SAMITI TALAJA KHETI UTPANNA BAZA UTPANNA BAZA,BHAVNAGAR V. ITO (EXEMP), BHAVNAGAR, BHAVNAGAR

ITA 1292/AHD/2024

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The case involves Samiti Talaja Kheti Utpanna Bazar Utpanna Baza, the appellant, contesting the disallowance of a deduction claimed under section 11 of the Income Tax Act, 1961, by the CPC during the processing of their return for the Assessment Year 2017-18. The assessee, a Notified Agricultural Product Market Committee and registered under section 12AA, argued that their income, which was exempt under section 10(26AAB), was wrongly subjected to disallowance. The CIT(A) dismissed the initial appeal, leading to this second appeal before the Income Tax Appellate Tribunal. The Tribunal found merit in the assessee's arguments and set aside the matter for re-evaluation by the Jurisdictional AO.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 25318 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 22-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 29-06-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: SARJU MEHTA
• Keywords: Set aside; TDS; Rectification of order; Application of stay
• Section: 154; 11; 13

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1292/Ahd/2024 & Stay Application No. 13/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year : 2017-18) Samiti Talaja Kheti Utpanna Baza Utpanna Baza 10, Khetiwadi Utpanna Bazar Samiti, Palitana Chokdi Road, Market Yard, Bhavanagar, Gujarat - 364140 बनाम/ Vs. ITO(Exemption) Bhavnagar èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAAJS1591A (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Sarju Mehta, A.R. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Rignesh Das, Sr. DR Date of Hearing 22/10/2024 Date of Pronouncement 05/11/2024 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short ‘the CIT(A)’), dated 15.05.2024 for the Assessment Year 2017-18 in respect of assessee’s application under section 154 of the Income Tax Act, 1961 (in short ‘the Act’). 2. The brief facts of the case are that the assessee had filed its return of income for A.Y. 2017-18 on 04.10.2017 declaring Nil ITA No. 1292/Ahd/2024 & SA No. 13/Ahd/2024 [Samiti Talaja Kheti Utpanna Bazar Utpanna Baza vs. ITO(E)] A..Y. 2017-18 - 2 – income. An intimation dated 02.05.2018 was received from the CPC u/s.139(9) of the Act informing the assessee that the return was defective for the reason that no income was offered but credit for TDS was claimed. Further that the deduction claimed u/s.10 or 11 or 13 of the Act was not appearing in the Schedule in the return. Thereafter, the assessee had filed a rectified return on 02.06.2018, wherein the defects pointed out by the CPC were rectified. The return was processed by the CPC and an intimation u/s.143(1) of the Act dated 27.03.2019 was issued wherein the deduction of Rs.1,05,20,468/- claimed u/s 11 of the Act in respect of “Amount applied to charitable or religious purposes in India during the previous year – Revenue account”, was disallowed. Thereafter, the assessee had filed a rectification application u/s.154 of the Act on 12.12.2019, which was disposed by CPC vide order dated 06.01.2020. In the rectification order the disallowance of Rs.1,05,20,468/- as made initially was repeated and, thus, the rectification application of the assessee was rejected. 3. Aggrieved with the rectification order of the CPC, the assessee had filed an appeal before the Ld. CIT(A), which has been decided vide the impugned order and the appeal of the assessee was dismissed. 4. Now, the assessee is in second appeal before us. The following grounds of appeal have been taken in this appeal: “1. The Appellant prays that CIT(A) has made big error while passing the impugned order dated 15-05-2024 stating in the said order at page no. 2 of the order that in course of appeal ITA No. 1292/Ahd/2024 & SA No. 13/Ahd/2024 [Samiti Talaja Kheti Utpanna Bazar Utpanna Baza vs. ITO(E)] A..Y. 2017-18 - 3 – proceeding despite availing multiple opportunity of hearing including dated 17-07-2022, 10-10-2022, the appellant miserably failed to comply the said notices. However the present appeal is disposed of on the basis of materials on record. However, the Appellant had very much replied to both the afore mentioned notices and uploaded detailed written submission along with all enclosures in the window of income tax portal under proceeding with CIT(A) vide income lax portal acknowledgment number 456400961290822 on dated 29.08.2022 and 745019091221022 on dated 22.10.2022 (copy of both enclosed herewith) in response to the CIT(A) notices dated 11.07.2022 and 10.10.2022. Said submission is even today visible on income tax portal. Thus, though complete written submission was made by the appellant to the CIT(A), still CIT(A) has overlooked the same, may be by mistake, and therefore your appellant submit that the impugned order is liable to be quashed and set aside as being illegal, invalid and bad-in-law 2. The CIT (A) has erred in law and on facts by issuing the impugned order which is not reasoned one and without dealing with pleas raised by the appellant and not properly appreciated various facts and law in its proper perspective and has not passed any speaking order The Appellant, in view of the above, say and submit that the impugned order is liable to be quashed and set aside and addition made by the assessing officer may therefore kindly be deleted 3. The CIT (A) has erred in law and on facts in upholding the Ld AO's action by not considering deduction of Rs. 1,08,01,697/-.” 