Surat Young Muslim Graduates Association, Surat V. The Dy.CIT., Circle-2,Exemp., Ahmedabad

ITA 920/AHD/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6591 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-06-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 12-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice; Revised return; Set aside
• Section: 154

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद । ।। । IN THE INCOME TAX APPELLATE TRIBUNAL “ B ” BENCH, AHMEDABAD ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTNAT MEMBER ITA No.920/Ahd/2023 Assessment Year : 2018-19 Surat Young Muslim Graduates Association Sagrampura Nr.Kshetrapal Mandir 395002 (Gujarat) Vs The Dy.CIT Circle-2 (Exempt.) Ahmedabad PAN: AABTS 3221 Q / (Appellant) / (Respondent) Assessee by : Shri Esmayeel Saherwala, AR Revenue by : Shri Sudhendu Das, CIT-DR /Date of Hearing : 03/06/2024 /Date of Pronouncement: 10/06/2024 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER Present appeal by the Assessee is directed against the order of the Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre, Delhi (NFAC) (hereinafter referred as “the Ld.CIT(A)”), dated 06-10-2023, against the order of CPC Bangalore u/s.154 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) in relation to the Assessment Year (AY)2018-19. ITA No.920/Ahd/2023 Surat Young Muslim Graduates Association vs. DCIT Asst. Year : 2018-19 2 Facts of the case: 2. The brief facts of the case are that the assessee filed its return of income for the AY 2018-19 and claimed exemption under section 10(23C)(vi) of the Act, 1961. However, due to a clerical error, the income was disclosed under the column for “Income from Other Sources” instead of the appropriate section in the return of income in form ITR 7. 2.1. The CPC processed the return of income u/s.143(1) of the Act disallowing the exemption u/s.10(23C)(vi) of the Act. The assessee filed rectification application u/s.154 of the Act with CPC and CPC processed the same without taking into consideration the reason for which application was made and passed an order under section 154 of the Act disallowing the exemption claimed by the assessee, without providing an opportunity of being heard to the assessee. 3. Aggrieved by the order of CPC, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) dismissed the appeal without examining the merits of the case, focusing solely on procedural aspects. 4. The assessee is now in appeal before us with following grounds: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), NFAC has erred in concluding that the appellant ought to have corrected his return instead of filing rectification application before or filing appeal before CIT (A) on rectification order. The LD.CIT(A), NFAC has overlooked the legal provisions, judicial pronouncements and technical procedure for eligibility and availability for filing revised return and rectification application. ITA No.920/Ahd/2023 Surat Young Muslim Graduates Association vs. DCIT Asst. Year : 2018-19 3 2. On the facts and in the circumstances of the case and in law, is Ld. CIT(A), NFAC justified in ignoring the fact that whether appellant is actually holding valid exemption vide Notification No.SRT/CCIT/ITO/OSD/10(23c)(vi)/009/03-04 Dated 30/04/2007 for AY.2018-19. read with CIRCULAR NO. 7/2010 [F. NO. 197/21/2010-ITA-1], DATED 27-10-2010 and eligible for exemption U/s.10(23C)(vi) of Rs. 63459317/- from its Gross Income for A.Y.2018-19? 3. Without prejudice to anything contained in above grounds, On the facts and in the circumstances of the case and in law, the Ld. CIT(A), NFAC has erred in concluding that the original return filed by the appellant was a belated return. Ld. CIT(A), NFAC has ignored the extension of due dates by Ld. CBDT for A.Y.2018- 19. 4. The Appellant reserves the right to add, amend, replace or delete any grounds of Appeal before conclusion of the appeal. 5. (5) The Appellant prays to quash the order of Ld CIT(A), NFAC and allow the eligibility of application for rectification U/s.154 filed by the Appellant.” On the grounds of appeal: 5. The Ld.Authorised Representative (AR) for the assessee, contended that the Ld.CIT(A) erred in not adjudicating the merits of the case and that the order was passed by the CPC under section 154 of the Act overlooking the legal provisions and technical procedure which was required to be followed by the assessee. The Ld.AR also pointed out the mistake which was committed by the assessee at the time of filing the return of income. 6. We have heard the rival submissions and perused the material available on record. It is evident that the exemption claimed by the assessee under section 10(23C)(vi) of the Act was disallowed due to a clerical error in the return of income. ITA No.920/Ahd/2023 Surat Young Muslim Graduates Association vs. DCIT Asst. Year : 2018-19 4 Further, the order under section 154 of the Act was passed by the CPC without granting the assessee an opportunity of being heard, which is a violation of the principles of natural justice. 6.1. The Ld.CIT(A) in his order has commented on the procedural part of the processing of the return by CPC which we reproduce here – “11. ITR forms from 1 to 7 have been prescribed for various users and instructions are also given by CBDT to guide the assessees for filing their tax returns. It is being provided to facilitate the assessees to file a correct return and to assist CPC to process crores of returns in a systematic manner. It is an automated machine- driven system and the person filing the return has to follow those instructions scrupulously. The appellant cannot expect CPC to grant relief or exemption or deduction, even though the appellant themselves offered income in the return as income from other sources. In the present case, the appellant ought to have corrected his return instead of filing rectification application before CPC or filing appeal before CIT(A) on that rectification order referred above.” 7. Expressing our concern about the way, the Ld.CIT(A) at NFAC decides the issue being first appellate authority, we would like to underline that it is the settled legal proposition that the powers of Ld.CIT(A) are co-terminus with that of the Assessing Officer. Therefore, Ld.CIT(A) can decide the issue on merit rather than suggesting remedial action. 7.1. In view of the above, we are of the opinion that the Ld.CIT(A) should have adjudicated the appeal on its merits. Therefore, we set aside the order of the Ld.CIT(A) and restore the matter back to the file of the Ld.CIT(A) for fresh adjudication. The Ld.CIT(A) is directed to verify the exemption claimed by the assessee under section 10(23C)(vi) of the Act and to grant appropriate relief if the claim is found to be correct. The Ld.CIT(A) is also ITA No.920/Ahd/2023 Surat Young Muslim Graduates Association vs. DCIT Asst. Year : 2018-19 5 directed to ensure that the assessee is provided with an adequate opportunity of being heard before passing the order. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 10 June, 2024 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, Dated 1-/06/2024 . ी. य , . . ./T.C. NAIR, Sr. PS ! "# /Copy of the Order forwarded to : 1. "!ी $% / The Appellant 2. &य$% / The Respondent. 3. '(')* य य + / Concerned CIT 4. य य + )"!ी (/ The CIT(A)- (NFAC) 5. . /ीय )* , य "!ी य ")* , ज /DR,ITAT, Ahmedabad, 6. / 12 3 /Guard file. / BY ORDER, &य ! //True Copy// ह य !'जी (Asstt. Registrar) य "!ी य ")* , ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 05.06.2024 2. Date on which the typed draft is placed before the Dictating Member. : 05.06.2024 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 10.6.’24 7. Date on which the file goes to the Bench Clerk. : 10.6.’24 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : ITA No.920/Ahd/2023 Surat Young Muslim Graduates Association vs. DCIT Asst. Year : 2018-19 6