Income Tax Appellate Tribunal - Mumbai
Income Tax Officer-26(2)(1), Mumbai vs Sai Prerana Co-Op Credit Society Ltd., ... on 27 April, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "G" MUMBAI
BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER)
AND
SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
ITA Nos. 217, 220 & 221, 218 & 219, 215, 214/MUM/2023
Assessment Years: 2013-14, 2016-17, 2017-18, 2018-19,
2020-21
Sai Prerana Co-op Credit ITO-17(3)(2),
Society Ltd., Room No. 126, 1st floor,
317, Puran Aasha Bldg, Gr. Fl. Vs. Kautilya Bhavan, C-41 to C-
Narashi Natha Street, Katha 43, G Block Bandra Kurla
Bazar Masjid Bunder (W), Complex, Bandra (East),
Mumbai-400 009. Mumbai-400051.
PAN No. AADTS 5638 M
Appellant Respondent
ITA Nos. 192, 193, 194 & 195/MUM/2023
Assessment Year: 2016-17, 2017-18, 2018-19 & 2020-21
ITO-26(2)(1), Sai Prerana Co-op Credit Society
Room No. 127, 1st floor, G- Ltd.,
Block, Kautilya Bhavan, Vs. 317, Puran Aasha Bldg, Gr. Fl.
Bandra Kurla Complex, NarashiNatha Street, Katha
Mumbai-400051. Bazar Masjid Bunder (W),
Mumbai-400 009.
PAN No. AADTS 5638 M
Appellant Respondent
Assessee by : Mr. Bharat Kumar, AR
Revenue by : Mr. Milind S. Chavan, DR
Date of Hearing : 24/03/2023
Date of pronouncement : 27/04/2023
Sai Prerana CoCo-op Credit Society Ltd. 2
ITA Nos. 217, 220, 221, 192/M/2023& 192 to
195/M/2023
ORDER
PER BENCH These appeals by the assessee and the Revenue are directed against separate orders passed by the Ld. First Appellate Authority i.e. the Commissioner of Income National Faceless Income-tax (appeals) -National Appeal Centre, Delhi [ in short the ld CIT(A)] , for assessment years from AY 2013-14 14 to AY 2020 15 , 2015-16 and 2020-21 except AY 2014-15 connecte with same assessee and 2019-20. These appeals being connected involving common issue, same were heard together and disposed off by way of this consolidated order for convenience and avoid repetition of facts.
2. First of all, we take up the appeal of the assessee for assessment year 2013-14.
2013 The grounds raised by the assessee in its appeal are reproduced as under:
1. On the facts and circumstances of the case in Law. Ld. CIT (A) erred in confirming reopening of the case on the same facts and circumstances which is change in opinion.
2. On the facts and circumstances of the case in Law, Ld. CIT (A) erred in confirming of the reopening which was open after four years without established failure on the part of the assesse which is bad in Law.
3. On the facts and circumstances of the case in Law, Ld. CIT (A) erred in disallowing80P deduction on account of interest received from other than cooperative bank.
Sai Prerana CoCo-op Credit Society Ltd. 3 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023
4. The Appellant keep its right reserve to add/modity/ delete the any grounds of appeal.
3. Briefly stated, facts of the case are that the assessee is a 'credit co-operative society constituted under the Maharashtra Co-
operative society' Co operative Society Act, 1960 or the year under consideration, the 1960. For assessee filed return of income u/s 139(1) of the Income-tax Income Act, 1961 (in short 'the Act') on 19.09.2013 declaring total income at Rs. Nil. The assessment u/s 143(3) of the Act was completed on 07.03.2016 wherein total income was assessed at Rs.1,18,440/ Rs.1,18,440/-.
Subsequently, the case was reopened u/s 147 of the Act. The Assessing Officer recorded reasons reasons to believe that income escaped assessment due to wrong claim of the assessee for deduction u/s 80P(2)(d) of the Act on the interest received from fixed deposits with 'co-operative' as well as 'nationalized banks'.. The Assessing Officer in the reassessmentt order passed u/s 147 read with section 143(3) of the Act on 03.12.2019, 03.12.2019 denied the deduction u/s 80P(2)(d) 80P of the Rs.97,49,707/- earned by the Act in respect of interest income of Rs.97,49,707/- assessee's society from banks (co (co-operative operative bank as well as ank) and assessed the said interest income under the nationalized bank) head 'income from other sources. According to the Assessing Officer the scope of deduction under section 80P(2)(d) is restricted to deposit made with 'cooperative society' and 'cooperative bank' are distinct from the cooperative society, society, no deduction can be allowed for deposits with Cooperative Bank. The Ld Assessing officer relied on the decision of Hon'ble Karnataka High Court in the case of CIT Sai Prerana CoCo-op Credit Society Ltd. 4 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 vs. Totgars Cooperative Society limited 83 taxmann.com 140 (2017) dated 16/06/2017, 16/06/2017, a SLP filed against which has been rejected by the Hon'ble Supreme Court.
4. On further appeal, the Ld. CIT(A) though upheld the validity of the reassessment proceedings, however on the merit allowed the deduction u/s 80P(2)(d) of the Act in respect of income earned from co-operative banks. In respect of interest deposits kept with the co from deposits with Nationalized Banks Banks, no finding has been given by the ld CIT(A).
5. Aggrieved, the assessee has challenged the finding of the Ld. CIT(A) before us on the validity of the reassessment as well as deduction u/s 80P(2)(d) of the Act in respect of interest received from banks other than co-operative co i.e. the Nationalized banksi.e.
banks
6. We have heard rival submission of the parties on the t issue-in-
dispute and perused the relevant material on record. Regarding the Ground No. 1 and 2 of the appeal related to the reassessment proceeding, we find that in in the case assessment has been reopened beyond the period of four years from the end of the th relevant assessment year. As per the provisions of the Act , an assessment cannot be reopened beyond the period of four years from end of the relevant assessment year unless there is a failure on the part of the aterial facts necessary for assessee to disclose fully and truly all material Sai Prerana CoCo-op Credit Society Ltd. 5 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 case, in the regular assessment completion of assessment. In the case year completed u/s 143(3) of the Act, the assessee was allowed deduction u/s 80P of the Act in respect of interest income earned co-operative bank.. The from the nationalized as well as c T Assessing Officer has reopened the assessment based on the same material which was available before the Assessing Officer during original assessment proceedings, which is evident from the reasons recorded by the Assessing Officer ( i.e. reproduced by the Assessing order). For ready reference Officer on page 1 of the assessment order same is reproduced as under:
Co op. Credit Society Ltd., is "The assessee, Sai Prerna Co-op.
assessed to tax in this charge. Assessee e filed its return of income forr AY 2013-14 2013 on 08.09.2012 showing income of Rs. .The case was duly concluded vide order us 143(3) dated Nil.The NIL/ . Assessee is a co operative credit
07.03.2016 at Rs NIL/-.
society.
2. Subsequently, in this case, it is found that assessee has claimed deduction under under section 80P(2) of the Act of R$ 97,49,7071- and the same was also allowed in the order.
