2013 (4) TMI 803 - AT - Income Tax

Summary

Issues Involved:

1. Legality of the CIT(A) and AO orders.
2. Applicability of principles of mutuality.
3. Procedural fairness and natural justice.
4. Jurisdictional High Court applicability.
5. Remand to CIT(A) for fresh consideration.

Summary:

1. Legality of the CIT(A) and AO Orders:
The assessee challenged the orders dated 27.01.2011 by CIT(A), Muzaffarnagar, and 19.11.2008 by the Additional Commissioner, Ghaziabad, claiming they were "bad in law and against the facts of the case." The CIT(A) was accused of "wrongly and erroneously rejecting" the appeal without appreciating the principles of mutuality and the ex-parte order by the Additional Commissioner. The CIT(A) was also criticized for sustaining the income of the Appellant Society at Rs. 82,37,686/- without proper basis.

2. Applicability of Principles of Mutuality:
The Ld. AR argued that the issue should be decided based on the principles of mutuality as per the judgment in CIT vs Talagang Co-operative Housing Society Ltd., 339 ITR 518 (Delhi). The Ld. DR, while relying on the orders of the authorities below, agreed that the issue should be decided in light of the principles laid down by the Jurisdictional High Court. However, the Tribunal clarified that the Jurisdictional High Court for the present case would be the Hon'ble Allahabad High Court, not the Hon'ble Delhi High Court.

3. Procedural Fairness and Natural Justice:
The assessee claimed that relevant documents could not be produced earlier due to non-cooperation by the former Secretary, who held the documents. The Tribunal noted that the special audit was conducted without proper involvement of the assessee and relied on documents provided by the ex-Secretary without giving the assessee an opportunity to examine their authenticity. The Tribunal emphasized the need for procedural fairness and directed that the issue be remanded for fresh consideration.

4. Jurisdictional High Court Applicability:
The Tribunal clarified that the Jurisdictional High Court for the case would be the Hon'ble Allahabad High Court, as the society is registered and situated in Ghaziabad, Uttar Pradesh. The Tribunal noted that while the decision of one High Court is not binding on another, it is conducive to judicial discipline to accept precedents in the absence of contrary judgments by the Jurisdictional High Court.

5. Remand to CIT(A) for Fresh Consideration:
The Tribunal decided to restore the issue to the CIT(A) for fresh consideration, allowing the assessee to file fresh evidence. The CIT(A) is to provide an opportunity for a remand report from the AO and ensure a reasonable opportunity of hearing for the assessee. The Tribunal also requested the CBDT to consolidate the appeals before one CIT(A) to ensure cohesive adjudication.

Conclusion:
The appeals were allowed for statistical purposes, and the order was pronounced in the open court on 5th April 2013.