5. Shri Sarju Mehta, Ld. AR appearing for the assessee explained that the assessee is a Notified Agricultural Product Market Committee notified since 1965 and the income of the assessee was exempt u/s.10(26AAB) of the Act. Further that the assessee was also registered u/s.12AA of the Act. Therefore, the deduction claimed by the assessee u/s.11 of the Act was wrongly denied by the CPC while processing the return. Further that the mistake was also not rectified in the order u/s 154 passed by the ITA No. 1292/Ahd/2024 & SA No. 13/Ahd/2024 [Samiti Talaja Kheti Utpanna Bazar Utpanna Baza vs. ITO(E)] A..Y. 2017-18 - 4 – CPC. The Ld. AR has drawn our attention to the order of the Ld. CIT(A), wherein he had observed that vide the rectification order the necessary demand was rectified. However, the fact remains that the grievance of the assessee was not redressed and the department was continuously enforcing for the payment of the demand. The Ld. AR submitted that the Ld. CIT(A) had dismissed the appeal of the assessee without correctly appreciating the facts of the case. He, therefore, requested that the matter may be set aside to the file of the Jurisdictional AO to look into the grievance of the assessee and allow the relief as per the provisions of the Act. The Ld. AR further submitted that in the subsequent two years return i.e for A.Ys. 2018-19 & 2019-20, no such demand was raised by the department while processing of the return u/s.143(1) of the Act. 6. Per contra, Shri Rignesh Das, the Ld. Sr. DR had no objection if the matter is set aside to the file of the Jurisdictional AO for necessary verification and action by the AO. 7. We have carefully considered the rival submissions. The grievance of the assessee is that the deduction claimed u/s.11 of the Act in the return of income was wrongly disallowed by the CPC while processing the return of income. The rectification application filed by the assessee was also not considered by the CPC in right perspective. As explained, the assessee derived income from activity of regulating the market of agriculture products and the assessee’s income was exempt u/s.10(26AAB) of the Act. Further, the assessee was also registered u/s.12AA of ITA No. 1292/Ahd/2024 & SA No. 13/Ahd/2024 [Samiti Talaja Kheti Utpanna Bazar Utpanna Baza vs. ITO(E)] A..Y. 2017-18 - 5 – the Act and it was eligible for deduction u/s.11 of the Act. Under the circumstances, the disallowance of the deduction u/s.11 of the Act claimed by the assessee doesn’t appear to have been correctly made while processing the return. In the interest of justice, we, therefore, deem it proper to set aside the matter to the file of the Jurisdictional AO to verify the contentions of the assessee. The JAO is directed to look into the grievance of the assessee and take necessary action in respect of rectification application of the assessee in accordance with the provision of law. If the income of the assessee was eligible for exemption u/s.10(26AAB) of the Act and the assessee was also registered u/s.12AA of the Act, the disallowance of deduction u/s.11 of the Act as made while processing the return, cannot be justified. The AO should look into all the relevant facts and thereafter take necessary action in accordance with the provisions of law. 8. In the result, the appeal of the assessee is allowed for statistical purposes. SA No.13/Ahd/2024 9. The assessee has filed this stay application in respect of demand of Rs.46,83,968/- pertaining to A.Y. 2017-18. 10. Shri Sarju Mehta, the Ld. AR submitted that the demand was raised due to wrong disallowance of deduction claimed under section 11 of the Act while processing the return. He further submitted that department was continuously pressing for recovery of demand. ITA No. 1292/Ahd/2024 & SA No. 13/Ahd/2024 [Samiti Talaja Kheti Utpanna Bazar Utpanna Baza vs. ITO(E)] A..Y. 2017-18 - 6 – 11. The stay application was tagged with the appeal of the assessee for this year. Since, we have already heard the matter on merits of the case and the appeal of the assessee has been allowed for statistical purposes, the demand is no longer enforceable. The AO is, therefore, directed not to enforce the collection of demand, since the appeal of the assessee has been decided and the matter is set aside to the AO for fresh adjudication of the grievance of the assessee in respect of wrong disallowance of deduction u/s 11 of the Act. 12. In the result, the Stay Application filed by the assessee is allowed for statistical purposes. 13. In the combined result, the appeal of the assessee and the stay application, both are allowed for statistical purposes. This Order pronounced on 05/11/2024 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 05 /11/2024 S. K. SINHA "