3. As per the records from Profit & Loss Alc, it was noticed that assessee received interest on FD of Rs 163,45,298/ 163,45,298/-. The FD's as seen from the Balance sheet were mainty with co operative banks and not with co operative society. This clearly showed that assessee has earned income from co operative banks and not from society. Section 80P(2)(d) does not extend the benefit of deduction for interest received from invest investments made with co operative banks, hence the deduction was required to be disallowed.
4. Assessee claimed deduction u/s 800(2) which is clearly in contravention to provisions of the Act. The income from FD was required to be offered under the head "income from other Sai Prerana CoCo-op Credit Society Ltd. 6 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 sources" as per the provisions of the Act as, co operative bank is a urban commercial bank and does not fall under the purview of co operative society referred to section 80P(2)(d) of the Act. The claim of assessee for deduction clearly shows hat there is failure on part of assessee in making true and full that 2012--13.
disclosure of its particulars of income for AY 2012
5. Section 147 of the Act states that If AO has reason to believe that any income chargeable to tax has escaped assessment for any asse ssment year, he may subject to assessment provisions of section 148 to 153, assessee or reassess such income and also any other income which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section."
6.1 On perusal usal of the above reasons recorded, it is evident that there is no tangible new information or material from either 'internal' or 'external'' source to form reasons to believe that income escaped assessment.
assessment The Assessing Officer has merely re re-
he information which was available before him in appreciated the original assessment proceedings and therefore, the reasons recorded are based on merely 'change of opinion'.. In para 4 of the reasons recorded though the Assessing Officer mentioned that there was a failure on the part of the assessee in making true and fully owever, he has not pointed out which information was disclosure, however, not disclosed fully and truly by the assessee. The interest income earned by the assessee from fixed deposits was duly explained he Assessing Officer in original assessment proceedings and before the therefore, contention of the Assessing Officer in reason recorded of failure on the part of the assessee in making full and true disclosure,is devoid of merit and in the nature of an incorrect Sai Prerana CoCo-op Credit Society Ltd. 7 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 allegation only. Relying on the decision of the Hon'ble Jurisdictional High Court in the case of Sunjewels India (P.) Ltd. reported in [2022] 141 taxmann.com 72 (Bombay)reassessments (Bombay)reassessments based on facts, which were available during original appreciating same facts assessment sessment proceedings proceedings,is bad in law on the reason of 'change of opinion'. In writ petition no. 3048 of 2022 in the case of Mumbai 2022 Postal Employees Co Co-operative ative Credit Society Ltd Vs ITO, ITO the Hon'ble Bombay High Court held that satisfaction recorded by the O in the reasons recorded was not based upon any material other AO than obtained on amount of 'perusal of the record', and hence it was opinion. The relevant finding of the Hon'ble High based on change of opinion.
Court is reproduced as under:
"8. learned Counsel for the parties.
8. We have heard learned
9. It is no longer res integra that the action of the A.O. ininitiating reassessment proceedings have to be tested on the touch stone of the reasons recorded. On a perusal of the reasons recorded as have been reproduced partially in the paragraphs, it is clear that the A.O. felt that the preceding paragraphs, claim of deduction under Section 80P(2)(d) of the Act which had been allowed in favour of the Petitioner was not in conformity with the provisions of the said section, which assessment of income consequently had resulted in an under assessment Rs.92,08,876/ and a consequent short levy of tax of of Rs.92,08,876/-
Rs.28,45,542/ . This satisfaction recorded by the A.O. in the Rs.28,45,542/-.
reasons was not based upon any material other than obtained on account of 'perusal of the record'.
10. It can be noti ced that in the present case the assessment noticed was under Section 143(3) of the Act, during which the Petitioner had been served with the notice under Section 142(1) of the Act dated 27th September, 2016 asking the evidence the claim of Petitioner to explain with documentary evidence Sai Prerana CoCo-op Credit Society Ltd. 8 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 deduction under Chapter VI-AVI A of the Act, reply thereto was submitted by the Petitioner on 10th October, 2016 with an explanation that the Petitioner get fulflled the conditions of eligibility under Section 80P of the Act, whereafter the order ord of assessment came to be passed on 23rd November, 2016. It is therefore clear that the issue stood considered as only a part the deduction under Section 80P of the Act while disallowing ofthe the same in regard to income from holiday home charges.
11. The A.O. therefore did not have any tangible material with him based upon which he could form his reason to believe that income had escaped assessment. The entire basis for reopening is nothing but a change of opinion on the part of the A.O. that the beneft of deduction under Section 80P of the Act Rs.92,08,876/ ought not to have been allowed at all. As of Rs.92,08,876/-
between the date of the assessment order under Section 143(3) of the Act and the date when the reasons were recorded, there has been neither any change in law l nor any new material has been shown to have come to the knowledge of the A.O.. This therefore is nothing but a clear case of change of opinion as was rightly urged by Mr. Mistry and, therefore, impermissible for reopening the assessment. Apart from this,, the assessment is sought to be reopened beyond the period of four years from the end of the relevant assessment year 2014-15 15 and, therefore, it was incumbent upon the A.O. to establish that the Petitioner had failed to disclose fully and truly all materi al facts necessary for assessment during the material relevant assessment proceedings. No such averment is made in the
12. In the case of Hindustan Lever Ltd. V/s. R. B. Wadkar, Assistant Commissioner Commissi Tax and others 1, of Income-Tax 1 it was held:
"......The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Offcer. The reasons recorded should be self anatory and should not keep the self-explanatory assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Offcer, in the event of justify the same challenge to the reasons, must be able to justify Sai Prerana CoCo-op Credit Society Ltd. 9 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment.
In the aforementioned case the Court set aside the notice under Section 148 of the Act impugned therein, on the ground jurisdictional requirement of the proviso to Section that the jurisdictional 147 of the Act had not been complied with as the A.O. had nowhere stated in the reasons recorded that there was failure on the part of the assessee to disclose fully and truly all situation exists even in the material facts. Similar facts situation present case where the reasons recorded do not at all alleged any such failure on the part of the assessee which was a condition prerequisite for invoking jurisdiction for reopening in tobelieve' as this was a addition to the condition of 'reasons tobelieve' case of reopening beyond the period of four years.
13. For the reasons mentioned hereinabove, we have no hesitation in holding that in the facts and circumstances of the present case, the reopening of the assessment is unsustainable. Be tthat hat as it may, the present petition is allowed. The notice under Section 148 of the Act as also the order of assessment dated 30th March, 2022 passed under Section 147 r/w Section 144B of the Act are set aside.
aside."
6.2 Similar finding has been given by the Ho Hon'ble n'ble Bombay High Court while deciding the writpetition no. 1809 of 2022 in the case of Tahnee Heights CHS Ltd Vs ITO.
ITO. The relevant finding of the Hon'ble High Court is reproduced as under:
8. In the present case although the A.O. has recorded in the "8.
sons that there was failure on the part of the assessee to reasons disclosefully and truly material facts, it failed to identify as to what was that material fact which was not disclosed by the assessee which if so disclosed could have prevented the escapement of income. The alleged failure to disclose appears Sai Prerana CoCo-op Credit Society Ltd. 10 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 to be nothing but a statement to somehow overcome the hurdle of reopening the assessment beyond four years.
Apart from the above, the A.O. could have proceeded to reopen the assessment only if he had reason to believe that 'income had escaped assessment'.
