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2025 Supreme(Online)(ITAT) 3317
INCOME TAX APPELLATE TRIBUNAL (JAIPUR BENCH)
DR. S. SEETHALAKSHMI, JM, SHRI RATHOD KAMLESH JAYANTBHAI, AM
KEDAR PRASAD VIJAY ALWAR – Appellant
Versus
ACIT CENTRAL CIRCLE ALWAR – Respondent
ITA 1280/JPR/2024
Shri P.C. Parwal, C.A., Smt. Runi Pal, CIT-DR
Income from an unregistered society is assessable in the hands of an AOP, not the individual members, emphasizing the principle of mutuality in taxation.
Headnote:(A) Income Tax Act, 1961 - Sections 143(3), 153A - Appeals against orders of CIT(A) regarding assessment of income from unregistered society - The CIT(A) directed that income from seized material is assessable in the hands of an AOP, not the individual assessee, leading to claims of perverse and illegal findings by the appellant. (Paras 1, 2, 3, 3.1, 3.5)
(B) Assessment of Income - The court emphasized that income must be assessed in the hands of the correct entity, and the concept of mutuality applies to the donations received and expenditures incurred by the society. (Paras 3.5, 3.5.1)
Facts of the case:
The appeals arise from assessments for AY 2014-15 and 2016-17 concerning income from donations received by an unregistered society, with disputes over the correct assessment of income and deductions. The CIT(A) held that the income should be assessed in the hands of an AOP comprising the appellant and two others. (Paras 1, 2)
Findings of Court:
The court concurred with the CIT(A) that the income should be assessed in the hands of the AOP, while also noting the need to address the discrepancies in the amounts assessed. (Paras 3.5, 3.5.1)
Issues: The main issues included the legality of the CIT(A)'s direction regarding the assessment of income in the hands of the AOP and the correctness of the amounts added by the AO. (Paras 2.1, 3.1)
Ratio Decidendi: The court ruled that the income from the unregistered society is assessable in the hands of the AOP, and the CIT(A)'s findings regarding the assessment process were upheld, with modifications to ensure accuracy in the amounts assessed. (Paras 3.5, 3.5.1)
Result: Appeals disposed of with directions for assessment in the hands of the AOP.
ORDER
PER: DR. S. SEETHALAKSHMI, J.M.
Both these appeals have been filed by the assessee against two different orders of the ld. CIT(A)-4, Jaipur dated 22-01-2024 and 22-03- 2024 passed under section passed 143(3) r.w.s. 153A and 143(3) of the Income Tax Act, 1961 respectively. The grounds of appeal raised by the assessee in both the appeals are as under:-
ITA No. 1280/JPR/2024 – A.Y. 2014-15
‘’1. The Ld. CIT(A) has erred on facts and in law in holding that amount of Rs.32,48,726/as per seized material and part thereof deposited in the bank account opened in the name of Shyam Salona Dhwaj Yatra Samiti, being the donation received from various persons which is operated by any two out of three individuals namely the assessee, Tulsi Ram Mittal and Dilip Kumar though not assessable in the hands of assessee in his individual capacity is to be deleted subject to assessment in the hands of AOP of these persons. Such direction of Ld. CIT(A) is perverse, illegal & bad in law, hence the same be expunged.
2. The Ld. CIT(A) has erred on facts and in law in rejecting the additional evidences filed by the assessee in support of existence of unregistered AOP in the name of Shyam Salona Dhwaj Yatra Samiti' by making various incorrect and irrelevant observations.
3. The Ld. CIT(A) has erred on facts and in law in holding that the expenditure incurred out of donation received by 'Shyam Salona Dhwaj Yatra Samiti' is not allowable as deduction in computing the total income by making various incorrect and irrelevant observations ignoring the concept of mutuality and basic principle of taxation.
4. That the learned Assessing Officer has erred in law as well as on the facts and circumstances of the case in wrongly computing the total receipts at Rupees 32,48,726.00, out of the seized material AS-2, whereas, the receipts are only Rupees 7,79,461.00 and expenses of Rupees 7,70,025.00 out of the same, thus there is an income of Rupees 9,436.00 only, out of the seized material AS- 2, as evidenced from statement/details of nottings and explanation and learned Commissioner of Income Tax-(Appeals)-IV, has erred in not giving any finding thereon.’’
ITA No. 1281/JPR/2024 – A.Y. 2016-17
‘’1. The Ld. CIT(A) has erred on facts and in law in holding that amount of Rs.22,95,239/- as per seized material and part thereof deposited in the bank account opened in the name of Shyam Salona Dhwaj Yatra Samiti, being the donation received from various persons which is operated by any two out of three individuals namely the assessee, Tulsi Ram Mittal and Dilip Kumar though not assessable in the hands of assessee in his individual capacity is to be deleted subject to assessment in the hands of AOP of these persons. Such direction of Ld. CIT(A) is perverse, illegal & bad in law, hence the same be expunged.
2. The Ld. CIT(A) has erred on facts and in law in rejecting the additional evidences filed by the assessee in support of existence of unregistered AOP in the name of 'Shyam Salona Dhwaj Yatra Samiti" by making various incorrect and irrelevant observations.
3. The Ld. CIT(A) has erred on facts and in law in holding that the expenditure incurred out of donation received by 'Shyam Salona Dhwaj Yatra Samiti is not allowable as deduction in computing the total income by making various incorrect and irrelevant observations ignoring the concept of mutuality and basic principle of taxation.
4. That the learned Assessing Officer has erred in law as well as on the facts and circumstances of the case in wrongly computing the total receipts at Rupees 22,95,239.00, out of the seized material AS-1 and AS- 3, whereas, the receipts are only Rupees 90,000.00 and expenses of Rupees 8,94,482.00, as evidenced from statement/details of nottings and explanation and learned Commissioner of Income Tax-(Appeals)-IV, has erred in not giving any finding thereon.
5. That the learned Assessing Officer has erred in law as well as on the facts and circumstances of the case in considering all the entries as appearin
