In case of any infirmity/defect in filing of ITR, before charging of maximum marginal rates, CPC is required to give an opportunity u/s 139(9) of the IT Act

The Income Tax Appellate Tribunal has ruled that the Central Processing Centre (CPC) must provide an opportunity to taxpayers to rectify any infirmities or defects in their Income Tax Returns (ITR) before charging tax at the maximum marginal rates. This is in accordance with Section 139(9) of the Income Tax Act. The tribunal found that the CPC had incorrectly applied the maximum marginal rate without allowing the basic exemption limit and without giving the assessee a chance to correct the return.

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI “SMC-2” BENCH: NEW DELHI
(THROUGH VIDEO CONFERENCING)

BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER

ITA Nos.7641/Del/2019
Assessment Year : 2014-15

Vidya Vihar Shiksha Samiti,
1/11864, Panchsheel Garden,
Naveen Shahdara,
New Delhi-110032.
PAN-AAATC1225A

vs 

ACIT,
CPC,
Banglore.
APPELLANT RESPONDENT

ITA Nos.7643/Del/2019
Assessment Year : 2017-18

Vidya Vihar Shiksha Samiti,
1/11864, Panchsheel Garden,
Naveen Shahdara,
New Delhi-110032.
PAN-AAATC1225A
APPELLANT 

vs 

DCIT,
CPC,
Banglore.
RESPONDENT

Appellant by Sh. Rajiv Jain, CA
Respondent by Sh. Farhat Khan, Sr.DR

Date of Hearing 30.03.2021
Date of Pronouncement 18.05.2021

ORDER

PER KUL BHARAT, JM :

These two appeals filed by the assessee for the assessment years 2014-15 & 2017-18 are directed against two different orders of learned CIT(A)-40, New Delhi both dated 26.07.2019. 

2. First I take up ITA No.7641/Del/2019 pertaining to Assessment Year 2014-15 filed by the assessee. The assessee has raised following grounds of appeal:-

1. “That where the appellant is a registered society with charitable objects and is running two recognized educational schools and in respect of income derived therefrom (aggregate receipts Rs. 1,46,73,932/-) filed its return of income in Form ITR-7 u/s 139(4A) of the Act, declaring total income of Rs. 2,40,752/- without claiming any exemption u/s ll/12/10(23C)(iiiad)/10(23C)(vi) of the Act, as the society is neither registered u/s 12A nor approved u/s 10 (23C) (vi) of the Act. In the intimation u/s 143(1) dated 10.03.2016 CPC charged maximum marginal rate without allowing the basic exemption limit which was challenged before the Id CIT(A)-40, New Delhi, who in her order dated 26-07-2019 was wrong:

(i) In holding that there appears to be no infirmity in the action of the CPC in calculating the tax at Maximum Marginal rates instead of the slab rates.

(ii) In not following her own view rendered in the appeal of ‘Ram Narain Krishna Devi Jain Foundation’, appeal no 181/2016-17 AY 2014-2015’ duly followed in for AY 2015- 2016 and other appeals holding that where a charitable society is not registered u/s 12A of the Act, it is entitled to basic exemption limit as per paragraph A and part I of the First Schedule to the Finance Act, and in view of the provisions of section 164(2) it is only the income which become taxable by virtue of section 13(1 )(c) or 13(l)(d) which become taxable at the maximum marginal rate. 

To know more in details find the attachment file