9. In CIT V/s. Kelvinator of India Ltd. 2 the Supreme Court held:
" The Assessing Offcer has no power to review; he has the power to reassess. But reassessment has to be based on fulfllment of certain precondition precondition and if the concept of "change of opinion" is removed, as contended on behalf of the re opening the assessment, Department, then, in the garb of re-opening review would take place. One must treat the concept of "change of opinion" as an inin-built test to check abuse of power by the Assessing Offcer. Hence, after 1 1989, Assessing 1-4-1989, Offcer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief."
10. In Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax 3 , the Court, in the light of the facts before it and in the background of section 147 of the Act, observed :
Income-tax Offcer has said is that he "...................all that the Income was not right in allowing deduction under Section 80I because he had allowed the deductions wrongly and, therefore, he was of the opinion that the income had escaped assessment. Though he has used the phrase "reason to believe" in his order, admittedly, between the date of the orders of assessment sought to be reopened and the date of forming of Income tax Offcer nothing new has happened. opinion by the Income-tax There is no change of law. No new material has come on been received. It is merely a fresh record. No information has been application of mind by the same Assessing Offcer to the same set of facts. While passing the original orders of assessment the order dated February 28, 1994, passed by the Income tax (Appeals) was before the Commissioner of Income-tax th Assessing Offcer. That order stands till today. What the Assessing Offce has said about the order of the Commissioner Sai Prerana CoCo-op Credit Society Ltd. 11 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 of Income-tax tax (Appeals) while recording reasons under Section 147 he could have said even in the original orders of assessment. Thus, it is a case of mere change of opinion which does not provide jurisdiction to the Assessing Offcer to initiate proceedings under Section 147 of the Act.
It is also equally well settled that if a notice under Section 148 jurisdictional foundation under has been issued without the jurisdictional Section 147 being available to the Assessing Offcer, the notice and the subsequent proceedings will be without jurisdiction, liable to be struck down in exercise of writ jurisdiction of this available, the writ court will not court. If "reason to believe" be available, exercise its power of judicial review to go into the suffciency or adequacy of the material available. However, the present one is not a case of testing the suffciency of material available. It is a case of absence of material and hence the absence of jurisdiction in the Assessing Offcer to initiate the proceedings under Section 147/148 of the Act."
11. Even in the present case there appears to be no tangible material with the A.O. as can be seen from the reasons recorded and that the reference was made only to the records of the assessment. It thus appears that between the date of the order of assessment and the date of the issuance of notice, nothing new had happened. There was no new information received by the Assessing Offcer nor was any reference made to any new material on record. The A.O. was simply toaccord a fresh consideration on the issue of attempting toaccord deduction under Section 80P of the Act claimed and allowed in favour of the Petitioner.
order of assessment passed in
12. We cannot forget that the order the case of the assessee was under Section 143(3) of the Act. The Petitioner had specifcally claimed the deduction under Section 80P of the Act which was not only reflected in the return of income but also gone into specifcally as can be seen from the notice issued under Section 142(1) of the Act where by the details of various deductions and exemptions along with documentary evidence had been sought for by the A.O., which fnally led to the passing of the order of assessment re by while certain disallowances were made in respect to where certain items, the claim of deduction under Section 80P was allowed. It is settled law that if a query is raised during the Sai Prerana CoCo-op Credit Society Ltd. 12 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 assessment proceedings and the assessee submits a reply to the passing of the order of assessment, a thereto, leading to reopening in the absence of any new tangible material would be nothing but a change of opinion, which would not furnish to the A.O. a basis for his 'reasons to believe' that income chargeable to tax had escaped assessment.
a
13. Be that as it may, we are of the opinion that the impugned notice is unsustainable on account of these jurisdictional errors committed by the A.O.. Consequently, the petition is allowed. The impugned notice dated30th March, 2021 under on 148 of the Act and the impugned order dated 10th Section March, 2022 are held to be unsustainable and are accordingly quashed."
6.3 In the case of Surat District Co-op op Milk Producers Union Ltd Vs ITO in (2013) 29 taxmann.com 81 (Gujrat), (Gujrat) Hon'ble high Court of Gujrat ujrat held that when the assessee had given full details of dividend income, interest income, essential requirement to reopen satisfied.. The relevant finding assessment after four years was not satisfied of the Hon'ble High Court id reproduced asunder:
"12. Having thus heard learned counsel for the parties and having perused the materials on record, we notice that in the return filed by the petitioner, in addition to claiming deduction of gross income of interest and dividend of Rs.1,81,27,606 80P(2)(d) of the Act, the petitioner further under Section 80P(2)(d) provided various details. For example, in the Annexure-VII Annexure to the return, such deduction under Section 80P(2)(d) was bifurcated into dividend income of Rs.53,71,450 and interest income of Rs.1,27,56,156. Further, the petitioner had also supplied the full details of the statement showing dividend and interest income received from cooperative societies along with dividend counters in the original. Additionally, along with Tax Audit Report under Section 44AB of the Act Act the petitioner had given details of the dividend income, interest income as well as interest expenses for the said year, which included Sai Prerana CoCo-op Credit Society Ltd. 13 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 interest expenditure on fixed deposit, interest expenditure on the Society Savings, Employee Savings, etc.
13. Thus, it can be seen that full details with respect to petitioner's claim for deduction under Section 80P(2)(d) of the Act was very much before the Assessing Officer in the original return accompanied by the audited accounts of the petitioner was, thus, no failure on the part of the society. There was, petitioner to disclose fully and truly all the material facts necessary for assessment. The essential requirement to enable the Assessing Officer to reopen the assessment and satisfied. Therefore, the period of four years is, thus, not satisfied. without going into the further question of the very maintainability of the belief of the Assessing Officer that the assessee's income has escaped assessment within the meaning of section 147 of the Act, we find sufficient justification in thepetitioner's questioning the reopening the process only on the ground that there was no failure on the part of the petitioner to disclose truly and fully all the material facts.
6.4 The contention of the ld DR that explanation below the section 147 of the Act prescribing'producing prescribing'producing books of amount does not facts', is not relevant amount to full and true disclosure of material facts' an material fact, in the case as the AO has not pointed out any fact which was not disclosed during regular assessment proceedings.
6.5 In view of the above discussion, the reassessment proceedings cannot be sustained,, firstly,, due to the reason that reassessment proceeding are based on mere 'change of opinion', secondly, no disclosure of full and true material facts by the assessee before the assessing officer, has not been substantiated by the Assessing officer, thirdly,, there being no internal or external material to trigger the reopening of assessment or for recording the reasons to Sai Prerana CoCo-op Credit Society Ltd. 14 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 assessment,, the action is a kind of believe that income escaped assessment review of assessment already completed, for which the AO is not permitted. Hence, the reassessment proceeding u/s 147 of the Act is quashed as void ab initio. nd 2 of the appeal of initio The ground No. 1 and the assessee are accordingly allowed.
7. In ground No. 3, the assessee is seeking deduction u/s 80P of the Act in respect of interest received from other than co-operative banks.Since ince we have already quashed the reassessment proceedings , therefore, the issue is rendered merely academic and appeal.
therefore, we are not adjudicating upon the same in this appeal
8. Now we take up the appeal of the assessee in ITA No. 220/M/2023 for assessment year 2016-17.
2016 17. The relevant grounds of the assessee are reproduced as under:
1. On the facts and circumstances of the case in Law, CPC made disallowance of 80P deduction which is not permissible while passing order us 143(1) which is bad in Law.
