Income Tax Appellate Tribunal - Chandigarh
The C.D. Co-Operative Credit Society ... vs Acit, Mandi on 3 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE MS. DIVA SINGH, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA Nos.1075/Chd/2014
(Assessment Year : 2008-09)
The C.D. Co-operative Credit Society Ltd., Vs. The A.C.I.T.,
HO Gohar, PO Chail Chowk, Circle Mandi, Bhiuli,
Teh. Chachiot, Distt. Mandi, Distt. Mandi,
Mandi. Mandi.
PAN: AAABT2301D
ITA Nos.1076/Chd/2014
(Assessment Year : 2009-10)
The C.D. Co-operative Credit Society Ltd., Vs. The D.C.I.T.,
HO Gohar, PO Chail Chowk, Circle Mandi, Bhiuli,
Teh. Chachiot, Distt. Mandi, Distt. Mandi,
Mandi. Mandi.
PAN: AAABT2301D
ITA Nos.1077/Chd/2014
(Assessment Year : 2010-11)
The C.D. Co-operative Credit Society Ltd., Vs. The D.C.I.T.,
HO Gohar, PO Chail Chowk, Circle Mandi, Bhiuli,
Teh. Chachiot, Distt. Mandi, Distt. Mandi,
Mandi. Mandi.
PAN: AAABT2301D
And
ITA Nos.1078/Chd/2014
(Assessment Year : 2011-12)
The C.D. Co-operative Credit Society Ltd., Vs. The D.C.I.T.,
HO Gohar, PO Chail Chowk, Circle Mandi, Bhiuli,
Teh. Chachiot, Distt. Mandi, Distt. Mandi,
Mandi. Mandi.
PAN: AAABT2301D
(Appellant) (Respondent)
Appellant by : S/Shri Ajay Jain, CA
B.M. Mongia, CA
& Rohit Kaura, Adv.
Respondent by : Shri Ravi Sarangal, CIT DR
Date of hearing : 13.07.2017
Date of Pronouncement : 03.08.2017
2
O R D E R
PER BENCH:
Thi s bunch of f our a p p e a l s r e l a t e t o t h e s a me a s s e s s e e a n d ha s b e e n fi l e d ag a i n s t se p a r a te o r d e r s of L d . CI T( A p p e a l s ) , S h i m l a , a l l da te d 0 4 . 0 9 .2 0 1 4 , r e l a t i n g t o a s s e s s m e nt y e a rs 2 0 0 8 - 0 9 a n d 20 1 1 - 1 2 .
2. I t w a s co m m o n g r o u n d b et w e e n b o t h t h e p a r t i e s t h a t t h e i s s u e ra i s e d i n a l l t h e a p p e a l s w a s i d en t i c a l a n d, t h e r e f o r e, t he y were all h e a rd t o g e th e r an d are be i n g disposed off by this common order. For t he sake of c o n v e n i e nc e w e sh a l l b e d e a l i n g wi t h t h e f a c t s i n th e c a s e o f I TA N o . 1 07 5 / C hd / 2 0 1 4 I T A N o . 1 07 5 / C hd / 2 0 1 4
3. Brief facts of the case are that th e a s s es s e e f i l e d r e t u r n d e c l a ri n g g r o ss i n co m e o f R s . 38 , 5 0 , 7 73/ - w hi c h w a s c l ai m e d t o b e d e d u ct i b l e u /s 8 0 P ( 2) ( a ) ( i ) o f t h e I n co m e Ta x A c t , 1 9 6 1 wh i c h p ro v i d e s de d u c t i o n t o a co o p e r a t i ve s o c i e t y o f w h ol e o f t h e p r o f i ts a n d g a i n s a t t ri bu t a b l e to carrying on of b u s i n e s s a c t i v i t i e s o f b a nk i n g or p r o v i d i ng c r e d i t f ac i l i t i e s to i t s m e m be r s . Th e A s s e s s me n t u/ s 1 4 3 ( 3 ) o f t h e A c t i n t h i s c a s e w a s co m pl e t e d o n 1 6. 1 1 . 20 1 0 , a n d i t w a s h e l d t h a t th e a s s e s s e e d i d n o t q u a l i f y f or d e d u c t i on u / s 8 0 P ( 2 ) ( a) ( i ) s i n c e t h o u g h i t w a s a c o o p e r a ti v e s o c i e t y p r o v i d i n g c r e d i t f a c i l i t i e s t o i t s m e m b e r s , i t ha d e a r n e d i n c o m e f r o m ban k i n t e r e s t. A l so i t w a s f o u n d t h a t t h e a s s e s s e e h a d pr o v i d e d l o a n s ot h e r t h an f o r ag r i c u l t u ra l 3 purposes and thus it di d no t qualify as a primary a g r i c u l t ur a l c r ed i t s o ci e t y . Th e A O a l s o f ou n d t h a t t h e assessee di d not qualify as a primary co o p e r a t i ve a g r i c u l t ur a l a nd r u r a l d ev e l o p me n t b a n k a l s o . Th u s the a s s e s s e e s c l a i m o f d e d u c t i o n u/ s 8 0 P ( 2 ) ( a ) ( i ) wa s d e n i e d . On appeal the d i s a l l o w a nc e made was u p he l d by the C I T( A p p e al s ) . Th e a s s e s s ee a gr e e d to t he de c i s i o n of C I T( A p p e al s ) t h at i n c o m e f r o m b an k i n t e r e s t h as t o b e t a x ed u / s 5 6 o f th e I . T. A c t , 1 9 6 1 a n d n o f u r th e r ap p e al w a s f i l e d. Th e r e a f t e r n o ti ce u / s 1 48 i s s ued t o t h e a s s e sse e f o r th e reason t h at w hi l e m a k i ng d i s al l o w a n c e of the interest i n c o m e , t h e s a me w a s n o t c o m put e d a s p e r s e ct i on 5 6 and b u s i n e s s e x p e nse s h a d b e e n d e du c t e d . I t w a s fo u n d t h at i n c o m e fr o m o the r s o u r c es w a s fo u n d s u b je c t e d to e x c e s si v e d e d u c t i o n t h us r e s u l t i n g i n e s ca p e m e n t o f i n c om e . N o t i ce u / s 1 4 8 o f t h e A c t w a s i s s u e d to t h e a s se s s e e i n r e s p o n se t o w h i ch t h e a s se s s e e di d n ot r ev i s e t he r e tu r n a n d s t at ed t h a t r et u r n f i l e d e a r l i er m a y b e tr e a t e d a s r et u r n f i l e d . Th e A s s e s s i n g O f f i c er , a f t e r a d et a i l e d d i s c u s si o n , concluded t h a t d e d u c t i on u / s 8 0 P ( 2 ) ( a ) ( i ) i s a v a i l a b l e o n ly i n r e s p e ct o f i n t e re s t fr o m t h e m e m be r s whi c h i s t h e i n c o me f r o m t h e a c t i v i t y o f p ro v i d i n g c r e d i t f a ci l i t i e s t o t h e m em b e r s a n d interest i n co m e from the deposits with banks was not e l i g i b l e f o r de d uc t i o n u /s 8 0 P ( 2 ) ( a ) ( i ) a s h e l d b y th e H o n ' b l e S u p r e m e C o u rt i n t h e c a s e o f To t g a r s C o o p e r a t i v e S a l es L t d . v s I TO a n d d e c i s i o n o f CI T( A p p e a l s ) i n a s s es s e e ' s o wn case. Th e Assessing O f f i ce r thereafter c om p u t e d the b u s i n e s s i n co m e o f t h e a s s e s s e e u n d e r t w o s u b- h e a d i . e . 4 I n co m e eligible for d e d u ct i o n u/s 8 0 P ( 2) ( a ) ( i ) , and t h at w h i c h i s no t e l i gi b l e . A f te r d e t ai l e d d i s c u s si o n ma d e i n t h e a s s e s s m e nt o r der f r o m p a g e 2 t o 1 1 , t h e i n c o m e w h i c h wa s n o t e l i g i b l e f or d e d u c t i o n 8 0 P( 2) ( a ) ( i ) w a s w o rke d o u t a t R s . 7 , 7 4 , 84 4 / - . Fu r t h e r t h e A ss e ss i n g O f f i ce r d i s al l o w e d t he b a n k i n t e re s t i n c o m e u / s 57 ( i i i ) a t R s . 4 8, 1 3 , 02 7 / - , a nd u n e x p l a i ne d i ncr e a s e i n t h e r e se r v e a t R s . 7, 5 4 ,6 4 3 / - a nd u n e x p l a i ne d i ncr e a s e i n t h e p ro v i s i o n s a t Rs . 39 , 0 9 , 3 9 8 /- w e r e a l s o a d de d t o t h e t o t a l i n co m e o f t h e a s s e ss e e d u r i ng 1 4 3 ( 3 ) / 1 48 p r o ce e d i n g s .
4. A g g r i e v e d b y t h e s a m e t h e a s s e ss e e f i l e d pr e s e n t a p p e a l b ef o r e us r a i s i n g t h e f ol l o w i n g g r o un d s :
"1. That the Learned CIT(A) has erred in law as well as on facts in not adjudicating the issue that the reassessment proceedings are without jurisdiction, illegal and bad in law.
2. That the order of the Ld. CIT(A) is arbitrary in not considering that the alleged reasons recorded for reopening lack 'reasons to believe' and hence invalid.
3. That the Ld. CIT(A), has grossly erred in not considering that the alleged reason recorded for reopening lack quantum of income having escaped assessment thus making reasons without cogent and tangible material.
4. That the Learned CIT(A) is not justified in upholding the reassessment order of the AO because there was no new/fresh material that had come to the possession of the AO, and it was only a case of 'change of opinion' and not per se 'reasons to believe'.
5. That the Ld. CIT(A), has erred in not considering that the noticeu/s148has been issued mechanically merely on the borrowed opinion of the order of CIT(A), without the application of mind by the AO himself on the material already on record which is illegal and does not confer valid jurisdiction upon the AO to frame reassessment.5
6. That the Learned CIT(A) is not justified in upholding the reassessment order because in the alleged 'reasons recorded' the term 'prima facie' denotes that the reopening is for verification instead of there being any 'reasons to believe' on any convincing material.
7. That the Learned CIT(A), is not justified in upholding the re-assessment order of the assessing officer as the reassessment order had again been made on the same facts and circumstances and on the same material already on record which tantamount to review not permissible under law.
8. That the Learned CIT(A), is not justified in upholding the denial of deduction to the appellant u/s 80P(2)(a)(i), to which the appellant-assessee is entitled as per law.
9. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard and disposed off."
5. S u b s e q u e nt l y th e assessee filed r e v i s e d / a dd i t i o n a l g r o u n d s o f a p pea l v i d e i t s l e t te r d a t e d 8 . 2 . 2 0 17 stating as under:
It is humbly prayed that the above noted appeal is fixed for hearing before the Hon'ble ITAT, Chandigarh Bench on 15th February, 2017. We respectfully submit, that we want to take the following additional/ revised grounds of appeal.
1. That the Learned Assessing Officer has wrongly invoked the provisions of section 147/148 solely on the basis of CIT(A) order for A.Y.2007-08and that too on wrong facts and without having any fresh material and therefore the reassessment on the basis of change of opinion is not permissible under law.
2. That the Learned CIT(A), is not justified in upholding the denial of deduction to the appellant u/s 80P(2)(a)(i), to which the appellant-assessee is entitled as per law, and judgment in the case of Totgars, co-operative sale society ltd., 322 ITR 283 (SC), is not applicable to the case of the appellant society.
3. The Learned CIT(A) has erred in upholding the addition of Rs.7,54,643/- and Rs.39,09,398/- on account of unexplained increase in reserves and provisions by taking the wrong figures of other funds and without considering the facts and reply of the assessee.
4. Without prejudice to the ground of appeal No. 2, and strictly in the alternative, if the income of the 6 appellant is considered u/s 56 as income from other sources then the Learned AO & CIT(A) has erred by not allowing deduction u/s 57(iii) on account of interest paid on borrowed amount.
5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard and disposed off.
We also submit that grounds No. 1 & 4 were not taken before the CIT(A) and these grounds are purely legal grounds and therefore we request your honour to admit the grounds No. 1 & 4 in view of well settled law that the legal ground can be raised any time as per the ratio laid down by the Hon'ble Supreme Court in the case of NTPC Ltd. Vs. CIT, 229 ITR 383, therefore, we request your Honours to admit the above legal grounds."
6. B e f o r e u s L d C o u n s e l f o r t h e a s s e s s e e r e l yi n g upon i ts a bo v e a p pl i c a t i on r e q u es t e d that the r e v i s e d / ad d i t i ona l g r o u n ds b e adm i t t e d .
7. W e h a v e h e a r d b o t h t h e p a r t i e s. We find that g r o u n d N o . 1 & 4 r a i s e d i n t he a b o v e a p p l i ca t i o n o f t h e assessee, c ha l l en g i n g the v a l i di t y of the r e as s e s s m e n t p r o c e e d i ng s a n d c l a i m i n g a l l o w a n c e o f e x p e ns e s a s p e r s e c t i o n 5 7 ( 3 ) o f t h e A c t , h a s be en r a i s e d f o r th e f i r s t t i m e b e f o r e u s, h a v i ng n o t b e e n c h a l l e n g e d / c l ai m e d b e f o r e t he L d . CI T( A ) . Since these are l e g al g r o u nd s w hi ch can be d e c i d e d o n t h e ba s i s o f f a c t s a l rea d y o n r e c o r d w e a d m i t t h e s a m e f o r a d j u d i ca t i o n .
8. I n G r o un d No . 3 t h e a s s es s e e h as c h a l l e n g e d t h e action of the L d . CI T ( A p p e a l s) in making addition on account of unexplained i n c r e as e in r es e r v e s. Th e said g r o u n d wa s n ot p a r t o f t h e g r o un d s r a i se d i n t he o r i g i na l m e m o r a n d um of appeal. But since it challenges the a d d i t i o n u p h e l d b y t h e CI T( A ) , i n t h e i n te r e s t o f ju s t i c e , w e 7 a d m i t t h e s a m e fo r a d j u d i c a t i o n.
9. Th u s a l l t h e g rou n d s r a i se d b y th e a s s e s se e v i de i t s s u b s e qu e n t a p p l i c a t i o n a r e a d m i t t e d fo r a dj u d i c a t i on and a r e t r e a t ed a s t h e o n l y gr o u n d s t o be ad j u d i c a t ed upon, r e p l a ci n g the original grounds r a i se d in the m e m o r a n d um o f a p p e a l .
10. F u r t h e r we o b s er v e t h a t th e a s se s s e e h a v i n g n o t raised the legal grounds b e fo r e t h e CI T( A ) , h e di d n o t h a v e a n o c c a s i on t o ad j u d i c a t e t h e m . A l s o t h e i s s u e s ad j u d i c a t ed o n m e r i t s w e r e n o t t a k e n i n t he r i g h t p e r s p e cti v e i n t h e a b s e n c e o f c ha l l e n g e t o t h e l e ga l g r o u n d s . Th e r e fo r e i n t h e i n t e r e s t o f j u s t i ce w e ar e i nc l i n ed t o se n d t he wh o l e m a tt er b a c k t o t h e CI T( A ) t o a d j ud i c a t e a l l i s s u es r a i s ed i . e . l e gal a n d o n m e r i t s , af r e s h a n d i n a c co r d a n c e w i t h l a w. N e e d l e s s to add that the assessee be given due o p p or t u n i t y of hearing.
11. The appeal of the assessee, therefore, stands allowed for statistical purposes.
I T A N o . 1 07 6 / C hd / 2 0 1 4 I T A N o . 1 07 7 / C hd / 2 0 1 4 & I T A N o . 1 07 8 / C hd / 2 0 1 4
12. It is relevant to observe here that the facts and circumstances of these appeals are similar to the facts and circumstances in ITA No.1075/Chd/2014 and the findings given in ITA No.1075/Chd/2014 shall apply mutatis mutandis to these appeals also. 8
13. I n t h e r es u l t , a l l t h e a p p e a l s o f t h e a s s e s s e e a re a l l o w e d f o r s ta t i s t i c a l p ur p o s e s.
O r d e r p r on o u n c ed i n t h e o p e n cou r t .
Sd/- Sd/-
(DIVA SINGH) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 3 r d August, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh