Chandra Co-Operative Group Housing Society Limited vs ITO Ward 1(3)

PER VIKAS AWASTHY, JUDICIAL MEMBER:

This appeal by the assessee is directed against the order of Additional/Joint Commissioner of Income Tax (Appeals)-2, Pune [in short 'the CIT(A)'] dated 21.11.2024, for Assessment Year 2018-19.

The appeal is time barred by 392 days. The assessee has filed an application citing reasons causing delay in filing of appeal. After perusal of the same, I am satisfied that delay in filing of appeal is not intentional, the delay has been caused for the reasons stated in application which appears to be bonafide. Thus, delay of 392 days in filing of appeal is condoned and appeal is admitted for decision on merits.

Shri Gaurav Bansal, appearing on behalf of the assessee submits that the assessee is a Group Housing Society. The assessee filed its return of income u/s.139(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The assessee in its return of income Schedule BP, Column A5, disclosed exempt income Rs.26,66,716/- but inadvertently failed to mention the said amount in Schedule E1 of the return of income. The return of income was processed u/s.143(1) of the Act, the Centralized Processing Centre (CPC) made addition of the exempt amount merely for the reason that the same has not been reflect in Schedule E1. Aggrieved by intimation dated 25.06.2019, the assessee filed appeal before the CIT(A). The CIT(A) accepted the fact that prima facie claim of the assessee is genuine but refuse to grant relief upholding reasons for rejection of assessee’s claim by CPC. The ld. Counsel submits that mere inadvertent non mentioning of exempt income in Schedule E1 cannot be a reason to deny legitimate benefit to the assessee. He submitted that the receipts claimed as exempt was based on the principles of mutuality. In the succeeding assessment year i.e. AY 2019-20, the CPC has accepted assessee’s claim and has granted benefit of exemption on such receipts.

Per contra, Shri Manoj Kumar, representing the department and supported the impugned order and prayed for dismissing appeal of the assessee.

Both sides heard, orders of the lower authorities examined. The short issue for consideration in the instant appeal by the assessee is denial of exemption of the amount claimed on the basis of principle of mutuality. The assessee has mentioned amount claimed as exempt in Schedule BP 5 of the Income Tax return, but has not shown the said amount in Schedule E1 of the return of income. The mistake in not mentioning amount of exempt income in Schedule E1 appears to be out of inadvertence, as the amount claimed as exempt has been show in return of income in Schedule BP5. Merely, for the reason that the amount remained to be reflected in Schedule E1 cannot be a reason to deny benefit of exemption to which the assessee is legally entitle to. The benefit of exemption on the principle of mutuality was allowed by CPC in subsequent assessment year. Considering entire facts of the case, the AO is directed to allow claim of exemption based on principle of mutuality to the assessee.

In the result, impugned order is set aside and appeal of the assessee is allowed.