2. On the facts and circumstances of the case in Law, no addition is permissible while processing return u/s 143(1) on debatable issue.
3. On the facts and circumstances of the case in Law, Ld. CIT(A) erred in disallowing received from other than 80P deduction on account of interest received cooperative bank.
4. The Appellant keep its right reserve to add/modify/ delete the any grounds of appeal.
Sai Prerana CoCo-op Credit Society Ltd. 15 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023
9. rocessing Center We find that the in the case, the Computer Processing (CPC) Bangalore of the Income-tax Income Department,while ,while processing the return of income vide intimation order u/s 143(1) of the Act dated 12.01.2017,made adjustment to the returned income for deduction u/s 80P of the Act amounting to Rs. 1,65,88,880/ 1,65,88,880/-.Theassessee sought rectification of the adjustment and the Assessing Officer Of passed order u/s 154 of the Act 06.07.2019 Since the ct dated 06.07.2019.
assessee preferred appeal against the said rectification order u/s also the Ld. CIT(A) rejected the appeal of the 154 of the Act also, assessee against the adjustment made u/s 143(1) of the Act, Act observing as under:
5.0 It is found from records that the assessee had filed an "5.0 appeal against a subsequent Order us 154 rectifying the instant Order underAppeal passed by the CPC, Bangalore for the same A. Yr. By virtue of the Doctrine of Merger, the imation us 143(1) dated 12/01/2017 had merged with the intimation rectification Order us 154 dated 06/07/2019."
06/07/2019.
10. We have heard rival submission of the parties on the issue issue-in-
dispute and perused the relevant material on record. We find that the Ld. CIT(A) has dismissed the appeal merely for the reason that dispute has already been merged in the rectification order issue-in-dispute dated 06.07.2019 u/s 154 of the Act against which the assessee also filed appeal before the Ld. CIT(A). In view of the fact that tification order passed by the Assessing Officer, the against rectification assessee had already preferred appeal before the Ld. CIT(A), we concur with the finding of the Ld. CIT(A) that no separate Sai Prerana CoCo-op Credit Society Ltd. 16 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 adjudication is required on the issue of adjustment made u/s 143(1) when the same me adjustment for disallowance of deduction u/s 80P was raised in appeal filed with relation to consequent ground of appeal of the assessee are rectification order. The grounds accordingly dismissed.
12. Now we take up the cross appeals appeal of the assessee and the evenue against order of the ld CIT(A) dated 30/11/2022 in relation Revenue to order u/s 154 of the Act passed by the Assessing Officer for assessment year 2016 17. The grounds raised by the Revenue in 2016-17.
ITA No. 192/mum/2023 are reproduced as under:1. "Whether on the the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the section 194A(3)(v) amendment made by Finance Act, 2015 in section of the Act which excludes the Cooperative Banks from the "Co operative Society" and requiring them to definition of "Co-
deduct income tax at source under Section 194A of the Act that also makes the legislative intent clear that the Co-Co anks are not that specie of genus co-operative operative Banks co society, which are entitled to claim deduction under the special provisions of Chapter VIA in the form of Section 80P of the Act."
2. "Whether on the facts and circumstances of the case and in law, the Ld.CIT( A) was correct in allowing deduction Ld.CIT(A) u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring firstly, the sub section (4) in purpose of bringing on the statute book sub-section Section 80P of the Act to exclude the applicability of Section co operative bank and 80P of the Act altogether to any co-operative secondly, ignoring the fact that words used in section 80P(4) are "in relation to" that can include within its ambit and Sai Prerana CoCo-op Credit Society Ltd. 17 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 scope even the interest income earned by the respondent assessee, a co operative Bank co-operative Society from a Co-operative and this exclusion by Section 80P(4) of the Act even though without any amendment in Section 80P(2)(d) of the Act is sufficient to deny the claim of the assessee for deduction under Section 80P(2)(d) 80P(2)( of the Act."
3. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring that whether the deposits and investment of surplus funds of assessee not immediately required for its purposes, is made with Scheduled Bank or Nationalized Banks or with co- co operative Banks does not make a difference as far as the character of the income earned by assessee assessee is concerned and it does not partake the character of its operational income from its activity as cooperative housing society, the same would continue to be fully taxable and will not be eligible for deduction under section 80P(2)(d) of the Act."
ther on the facts and circumstances of the case and
4. "Whether in law, the Ld.CIT(A) was correct in allowing deduction /s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits, though Hon'ble Karnataka High Court in a detailed judgment discussin discussing g the law and various related issues in the case of PCIT Vs Totagar's Cooperative Sales Society(392 IT 74) has specifically decided the Question of Law about the allowability of interest earned deposits with Cooperative Bank u/s. 80P(2)(d) of the from deposits-
Income ome Tax Act in favour of the Revenue."
12.1 The grounds raised by the assessee in ITA No. 221/Mum/2023 are reproduced as under:
1. On the facts and circumstances of the case in Law, Ld. CIT(A) erred in disallowing80P deduction on account of received from otherthan cooperative bank.
interest received
2. The Appellant keep its right reserve to add/modify/ delete the any grounds of appeal.
Sai Prerana CoCo-op Credit Society Ltd. 18 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023
13. Facts in brief of the case are that during the year under consideration, the assessee earned interest of Rs.2,85,18,226/ Rs.2,85,18,226/-
from deposits with co-operative co operative banks of Rs.39,28,73,877/-
Rs.39,28,73,877/ and Rs.4,53,592/- from deposits of Rs.46,03,225/- interest of Rs.4,53,592/ Rs.46,03,225/ with nationalized banks. The Assessing Officer in the rectification order rejected the claim of the assessee of deduction u/s 80P(2)(d) of the t Act in respect of both interest from co-operative co operative bank as well as nationalized bank. On further appeal, the Ld. CIT(A) allowed the claim of the assessee u/s 80P(2)(d) of the Act in respect of interest earned from deposits kept with co-operative co operative banks however ho did not give any finding in respect of interest from nationalized banks.
14. Before us, the Revenue is aggrieved with respect to deduction allowed by the Ld. CIT(A) in respect of interest from cooperative bank whereas the assessee is aggrieved with deduction not allowed in respect of interest from the nationalized bank.
15. We have heard rival submission of the parties on the issue issue-in-
dispute and perused the relevant material on record. As far as ground of appeal of the Revenue are concerned, we find fin that the Tribunal in the case of the assessee for assessment year 2014-15 2014 in 5741/Mum/2018, after considering the decision of the ITA No. 5741/Mum/2018, Hon'ble Karnataka High Court in the case of PCIT v. Totagar's Cooperative Sales Society (392 ITR 74),
74) which was relied reli upon Sai Prerana CoCo-op Credit Society Ltd. 19 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 Officer has allowed the claim of the assessee by the Assessing Officer, observing as under:
"7.
