2022 (8) TMI 135 - AT - Income Tax

Rectification u/s 154 - assessee claimed this income of exemption on the basis of mutuality whereas CPC, Bengaluru has taxed it on the maximum marginal rate - Income wrongly taxed under section 167A rather assessee is an AOP and working and working on the different mutuality - HELD THAT - CPC, Bengaluru assessed the same income, which has been declared by the assessee in its return of income, only the CPC, Bengaluru taxed the assessee at maximum marginal rate under section 167A. Before us Ld. Sr. DR for the Revenue raised objection that similar treatments were made in three cases of assessee, which has been accepted by the assessee. Considering the fact that the CPC, Bengaluru has accepted / assessed the same income as has been offered by the assessee though under section 167A of the Act. Therefore, we concur with the findings of Ld. CIT(A) that there is no mistake which can be classified as mistake apparent from the record. Appeal of the assessee is dismissed.

Summary

Issues:
1. Validity of application under section 154 of the Income Tax Act.
2. Taxation on the concept of "mutuality."

Issue 1: Validity of application under section 154 of the Income Tax Act:
The appeal by the assessee was directed against the order of the Commissioner of Income-Tax (Appeals) for assessment year 2014-15. The assessee contended that there was a mistake in the assessment order passed by the Centralized Processing Centre, Bengaluru, and filed an application under section 154 seeking rectification. The application was rejected, leading to an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal, stating that there was no mistake apparent on record as the CPC had assessed the same income as declared by the assessee. The Tribunal concurred with this finding, noting that the CPC had accepted the income offered by the assessee and taxed it at the maximum marginal rate under section 167A. Therefore, the appeal on this issue was dismissed.

Issue 2: Taxation on the concept of "mutuality":
The assessee, an Association of Person (AOP) formed to promote and protect the interests of individuals in the business of kariyana & dry fruits, claimed that its income was exempt based on the principle of "mutuality." The assessee argued that it was not carrying out business activities for profit-sharing or asset distribution and that its setup was based on the principle of mutuality, with no member having entitlement to funds. Despite these contentions, the CPC assessed the income at the maximum marginal rate. The Tribunal noted that similar treatment had been accepted by the assessee in preceding assessment years without further appeal. The Tribunal agreed with the Ld. CIT(A) that there was no mistake apparent on record, as the CPC had assessed the same income offered by the assessee. Consequently, the appeal on this issue was also dismissed.

In conclusion, the Tribunal upheld the decision of the Ld. CIT(A) and dismissed the appeal by the assessee regarding the validity of the application under section 154 and the taxation based on the concept of "mutuality." The judgment emphasized that the CPC had assessed the income in line with the declarations made by the assessee, leading to the rejection of the appeal on both issues.