The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remits matter to Assessing Officer ( AO ) for reassessment and recalculation of income as Association of Persons ( AOP ) following denial of trust registration under section 12AB of Income Tax Act,1961
Betalish Dash Hummad Jain Chokhla Punch Sanchalit Keshavlal Maganlal,appellant-assessee,challenged the ex parte appellate order dated 29-11-2023 passed by the Commissioner of Income Tax (Appeals)[CIT(A)] concerning the assessment order under section 143(3) for the assessment year 2019-20.
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The assessee trust presented alternate grounds, requesting to be assessed as an AOP since the exemption was denied only due to the absence of registration under section 12AA, a point acknowledged by the Assessing Officer(AO), but the liability was not quantified. The assessee also sought taxation under section 167B for the AOP and argued that the disallowed amount of Rs. 17,56,003 should have been Rs. 5,05,369. Additionally, the assessee contested that while the AO determined an assessed income of Rs. 35,71,443, tax was calculated on Rs. 53,27,442, leading to errors in the additions.
The revenue counsel did not raise any objection in the additional grounds raised.
The two member bench comprising Dr.BRR Kumar(Vice President) and T.R.Senthil Kumar(Judicial Member),after considering the assessee’s alternative argument, found that if registration under section 12AB is denied, the assessee should be treated as an AOP under section 167B, which is a valid legal ground.
Given that the order by the Commissioner of Income Tax(Exemption)[CIT(E)] was ex parte, they decided to set aside the decision of the lower authorities and send the matter back to the Jurisdictional Assessing Officer(JAO).
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Section 167B of the Act, holds partners of a partnership firm or members of an Limited Liability Partnership(LLP) liable for tax if the firm or LLP fails to file its return on time under section 139. In such cases, the firm’s income is attributed to the partners or members, who must pay tax on it as if it were their own, ensuring compliance with filing requirements.
The AO was instructed to take the additional ground into account and re-calculate the income in line with the law, ensuring the appellant is given a proper opportunity to be heard.
The appellate tribunal also emphasized that the assessee should cooperate by providing the required details and evidence for the reassessment.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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