7. Having heard the rival contentions, we noticed that there is merit in the contentions of the assessee as it is supported by the order passed by the SMC Bench in the case of Citiscape Co operative Housing Society Ltd. (supra) and also Co-operative the decision rendered by the Division Bench in the case of Co operative Housing Society Ltd. (supra). For the Sea Grean Co-operative sake of convenience, we extract below the operative portion of the order passed by the Division Bench in the case of Sea Grean Co-operative operative Housing Society Ltd.(supra):
"5. We have carefully considered the rival submissions. The facts lie in a narrow compass, inasmuch as, the appellant is a Cooperative operative society, whos alia, included whose income, inter-alia, interest earned on deposits with another Cooperative bank. Accordingly, such income was claimed as exempt under section 80P(2)(d) of the Act. The claim has been denied primarily on account of the fact that section 80P(2)(d) of o the Act relates to the income earned from a Co operative society.
Co-operative In this context, the decision of the MumbaiTribunal in the Co operative Housing Society Ltd. (supra) case of Lands End Co-operative is rendered under identical circumstances and the following discussion n is relevant:-
relevant:
"8.3 We have heard the rival submissions and perused the material on record. We find that the CIT(A) enhanced the income of the assessee by rejecting the deduction u/s Rs.14,88,107/ being interest on 80P(2)(d) of the Act of Rs.14,88,107/-
with other Coop. banks by following the decision investment with in the case of Bandra Samruddihi Cooperative Housing Society Ltd.(Supra) which was passed on the basis of the decision passed by the Hon'ble Supreme Court in the case of Totagar's Cooperative Sale Society Ltd. In the case of Co operative Sale Society Ltd v/s ITAT (supra) the Totagar's Co-operative Hon'ble Supreme Court while interpreting the section 80P(2)(a)(i) of the Act held that surplus funds not immediately required in the business and invested in the short term deposit would be assessable under the head "income from other sources" where the Cooperative society is engaged in Sai Prerana CoCo-op Credit Society Ltd. 20 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 carrying on business of banking or providing credit facilities to its members and consequently no deduction is allowable u/s 80P(2)(a)(i) of the Act.
Act. Whereas in the case before us the co operative society which has derived issue is whether a co-operative income on investment with cooperative banks is entitled to deduction u/s 80P(2)(d). The provisions of Section 80P(2)(d) of the Act provide deduction in respect of income by way of interest or dividend on investments made with other Cooperative society. For the purposes of better proper understanding of these two provisions the relevant extract of the section are reproduced below: 80P: Deduction in respect of income of co co-operative Societies.
1. Where, in the case of an assesssee being a co-operative co society, the gross total income, includes any income referred to in sub-section section (2), there shall be deducted, in accordance section, the sums with and subject to the provisions of this section, sub section (2), in computing the total income of specified in sub-section the assessee.
2. The sums referred to in sub section (1) shall be the sub-section following, namely:- operative society namely: (a)In the case of a co-operative engaged in-
(i) Carrying on the business of banking or providing credit facilities to its members. The whole of the amount of profits and gains of business attributable to any one or more of much attributes.
(d)In respect of any income by way of interest or dividends derived by the co-operative co iety from its investments with society operative society, the whole of such income."
any other co--operative From the close perusal of the provisions of u/s 80P(2)(a)(i) and 80P(2)(d) it is clear that the former deals with deduction business in case of the co-
in respect of profits and gain of business co operative society carrying on business of banking or providing credit facilities to its members if the said income is assessable as income from business whereas latter provides for deduction in respect of income by way interest and dend derived by assessee from its investments with other dividend cooperative society. Thus it is amply clear that a cooperative society can only avail deduction u/s 80P(2)(d)(i) in respect of Sai Prerana CoCo-op Credit Society Ltd. 21 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 its income assessable as business income and not as income sources if it carries on business of the banking or from other sources providing credit facilities to its members and has income assessable under the head business whereas for claiming u/s 80P(2)(d) it must have income of interest and dividend on investments with other Co-operative Co ative society may or may not be engaged in the banking for providing credit facilities to its members and the head under which the income is assessable is not material for the claim of deduction under this section. Now will evaluate the assessee's case in the light of the decision of the Hon'ble Supreme court. The Honble Supreme Court in the case of Totagar's Co Co-operative Sale Society Ltd.(Supra) held that a society has surplus funds which are invested in short term deposits where the society is engaged in the business of banking or providing credit facilities to its members in that case the said income from short term deposits shall be treated and assessed as income from other sources and deduction u/s 80(P)(2)(a)(i) would not be available meaning thereby tthat hat deduction u/s 80(P)(2)(a)(i) is available only in respect of income which is assessable as business income and not as income from other sources. Whereas in distinction to this , the provisions of section 80(P)(2)(d) of the Act provides for deduction in respect of income of a coop society by way of interest or dividend from its investments with other coop society if such income is included in the gross total income of the such coop society. In view these facts and circumstances we are of the considered iew that the assessee is entitled to the deduction of Rs. view 14,88,107/- in respect of interest received/derived by it on deposits with coop. banks and therefore the appeal of the assessee is allowed by reversing the order of the CIT(A). The AO is directed acaccordingly.
5.1 It is clear that the Tribunal in the case of Lands End Cooperative Housing Society Ltd. (supra) has considered a similar situation and allowed the claim of the assessee. We find that the CIT(A) has placed reliance on the decision of the dabad Bench of the Tribunal in the case of State Bank Ahmedabad Co operative Credit Society Ltd 57 of India Employees Co-operative taxman.com 367. It is further noted by the CIT(A) that the said decision of the Ahmedabad Bench of the Tribunal has Bench of Mumbai Tribunal in the been referred to by the SMC Bench case of Shri Saidatta Cooperative Credit Society Ltd. (supra).
Sai Prerana CoCo-op Credit Society Ltd. 22 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 In our view, the reliance placed by the CIT(A) on the judgment of the Ahmedabad Bench of the Tribunal is quite untenable, inasmuch as, in the said case the interest income in question was earned from deposits kept with State Bank of India. Obviously, State Bank of India is not a CoCo-operative society so as to justify the claim that such interest earnings fall within the scope of section 80P(2)(d) of the Act. Further, the he reliance placed by the CIT(A) on the decision of the SMC Bench of Mumbai Tribunal in the case of Shri Saidatta Cooperative Credit Society Ltd.(supra) is also of no avail, set aside the matter to the inasmuch as, the Bench merely set-aside file of the Assessing Of ficer for examination afresh, whereas Officer in the case of Lands End Co-operative Co operative Housing Society Ltd(supra), the claim of exemption under section 80P(2)(d) of the Act with respect to the interest earned from a Co- Co operative bank has been upheld. Therefore, in vi view of the said precedent, the claim of the assessee deserves to be allowed. We hold so.
8. In view of the foregoing, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to allow respect of interest deduction u/s 80P(2)(d) of the Act in respect earned by the assessee from the deposits kept with Co- Co operative Banks."
Banks.
15.1 Respectfully following the finding of the Tribunal (supra) in the itself, we do not find any error in the order of case of the assessee itself, the Ld CIT(A) on the issue-in-dispute dispute for following the binding precedents. The grounds of appeal of the Revenue are accordingly dismissed.
