2020 (7) TMI 151 - AT - Income Tax

Reopening of assessment - treating Exempt Interest and Rental income under section 10(24) as Taxable income of the assessee - non providing the sufficient opportunity of being heard, without providing the copy of recorded reason for issuing the notice under section 148 - HELD THAT - Assessee has not filed any return of income U/s 139(1) of the Act and the A.O. has initiated reassessment proceedings U/s 147/148 by issuing notice U/s 148 on the basis of AIR information showing the interest income received by the assessee from SBBJ. Exemption claimed by the assessee U/s 10(24) of the Act was denied by the A.O. and consequently, the entire income as shown in the return of income has been assessed to tax while framing the reassessment order on 23/12/2017. Since no body has appeared and attended the proceedings before the ld. CIT(A), therefore, the appeal of the assessee was dismissed by impugned order passed ex parte. It is pertinent to note that even the documentary evidence regarding the registration of the assessee s Trade Union was not produced either before the A.O. or before the ld. CIT(A), therefore, in these facts and circumstances the assessee has now produced all the documentary evidences to show that the assessee is a registered Trade Union and the income during the year was earned from interest from the bank deposits as well as rental income in respect of the property owned by the assessee. Since this explanation and documentary evidence were not available before the authorities below and the ld. CIT(A) has dismissed the appeal of the assessee ex parte, therefore, in the interest of justice, we set aside the matter back to the record of the A.O. to frame the assessment de novo after considering all the documentary evidences regarding source of income and eligibility of the assessee for exemption U/s 10(24) of the Act. Appeal of the assessee is allowed for statistical purposes only.

Issues:
1. Denial of exemption under section 10(24) of the Income Tax Act for interest and rental income.
2. Validity of reassessment proceedings initiated by the Assessing Officer.
3. Dismissal of appeal by the Commissioner of Income Tax (Appeals) due to non-representation.
4. Non-acceptance of TDS credit by the Assessing Officer.

Analysis:

Issue 1: Denial of exemption under section 10(24) of the Income Tax Act for interest and rental income:
The assessee, a registered Trade Union, challenged the denial of exemption under section 10(24) for interest and rental income. The Assessing Officer (A.O.) had assessed the total income without accepting the return filed by the assessee, leading to the denial of exemption. The assessee contended that all relevant records supporting the exemption claim were submitted, including evidence of being a registered Trade Union and a certificate for TDS deduction at zero percent. The Tribunal noted that these documents were not presented before the lower authorities due to non-representation, and in the interest of justice, remanded the matter to the A.O. to reassess considering the documentary evidence provided.

Issue 2: Validity of reassessment proceedings initiated by the Assessing Officer:
The A.O. initiated reassessment proceedings under sections 147/148 of the Act based on information regarding interest income. The assessee filed a belated return showing NIL income after claiming exemption under section 10(24). The A.O. proposed to assess lower interest income than declared by the assessee, but denied the exemption claimed. The Tribunal found that the A.O. did not accept the belated return and assessed the entire income without disputing the declared amounts. The reassessment was deemed invalid due to lack of acceptance of the return and denial of exemption without considering the documentary evidence.

Issue 3: Dismissal of appeal by the Commissioner of Income Tax (Appeals) due to non-representation:
The appeal before the Commissioner of Income Tax (Appeals) was dismissed ex parte as there was no representation on behalf of the assessee. This led to the denial of an opportunity for the assessee to present its case effectively. The Tribunal set aside the dismissal and remanded the matter to the Assessing Officer for a fresh assessment considering all documentary evidence.

Issue 4: Non-acceptance of TDS credit by the Assessing Officer:
The Assessing Officer did not give credit for TDS amounting to a specific sum. The assessee argued that the non-acceptance of TDS credit was not in accordance with the law and facts of the case. However, this issue was not extensively discussed in the judgment, and the Tribunal allowed the appeal for statistical purposes only.

In conclusion, the Tribunal allowed the appeal for statistical purposes, remanding the matter to the Assessing Officer for a fresh assessment considering all documentary evidence and ensuring proper application of exemption provisions under section 10(24) of the Income Tax Act.

← Previous Next →