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TMI Blog2024 (9) TMI 1699X X X X Extracts X X X X X X X X Extracts X X X X ..... g the rate of tax in the Intimation u/s. 143(1). Your appellant submits that the issue as to what is the correct rate of tax, being a debatable issue, the Ld. ADIT, CPC had no jurisdiction to apply the maximum marginal rate (MMR) of tax to the appellant's total income in the Intimation u/s. 143(1). Your appellant, therefore, prays that the appellant's total income be taxed at the normal rate of tax. 2. Without prejudice, the appellant submits that the Ld. Addl. /JCIT(A) erred in upholding the application of MMR of tax to the appellant's total income. Your appellant submits that, on the facts and in the circumstances of the case, and in law, MMR of tax is not attracted in its case. Your appellant, therefore, prays that the appellant's total income be taxed at the normal rate of tax. 3. Your appellant craves leave to alter, modify, amend or delete any of the above grounds of appeal, or to add one or more new grounds), as may be necessary." Brief facts of the case are as under: 2. The assessee is stated to be a registered public charitable trust under the Bombay Public Trusts Act. It is also submitted that the assessee was not registered under Section 12A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, the prior communication was not required to be made with the appellant. Therefore, there is no legal infirmity in the action of the CPC. Accordingly, the Ground No. 1 is dismissed. 5.2 Ground of appeal No. 2- In this ground, the appellant has contended that the AO, CPC has erred in calculating tax liability of the appellant at MMR. 5.2.1 A perusal of the documents available on record reveals that the appellant had filed its return of income 22.12.2021 declaring an income of Rs. 1,66,700/-. The AO, CPC has processed the ITR of the appellant u/s 143(1) on 23.09.2022 accepting the income reported by the appellant. However, the AO, CPC has computed the tax liability of the appellant at MMR. 5.2.2 The appellant in its statement of facts submitted with Form 35 stated that it is a public charitable trust but it is not registered for the purpose of Income Tax for the year under consideration. It is pertinent to mention here that it has chosen to file its return of income in Form 5 (applicable for AOP) and declared its status as AOP while filing the ITR rather than ITR 7 which is applicable to the case of charitable trusts, hence the appellant is admittedly liable to be tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence the AO, CPC is correct in computing the tax liability of the appellant. Hence, this ground of appeal taken by the appellant is dismissed. 5.2.5 The appellant vide its reply dated 16.05.2024 requested for an opportunity of being heard by video conference and stated that "We request Your Honour to grant us the opportunity of being heard by way of video conferencing if, at all, Your Honour finds that some additional information/explanations are required for granting the relief prayed for in this Appeal. In this connection, it is pertinent to mention here that this office has already provided ample opportunity to the appellant vide notices u/s 250. All the submissions made by the appellant in response to these notices have been considered. From all its replies the appellant fails to establish within the parameters of applicable law as to why tax should not be charged at MMR keeping in view the facts of the case and thus the request made by the appellant for video conferencing has no bearing on the decision in the case. 5.3 Grounds of appeal No. 3 and 4:- These ground of appeal are consequential in nature and need no adjudication. 5.4 Ground of appeal no 5:- This ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 11.01.1982 issued by the CBDT, which was issued in the context of Section 167A that was omitted by Direct Tax Laws (Amendment) Act, 1989 and Section 167B was inserted replacing it, which is materially similar to the erstwhile Section 167A, in its scope. 4.4 The Ld. AR thus submitted that, provisions of Section 164(2) of the Act governs the case of a registered charitable trust which is the case of the present assessee and the tax should be charged accordingly to Section 164(2). He also submitted that, the maximum marginal rate is applicable only to the relevant income which is not exempt under Sections 11 and 12, by virtue of Section 13(1)(c)/(d) of the Act. 4.5 On the contrary, the Ld. DR relied on the orders passed by the authorities below. We have perused the submissions advanced by both the sides in the light of the records placed before us. 5. The assessee has raised a preliminary issue challenging the validity of intimation under Section 143(1) of the Act passed without granting opportunity to the assessee, wherein an adjustment was made that was debatable in nature. The Ld. AR placed reliance on the decision of Hon'ble Bombay High Court in the case of Bajaj Auto Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in (1992) 196 ITR 157 (Bom) and held that the word "prima facie inadmissible" in clause (iii) of Section 143(1)(a)' means, 'on the face of it the claim is not admissible'. Hon'ble High Court observed that, it means the claim does not require any further inquiry before deemed disallowed. 5.2 Hon'ble Court further observed that where a claim was made which require further inquiry, it cannot be disallowed without hearing the parties and / or giving the opportunity to submit proof in support of its claim. Hon'ble Bombay High Court thus observed that, debatable issues cannot be adjusted by way of intimation under Section 143(1)(a), which would lead to an arbitrary and unreasonable intimation being issued leading to chaos. In our view the above proposition by Hon'ble Bombay High Court as well as Hon'ble Rajasthan High Court squarely is applicable to the present facts of the case. Accordingly ground No. 1 of the assessee stands allowed. (B) Ground No. 2 raised by the assessee, is on the applicability of the maximum marginal rate, for which reliance was placed on the decision of Hon'ble Bombay High Court in the case of CIT vs. Marsons Beneficiary Trust (supra). It is noted that present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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