15.2 As far as grounds of the assesseeseeking deduction u/s 80P(2)(d) of the Act for interest from other than cooperative bank i.e nationalized bank,are are concerned, the ld counsel relied on the decision of the Tribunal in ITA No. 604/Pun/2014 in the case of Shri Laxmi Narayan NagriSahkari Pat SansthanMaryadait for Sai Prerana CoCo-op Credit Society Ltd. 23 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 assessment year 2010-11 2010 and decision of hon'ble High Court of Culcutta in the case of PCIT Vs Gunja Samabay Krishi Unnayan Samity Ltd reported in (2013) 147 taxmann.com 518 (Calcutta). On perusal of the said decisions, we find that interest from short-
short term deposits with scheduled bank has been held as eligible by the Tribunal (supra) and Calcutta High Court (supra) under section 80P(2)(a)(i) of the Act ct and not under the section 80P(2)(d) of the Act. We are of the view that the Ld. CIT(A) has not adjudicated the issue in dispute of eligibility of deduction of interest from scheduled bank b u/s 80P(2)(d) of the Act,therefore Act, the assessee should be given one more opportunity to appear before the Ld CIT(A) so that he can give his finding on the matter. IIn the interest of the natural justice, we feel it appropriate to restore this issue bac back k to the file of the Ld. CIT(A) for deciding after providing adequate opportunity of being heard to the assessee. In the circumstances, the ground of appeal of the assessee is accordingly allowed for statistical purposes.
purposes
16. Now we take up the cross eals of the assessee and the cross-appeals Revenue for assessment year 2017-18 2017 18 in ITA No. 219 & respectively The grounds raised by the Revenue are 193/M/2023 respectively.
reproduced as under::
1. "Whether on the facts and circumstances of the case and correct in allowing deduction in law, the Ld.CIT(A) was correct u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the amendment made by Finance Act, 2015 in section 194A(3)(v) of the Act which excludes the Cooperative Banks from the Sai Prerana CoCo-op Credit Society Ltd. 24 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 definition inition of "Co-
"Co operative Society" and requiring them to deduct income tax at source under Section 194A of the Act that also makes the legislative intent clear that the Co- Co operative Banks are not that specie of genus co-operative co society, which are entitle d to claim deduction under the entitled special provisions of ChapterVIA in the form of Section 80P of the Act."
2. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring firstly, the sub section (4) in purpose of bringing on the statute book sub-section Section 80P of the Act to exclude the applicability of Section co operative bank 80P of the Act altogether to any co-operative ba and secondly, ignoring the fact that words used in section 80P(4) are "in relation to that can include within its ambit and scope even the interest income earned by the respondent assessee, a co-operative Co operative Bank and this operative Society from a Co-operative ion by Section 80P(4) of the Act even though without exclusion any amendment in Section 80P(2)(d) of the Act is sufficient to deny the claim of the assessee for deduction under Section 80P(2)(d) of the Act."
3. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring that whether the deposits and investment of surplus funds of required for its purposes, is made assessee not immediately required with Scheduled Bank or Nationalized Banks or with co- co operative Banks does not make a difference as far as the character of the income earned by assessee is concerned and it does not partake the character of its operational come from its activity as cooperative housing society, the income same would continue to be fully taxable and will not be eligible for deduction under section 80P(2)(d) of the Act."
4. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits, though Hon'ble Karnataka High Court in a detailed judgment discussing the law and various Sai Prerana CoCo-op Credit Society Ltd. 25 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 related issues in the case of PCIT Vs Totagar's Coo Cooperative Sales Society(392 ITR 74) has specifically decided the Question of Law about the allowability of interest earned from deposits with Cooperative Bank u/s. 80P(2)(d) of the Income Tax Act in favour of the Revenue."
16.1 The ground raised by the asse assessee ssee is reproduced as under:
1. On the facts and circumstances of the case in law, Ld. CIT(A) erred in disallowing 80P deduction on account of interest received from other than cooperative bank.
17. The grounds raised by the assessee and Revenue in above cross--appeals for AY appeals are identical to grounds raised in cross 2016-17 and therefore, same are adjudicated mutatis mutandis.
mutandis
18. Now we take up the appeal of the assessee bearing ITA 18 in relation to penalty u/s No.218/Mum/2023 for AY 2017-18 272A(1)(d) of the Act. The relevant ground is reproduced as under:
1. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming penalty of Rs.50,000/-
Rs.50,000/ u/s 270A of the Act.
19. Briefly stated facts of the case are that during assessment proceedings u/s 143(3) of the Act he Assessing Officer issued Act,the statutory notices u/s 142(1) of the Act dated 09.08.2018;
09.08.2018 25.09.2018 28.01.2019 and 30.09.2019. According to 21.08.2018; 25.09.2018;
the Assessing Officer those notices were not responded/complied by the assessee. It was contended by the assessee that counsel of the occasion in complying filing of assessee was busy on some occasions other occasions, he had undergone eye return/audit and on ot Sai Prerana CoCo-op Credit Society Ltd. 26 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 operation and therefore, no compliance was made. But the ld AO rejected the contention of the assessee and imposed penalty of @ of Rs.10,000/- for each default totaling to Rs.50,000/ Rs.50,000/-..
20. On further appeal, the Ld. CIT(A) also upheld the penalty CIT(A) observing that there was no reasonable cause for failure on the part of the assessee. The relevant finding of the Ld. CIT(A) is reproduced as under:
"4.0 4.0 The records of the assessee and its submissions were duly perused.It is found that Notice us 142(1) were issued found and served on the assessee on 09/8/2018, 21/08/2018, 25/09/2018, 28/01/2019 and 30/09/2019, fixing the dates for hearing on 23/8/2018, 10/10/2018, 06/02/2019, 07/10/2019 and 12/12/2019 respectively but there was no liance on the part of the assessee. As per Page 2 of the compliance assessment order, assessment proceedings were completed as per provisions of Section 144 of the I.T. Act, 1961. Show cause notice u/s 274 r.w.s. 272A(1)(d) dated 17/12/2019 was issued and served on the the assessee. Fresh opportunity was provided by issue of notice u/s 274 r.w.s. 272A(1)(d) dated 22/12/2020 and 25/03/2021. However, the assessee had put in a reply only on 06/01/2020 which reads inter alia as follows: "Dear Sir Our advocate went throught eyee Operation therefore he did not appeared same 2012 13 and A. Yr time he submitted reply for the A. Yr 2012-13 2013-14."
4.1 The assessee also submitted a prescription from an eye specialist, perusal of which reveals that the purported Authorized Representative of the assessee had undergone a cataract operation on 26/01/2019 and was advised rest for 3 weeks.
5.0 The plea taken by the assessee that the purported Authorized Representative was busy in finalization of accounts etc. or that he had undergone a cataract s surgery does not appear to be a reasonable cause for failure on the Sai Prerana CoCo-op Credit Society Ltd. 27 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 part of the assessee / purported authorized representative to comply with the Notices issued over a period of more than one year and /or request for online adjournments. Even this basic work k was not carried out. The reasons for non- non compliance to Notices are general in nature and without sufficient cause. The assessee had thus not demonstrated with documentary evidence any reasonable and just cause for failure on its part to carry out its duties duties of compliance.
non cooperation on the part of the There was a total non-cooperation assessee during the entire course of assessment proceedings and the reasons put forth are not sufficient enough to exempt the assessee from the clutches of the provisions of section 272A(1)(d).
