The Lucknow Bench of Income Tax Appellate Tribunal ( ITAT ) criticized revenue for its unnecessary appeal against the Commissioner of Income Tax (Appeals) [CIT(A)]’s decision regarding income tax exemption under Section 26AAB of the Income Tax Act, 1961 despite the assessing officer had already accepted the claim and direction.
Krishi Utpadan Mandi Samiti (Market Committee), the assessee initially declared NIL income for the assessment year 2014-15. The Income Tax Department assessed taxable income at Rs. 3,90,11,484, denying exemption under Section 26AAB of the Income Tax Act, 1961.
Get a Complete Kit of Essential Books for Daily Practice, Click Here
The assessee appealed the denial to the Commissioner of Income Tax (Appeals) [CIT(A)] who ruled in favor of the assessee directing the Assessing Officer (AO) to verify the conditions for Section 26AAB exemption.
Following CIT(A)’s directions, the AO reviewed the matter and accepted the assessee’s exemption claim. The AO’s acceptance adjusted the assessee’s taxable income back to NIL. In the proceedings, it was revealed that in a subsequent regular assessment for 2017-18, the respondent’s similar claim for exemption was accepted.
Despite the AO’s acceptance, the revenue challenged the CIT(A)’s decision arguing that the exemption under Section 26AAB of the Income Tax Act, 1961 was not initially claimed in the Income Tax Return (ITR) by the respondent, and the CIT(A) allowed it without giving the Assessing Officer (AO) an opportunity to verify through a remand report.
Get a Complete Kit of Essential Books for Daily Practice, Click Here
The assessee’s counsel argued that the assessing officer accepted the exemption under Section 26AAB amounting to Rs. 3,90,11,484 in an order dated 22/05/2023. The counsel argued that a similar exemption claim was accepted in a regular assessment for 2017-18, showing consistency in the treatment of the exemption. Since the AO accepted the exemption and the regular assessment for subsequent years, the revenue’s appeal is now irrelevant.
The two-member bench comprising Anadee Nath Misshra (Accountant Member) and Subhash Malguria (Judicial Member) observed that the AO accepted the assessee’s exemption claim under Section 26AAB in a subsequent assessment order dated 22/05/2023, effectively nullifying the basis for the Revenue’s appeal.
Get a Complete Kit of Essential Books for Daily Practice, Click Here
The tribunal noted that there was no substantial difference in facts between the assessment years 2014-15 and 2017-18, where similar exemptions were granted. The tribunal criticized that the revenue appeal was filed after the AO had already accepted the exemption, indicating a lack of coordination or due diligence within the Revenue departments.
Therefore, the tribunal dismissed the revenue’s appeal as being “infructuous” since the AO had already accepted the exemption in question.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
