CPC not justified in changing assessee status without proper examination: ITAT:

The ITAT quashed the tax demand raised by the CPC, holding that changing a return's status from AOP to Cooperative Society requires detailed examination.

ITAT Holds Assessee Status Change Not Permissible Under Section 143(1)

Saloni Kumari

Apr 11, 2026

Last update on Apr 11, 2026

CPC not justified in changing assessee status without proper examination: ITAT The ITAT Ahmedabad quashed a tax demand raised by the CPC, holding that changing the assessee's status from Association of Persons (AOP) to Cooperative Society requires a detailed examination and cannot be done during routine processing. The assessee's return was processed by the Central Processing Centre (CPC), where its status was changed from an Association of Persons (AOP) to a Cooperative Society, leading to a tax demand amounting to Rs 97,690. For rectification of the same, the assessee had furnished an application under Section 154, but the same was rejected by the tax authorities. The aggrieved assessee filed an appeal before the ITAT Ahmedabad, claiming that it is a non-profit apartment owners’ association and has consistently filed ITRs as an AOP/BOI in previous years, which were all accepted by the tax authorities. Therefore, the CPC was not justified in changing the assessee status from AOP to a Cooperative Society without proper examination. The tax authorities argued that the assessee had not furnished sufficient evidence proving its non-profit status, which led to the imposition of the impugned tax demand. When the tribunal analysed the case, it held that only limited adjustments such as arithmetic errors or incorrect claims are allowed under Section 143(1) of the Income Tax Act. The tax authorities are required to conduct a detailed examination when changing an assessee's status, and such an action cannot be done during routine processing. Additionally, the tax authorities had not raised any objection to the assessee's status in earlier years; the CPC’s action was not under its jurisdiction. Consequently, the tribunal set aside the adjustments made by the CPC and ruled in favour of the assessee.

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Saloni Kumari

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Saloni is a Content Writer with 2+ years of experience at studycafe.in. She writes legal, taxation, and finance related content including GST, Income Tax etc. Skilled in translating complex judicial pronouncements and regulatory developments into clear, and reader-friendly articles. Experienced in covering judgements of ITAT, High Court, GSTAT, and news related to Income Tax, GST, and corporate law. She can be reached at [email protected].