5.2 In the facts and under the circumstances of the case, I do not find any merit in the submissions of the assessee and as such the instant appeal is hereby disposed off as "DISMISSED."
21. We have heard rival submission of the parties on the is issue-in-
dispute and perused the relevant material on record. We find that the Assessing Officer has levied penalty u/s 272A of the Act for compliance on the part of the assessee for various notices non-compliance issued u/s 142(1) of the Act. We find that regarding th the notices u/s 142(1) of the Act dated 09.08.2018, 21.08.2018 and 25.09.2018, 25.09.2018 it was submitted by the assessee that the authorized representative of the assessee was busy in preparation of profit and loss account and balance sheet for tax payers as the due date of filing for income-tax tax return for assessment year 2018 19 in the case of non-
2018-19 non tax audit taxes was 31.07.2019 and in the case of tax audit , was on 30.09.2018 ,therefore, therefore, due to rush of filing income income-tax returns, he could not respond to the Assessing Officer. Regarding the notice Assessing dated 28.01.2019, it was submitted that representative of the Sai Prerana CoCo-op Credit Society Ltd. 28 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 assessee was operated by a doctor for eye surgery and therefore said notice could not be complied.
21.1 Regarding the notice for 30.09.2019, it was submitted that non tax audit cases, due to date of filing of return of income for non-tax cases he could not respond to the notice. It was submitted on the part of the non assessee that there was no deliberate intention to non-cooperate to the Assessing officer. ore us, the Ld. Counsel of the assessee officer Before relied on the decision of the Tribunal in the case of Triumph International Finance India Ltd in ITA No. 1870/Mum/2020 1870/Mum/2020.
Tribunal(supra) is reproduced as under:
The relevant finding of the Tribunal "4.
4. We have heard the submis submissions sions made by rival sides. The Assessing Officer vide order dated 21/12/2019 has levied Rs.10,000/ under section 272A(1)(d) of the Act for penalty of Rs.10,000/-
compliance of the notice issued under section. 142(1) of non-compliance furnished by the the Act. Undisputedly, no explanation was furnished assessee before the Assessing Officer for non compliance of non-compliance the notice under section 142(1) of the Act. As per the contentions of ld. Authorized Representative of the assessee, the notice under section 142(1) of the Act was served on the essee electronically. The Department was gradually assessee moving towards e assessments and the notices were being e-assessments served to the assessee online/electronically and the year 2019 being the first year of this shift from physical to fact that assessee was not electronic mode coupled with the fact carrying out any business operations during the relevant period and hence, was working on minimal employees, the employees of the assessee failed to take not of the notice issued electronically. We are satisfied that the assessee has been able to show reasonable cause for not responding to the initial notice issued under section 142(1) of the Act. It is pertinent to mention here that subsequently on learning about ongoing assessment proceedings, the assessee Assessing Officer and furnished the appeared before the Assessing Sai Prerana CoCo-op Credit Society Ltd. 29 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 requisite details. The Assessing Officer after taking note of the documents/submissions of the assessee has passed the assessment order under section 143(3) of the Act . It is not a case of absolute non-appearance non sessee before the of the assessee Assessing Officer.
5. The first appellate authority has rejected the explanation furnished by the assessee for non compliance of the notice non-compliance issued under section 142(1) of the Act merely for the reason under section 272A(1)(d) of that during penalty proceedings under the Act, the assessee has not stated the reasonable cause. We are not in agreement with the findings of CIT(A). The assessee has explained that about ongoing assessment proceedings the assessee came to know only on receipt of order u/s. 272A(1)(d) of the Act and demand notice. The explanation furnished by the assessee before the CIT(A) and before the Tribunal is consistent. We are satisfied that nonappearance of the assessee in response to the initial the Act was not deliberate. The notice under section 142(1) of the year 2019 being the initial year of shift towards digital and electronic mode, the mistake appears to be bonafide. The assessee has been able to show reasonable cause for the failure to comply with statutory notice u/s. 142(1) 142(1 of the Act.
Thus, in our view penalty levied u/s. 272A(1)(d) of the Act is unsustainable. The Assessing Officer is directed to delete the penalty."
21.1.1 In the case of BU Bhandari Auto P ltd in ITA No. 324/PUN/2022 also the Tribunal deleted the penalty u/s 272A(1)(d) observing as under:
6. We have carefully gone through the impugned orders and "6.
find that on receipt of notice u/s 142(1) dated 05.09.2019, the appellant sought time for 15 days to file the required filed on 04.11.2019.
details and the requisite details were filed From the material on record, it appears that when the appellant sought time to file the details, thesaid application was not disposed of by the Assessing Officer either rejecting the said application or granting time. We also find that ltimately the assessment was completed by the Assessing ultimately Officer u/s 143(3) of the Act accepting the returned income.
Sai Prerana CoCo-op Credit Society Ltd. 30 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 Thus, it will conclusively prove that no prejudice was caused non complying with the to the Assessing Officer on account of non-complying notice u/s 142(1) 142(1) issued on 05.09.2019 and inaction of the Assessing Officer on the adjournment petition moved by the assessee would also enable the appellant to believe that the time to comply with the extension of time as prayed was circumstances, we are of the granted. Therefore, in the circumstances, considered opinion that it cannot be said that the appellant is guilty of contumacious conduct to comply with the notice u/s 142(1) of the Act. Thus, it is not a fit case for levy of penalty u/s 272A(1)(d) of the Act. Accordingly, we direct di the Assessing Officer to delete the penalty of Rs.10,000/-.
Rs.10,000/ Hence, the ground of appeal raised by the assessee in the present appeal stands allowed."
allowed.
21.2 In the instant case before us also the assessee could not comply with the issue of noticesdue notice to the reason that the authorized representative of assessee was occupied in regulatory compliance on some occasions and on one occasion, he could not respond due to medical emergency. In our opinion, the assessee compliance on the should not be penalized for any bonafide non-compliance part of the authorized representative of the assessee. The assessee has duly explained the reasons for non-compliance.
non compliance. In our opinion, the failure in compliance to the notices is not deliberate on the part of the assessee. The reasons cited ci by the assessee for failure in compliance of the statutory notices u/s 142(1) of the Act are not malafide. Also, we note that ultimately the assessment order has been passed u/s 143(3) of the Act. The circumstances of the instant case being identical tto the cases cited by the Ld. Counsel of the assessee. Therefore, respectfully following the same, we set aside the order of the Ld. CIT(A) on the issue dispute and direct to issue-in-dispute Sai Prerana CoCo-op Credit Society Ltd. 31 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 delete the penalty levied u/s 272A of the Act by the Assessing Officer.
22. Now we take up the cross cross-appeals appeals of the assessee and the Revenue for AY 2018-19.
2018 The grounds raised by the Revenue are reproduced as under::
1. "Whether on the facts and circumstances of the case and "1.
in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the amendment made by Finance Act, 2015 in section 194A(3)(v) of the Act which excludes the Cooperative Banks from the "Co operative Society" and requiring them to definition of "Co-
deduct income tax at source under Section 194A of the Act that also makes the legislative intent clear that the Co-Co operative Banks are not that specie of genus co-operative co society, which are entitled to claim deduction under unde the special provisions of Chapter VIA in the form of Section 80P of the Act."
2. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned rned from deposits in cooperative bank ignoring firstly, the sub section (4) in purpose of bringing on the statute book sub-section Section 80P of the Act to exclude the applicability of Section co operative bank and 80P of the Act altogether to any co-operative secondly, ignoring the fact that words used in section 80P(4) are "in relation to" that can include within its ambit and scope even the interest income earned by the respondent assessee, a co operative Bank co-operative Society from a Co-operative and this exclusion by Section 80P(4) of the Act even though without any amendment in Section 80P(2)(d) of the Act is sufficient to deny the claim of the assessee for deduction under Section 80P(2)(d) of the Act."
3. "Whether on the facts and circumstances of the case and was correct in allowing deduction in law, the Ld.CIT(A) was Sai Prerana CoCo-op Credit Society Ltd. 32 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring that whether the deposits and investment of surplus funds of assessee not immediately required for its purposes, is i made with Scheduled Bank or Nationalized Banks or with co- co operative Banks does not make a difference as far as the character of the income earned by assessee is concerned and it does not partake the character of its operational income from its activity a s cooperative housing society, the as same would continue to be fully taxable and will not be eligible for deduction under section 80P(2)(d) of the Act."
4. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits, though Hon'ble Karnataka High Court in a detailed judgment discussing the law and various related issues in the case of PCIT Vs Totagar's Cooperative Society(392 IT 74) has specifically decided the Sales Society(392 Question of Law about the allowability of interest earned from deposits with Cooperative Bank u/s. 80P(2)(d) of the Income Tax Act in favour of the Revenue.' 22.1 The grounds raised by the assessee are reproduced as under:
u
1. On the facts and circumstances of the case in Law, Ld. CIT(A) erred in confirming disallowing 80P deduction on account of interest received from other than cooperative bank.
2. On the facts and circumstances of the case in Law, Ld. CIT(A) erred in confirming addition of Rs. 16,53,669/-
16,53,669/
23. As far as ground No. 1 of the appeal of the assessee and ground No. 1 to 4 of the appeal of the Revenue are concerned same cross appeals of the assessee for assessment are identical to the cross-appeals year 2016-17 17 and therefore, theref ore, same are adjudicated mutatis mutandis.
Sai Prerana CoCo-op Credit Society Ltd. 33 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 23.1 As far as ground No. 2 of the appeal of the assessee is concerned, the assessee has raised the issue of addition of Rs.16,53,669/-as s other receipts shown under the head " income relevant table reproduced by the Assessing from other sources".. The relevant Officer in para 5, is extracted as under:
Sr. No. Particulars Amount (in Rs.)
1. Interest from FD in Bank 3,50,60,858/-
2. Interest on bank savings 9,817/-
3. Dividend received from Mumbai Dist. 5,246/-
Central Co-op.
Co Bank
4. Other receipts 16,53,669/-
24. However, we find that ultimately in the assessment order, the Assessing Officer has assessed income u/s 56 of the Act in respect of interest earned from deposits with bank amounting to Rs.3,50,60,858/- and after reducing the corresponding expenses of Rs.1,20,70,152/- , he made addition of Rs.2,46,59,438/ Rs.2,46,59,438/-.
Therefore, no addition has been made by the Assessing Officer in respect of other receipts of Rs.16,53,669/-
Rs.16,53,669/ and therefore, the ground No. 2 raised by the assessee being infructuous, infructuous same is rejected.
25. Now, we take up the cross appeals filed by the assessee and the Revenue for AY 2020-21.The 2020 .The grounds raised by the Revenue are reproduced as under:
1. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction us.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the Sai Prerana CoCo-op Credit Society Ltd. 34 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 amendment made by Finance Act,Act, 2015 in section 194A(3)(v) of the Act which excludes the Cooperative Banks from the definition of "Co-
"Co operative Society" and requiring them to deduct income tax at source under Section 194A of the Act that also makes the legislative intent clear that th the Co- operative Banks are not that specie of genus co-operative co society, which are entitled to claim deduction under the special provisions of Chapter VIA in the form of Section 80P of the Act."
2. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring firstly, the sub section (4) in purpose of bringing on the statute book sub-section Section 80P of the Act to exclude the applicability of Section co operative bank and 80P of the Act altogether to any co-operative secondly, ignoring the fact that words used in section 80P(4) are "in relation to" that can include within its ambit and scope even the interest income earned by by the respondent assessee, a coco-operative Society from a Co-operative operative Bank and this exclusion by Section 80P(4) of the Act even though without any amendment in Section 80P(2)(d) of the Act is sufficient to deny the claim of the assessee for deduction under Section 80P(2)(d) of the Act."
3. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring that whether the deposits and investment of surplus funds of assessee not immediately required for its purposes, is made with Scheduled Bank or Nationalized Banks or with co- co operative Banks does not make a difference as far as the earned by assessee is concerned character of the income earned and it does not partake the character of its operational income from its activity as cooperative housing society, the same would continue to be fully taxable and will not be the Act."
eligible for deduction under section 80P(2)(d) of the
4. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction us.80P(2)(d) of the Income Tax Act in respect of interest Sai Prerana CoCo-op Credit Society Ltd. 35 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 earned from deposits, though Hon'ble Karnataka High Court in a detailed ju dgment discussing the law and various judgment related issues in the case of PCIT Vs Totagar's Cooperative Sales Society(392 IT 74) has specifically decided the Questionof Law about the allowability of interest earned from 80P(2)(d) of the Income deposits. with Cooperative Bank u/s. 80P(2)(d) Tax Act in favour of the Revenue."
25.1 The ground raised by the assessee is reproduced as under:
1. On the facts and circumstances of the case in Law, Ld. "1.
CIT(A) erred in confirming disallowing 80P deduction on account of interest received received from other than cooperative bank.
2. On the facts and circumstances of the case in Law, Ld. CIT(A) erred in confirming addition of Rs. 23,16,155/-."
23,16,155/
26. The grounds raised by the assessee and the Revenue in the above appeals are identical to grounds raised aised in assessment year 2018-19 19 therefore, same are adjudicated mutatis mutandis.
mutandis
27. In the result, appeals of the assessee and the Revenue are decided as under:
Sr. No. ITA No. Assessment Year Result
1. 217/M/2023 2013-14 allowed
2. 220 /M/2023 2016-17 dismissed
3. 221/M/2023 2016-17 Allowed for statistical purposes
4. 218/M/2023 2017-18 allowed
5. 219/M/2023 2017-18 Allowed for statistical purposes
6. 214M/2023 2020-21 Allowed partly for Sai Prerana CoCo-op Credit Society Ltd. 36 ITA Nos. 217, 220, 221, 192/M/2023& 192 to 195/M/2023 statistical purposes
7. 215/M/2023 2018-19 Allowed partly for statistical purposes
8. 192/M/2023 2016-17 dismissed
9. 193/M/2023 2017-18 dismissed
10. 194/M/2023 2018-19 dismissed
11. 195/M/2023 2020-21 dismissed Order pronounced nounced in the open Court on 27/04/2023.
/04/2023.
Sd/- Sd/-
Sd/
(KULDIP
KULDIP SINGH
SINGH) (OM
OM PRAKASH KANT)
KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 27/04/2023
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai