Mehta Sakarchand Kalidas Trust, Ahmedabad V. The ACIT CPC , Banglore

ITA 505/AHD/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4955 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 13-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUSHIL PRAJAPATI
• Keywords: Principle of natural justice; Maximum Marginal Rate; TDS
• Section: 143(1); 22

Judgement Text

ITA No.505/Ahd/2020 A.Y. 2017-18 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.505/Ahd/2020 Assessment Year: 2017-18 Mehta Sakarchand Kalidas Trust, vs. A.C.I.T., CPC 2-3-4, Silver oak Building, Bangalore. Mahalaxmi Char Rasta, Paldi, Ahmedabad – 380 007. [PAN – AACTM 7782 K] (Appellant) (Respondent) Appellant by : Shri Sushil Prajapati, AR Respondent by : Shri N.J. Vyas, Sr. D.R. Date of hearing : 30.08.2022 Date of pronouncement : 21.09.2022 O R D E R This appeal is filed by the assessee against the order dated 26.08.2020 passed by the CIT(A)-5, Ahmedabad for the Assessment Year 2017-18. 2. The assessee has raised the following grounds of appeal :- “1.1 The order passed U/s.250 passed on 26-8-2020 by CIT(A)-5, A'bad, upholding the tax liability determined at Rs.25,380/- on the total income of Rs.84,600/- by applying maximum marginal rate is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant. The Ld. CIT(A) has erred in completely overlooking the appellate orders of earlier years though identical issue was determined therein. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming the tax liability determined at Rs.25,380/- on the total income of Rs.84.600/- by applying maximum marginal rate though the proviso to sec 164(2) was not applicable and appellant Trust was liable to be assessed at normal rate on the total income exceeding amount not chargeable to tax, 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the tax liability determined at ITA No.505/Ahd/2020 A.Y. 2017-18 Page 2 of 4 Rs.25.380/- on the total income of Rs.84,600/- by applying maximum marginal rate. 2.3 That in the facts and circumstances of the case as well as in taw, the Ld. C1T(A) has failed to appreciate that when the proviso to sec 164(2) was not applicable to the appellant Trust and its total income did not exceed exemption limit of Rs.2,50.000/-, it was not liable to maximum marginal rate. It is, therefore, prayed that the tax liability at maximum marginal rate upheld by the CIT(A) may kindly be deleted.” 3. The assessee is a charitable Trust and is registered under Bombay Public Charitable Trust Act. The return of income of the Trust was filed on 30.03.2018 declaring total income of Rs.84,600/-. In the said return, credit was claimed for the TDS of Rs.8,000/-. On the said return of come, an intimation under Section 143(1) of the Income Tax Act, 1961 was issued thereby determining total income at Rs.84,600/-. However, the credit for the TDS of Rs.8,000 has not been allowed and tax payable including interest is determined at Rs.35,810/- (Tax Rs.26,141/- plus interest Rs.9,669). 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted that the assessee is a Charitable Trust and the return was processed under Section 143(1) on 15.03.2019 wherein the total income assessed at Rs.84,600/- but while computing tax liability tax was levied at maximum magical rate without allowing the basic tax exemption limit of Rs.2,50,000/- and tax liability of Rs.35,810/- was determined consisting of tax of Rs.26,141/- and interest of Rs.9,669/-. Even credit for TDS of Rs.8,000/- was not allowed. The assessee filed appeal before the CIT(A) wherein it was contended by the assessee that since there was no contravention of the provisions of Section 13(1), the proviso to Section 164(2) of the Act was not applicable so that tax cannot be imposed at maximum marginal rate. The Ld. AR submitted that the assessee relied upon the orders passed by the CIT(A) for Assessment Years 2013-14, 2014-15 & 2016-17. The Ld. AR also submitted that the adjustment made in the tax computation by charging tax at ITA No.505/Ahd/2020 A.Y. 2017-18 Page 3 of 4 maximum marginal rate is bad in law. However, the CIT(A) strangely enough held that as per column 22 of intimation the amount of Rs.84,600/- exceeded the exemption limit and as per column 29 normal rate was applied. The Ld. AR submitted that the particulars mentioned in the intimation are the one prescribed by the Department and the same are in standard format which cannot be changed by the assessee. Moreover, when the total income of the assessee Trust was only Rs.84,600/-, how it could be the sum exceeding exemption limit. The Ld. AR submitted that the CIT(A) has completely ignored appellate orders for earlier years filed with him. 6. The Ld. DR submitted that assessee is not a Charitable Trust and, therefore, the Assessing Officer has rightly applied the maximum marginal rate. 7. I have heard both the parties and perused all the relevant material available on record. It is pertinent to note that in the earlier Assessment Years i.e. 2013-14, 2014- 15 & 2016-17 the CIT(A) has directed the Assessing Officer to verify the submissions of the assessee and determine the tax at the appropriate rate instead of maximum marginal rate if admissible as per the provisions of Income Tax Act. In the present year also the CIT(A) has not given any reason as to why the maximum marginal rate has to be applied in assessee’s case and simplicitor directed the Assessing Officer to verify and grant credit for TDS of Rs.8,000/-. The submissions of the assessee have to be verified by the Assessing Officer after taking into account all the details. Therefore, I direct the Assessing Officer to verify the same and accordingly adjudicate the matter as per provisions of law. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. 8. In the result, appeal filed by the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on this 21 st day of September, 2022. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 21 st day of September, 2022 ITA No.505/Ahd/2020 A.Y. 2017-18 Page 4 of 4 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad