA USE THE SHARES OF THE MEMBERS OF AOP WERE INDETERMINATE AS PER THE RELEVANT COLUMNS AVAILABLE IN THE RETURN OF INCOME. IN ORDER TO MAKE GOOD THIS MISTAKE, A NOTICE U/S 154 WAS ISSUED ON 09-09-2009 IN RESPONSE TO WHICH THE ASSESSEE FILED REPLY ON 06-11-2009 WHEREI N CONTRIBUTIONS MADE BY VARIOUS MEMBERS OF AOP WAS FURNISHED. ANOTH ER OPPORTUNITY WAS AFFORDED TO THE ASSESSEE VIDE LETTER DATED 24-1 1-2010 WHICH WAS NOT AVAILED OF BY THE ASSESSEE. STILL ANOTHER OPPOR TUNITY WAS AFFORDED VIDE LETTER DATED 06-12-2010 BUT THERE WAS NO COMPL IANCE ON THE PART OF THE ASSESSEE TILL THE PASSING OF THE ORDER UNDER CONSIDERATION. ITA NO.120(ASR)/2014 4 KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTANC ES OF THE CASE, THE AO INVOKED THE PROVISIONS OF SECTION 167B(1) OF THE ACT FOR WORKING OUT OF THE TAX LIABILITY BY PRESSING INTO SERVICE T HE MAXIMUM MARGINAL RATE AND THEREBY CREATED A DEMAND OF RS.80,075/-. DURING THE APPELLATE PROCEEDINGS BEFORE ME, IT HAS BEEN CONTENDED BY THE LD. A/R OF THE APPELLANT THAT IT W AS A CASE OF A CO- OPERATIVE SOCIETY AND THUS THE PROVISIONS OF SECTIO N 167B(1) COULD NOT BE PRESSED INTO SERVICE. HOWEVER, I AM NOT INCLINED TO ACCEPT THIS CONTENTION BECAUSE THE ASSESSEE ITSELF HAD FILED TH E RETURN IN THE STATUS OF AOP AND HAD DECLARED IN THE RELEVANT COLUMNS O F THE RETURN THAT THE SHARES OF MEMBERS OF THE AOP WERE INDETERMINATE . THE LD. A/R COULD NOT TELL WHETHER THE ASSESSEE HAS AGITATED OR NOT THE ORDER U/S 154 DATED 29-01-2009 WHERE UNDER THE STATUS OF AOP AS HAD BEEN SHOWN IN THE RETURN WAS TAKEN BY THE AO. THE ASSESS EE ALSO COULD NOT SHOW THAT ANY REPLIES TO OPPORTUNITIES AFFORDED VID E LETTERS DATED 24- 11-2010 AND 06-12-2010 HAD BEEN FURNISHED. KEEPING IN VIEW THE FACTS NARRATED ABOVE, THE ORDER U/S 154 DATED 21-12 -2010 IS UPHELD AND ALL THE AFORESAID GROUNDS OF APPEAL ARE DISMISS ED. 5. WE HAVE HEARD BOTH THE PARTIES, CONSIDERED THE R IVAL CONTENTIONS AND HAVE PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS OF THE CASE, AS OBSERVED FROM THE ORDERS OF THE AUTHORITIES BELOW A RE THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME IN THIS CASE AS AOP BUT THE PROCESSING U/S 143(1) DATED 23.01.2009 WAS MADE IN THE STATUS OF CO-OPERA TIVE SOCIETY. THE AO VIDE ORDER DATED 29.01.2009 U/S 154 OF THE ACT MAD E RECTIFICATION THAT THE ASSESSEE HAS FILED THE RETURN IN THE STATUS OF AOP AND SHARES OF THE MEMBERS ARE NOT DETERMINABLE AND THEREFORE, THE NORMAL RAT E OF TAX AS ORIGINALLY APPLIED CANNOT BE APPLIED. THEREFORE, THE ASSESSEE IS COVERED U/S 167B(1) OF THE ACT. AND MAXIMUM MARGIN RATE OF TAX WAS APPLIED , THOUGH THE ASSESSEE ITA NO.120(ASR)/2014 5 HAS SUBMITTED REPLY DATED 06.11.2009 SHOWING CONTR IBUTION MADE BY THE MEMBERS OF THE AOP IS A MATTER OF RECORD IN THE ORD ER U/S 154 OF THE ACT DATED 21.12.2010. THE ASSESSEE HAS SUBMITTED FROM T IME TO TIME THE REPLIES TO THE NOTICES DATED 09.09.2009, 24.11.2010 & 06.1 2.2010 THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND IS TAXABLE AT NORMAL TAX RATE AND IS NOT COVERED U/S 167B(1) OF THE ACT AS SOCIETY HAS BEEN TAXED AT NORMAL RATE IN THE PRECEDING YEARS AS WELL AS IN THE LATTER YEARS. BUT THE AO AS WELL AS THE LD. CIT(A) DID NOT CONSIDER THE EXPLANATION SO FORWARDE D BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. IT WAS ARGUED THAT THERE WAS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND HAS TO B E TAXED AT NORMAL RATE AS PER INCOME TAX LAW. THE LD. COUNSEL FOR THE ASSESS EE PRAYED TO REVERSE THE ORDER OF THE LD. CIT(A) AND FURTHER PRAYED TO ISSUE DIRECTION TO TAX THE ASSESSEE AT NORMAL RATES AS PER RETURN OF INCOME. W E ARE CONVINCED WITH THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE AND THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE A O TO VERIFY WHETHER THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND AT WHAT RATE THE ASSESSEE HAD BEEN TAXED EARLIER AS WELL AS IN THE FOLLOWING YEARS AND WHAT RATES THE ASSESSEE, IF IT IS A CO-OPERATIVE SOCIETY IS LIABLE TO TAX UNDER THE INCOME-TAX LAW. THE REPLIES DATED 09.09.2009, 24.11.2010 & 06.12.2010 S UBMITTED BY THE ASSESSEE SHOULD BE CONSIDERED AND DECIDE THE ISSUE DENOVO AFTER AFFORDING ITA NO.120(ASR)/2014 6 ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE AO SHOULD PASS A SPEAKING ORDER AFTER CONSIDERING THE SAID REPLY WHE THER THE ASSESSEE IS COVERED U/S 167B(1) OF THE ACT AND WHETHER THE ASSE SSEE HAS TO BE TAXED AT NORMAL OR MAXIMUM MARGIN RATE, KEEPING INTO CONSID ERATION THE CONSISTENCY AND DECIDE THE ISSUE WITHIN THE FRAME-WORK OF LAW. ACCORDINGLY, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.120(ASR)/2014 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH MARCH, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17TH MARCH, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:THE VIJAY CO-OP. L & C. SOCIETY LTD., FARIDKOT. 2. THE DCIT, CIRCLE-1, FEROZEPUR. 3. THE CIT(A), BATHINDA. 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.