BALA SAMABAY KRISHI UNNAYAN SAMITY LTD.,WEST MIDNAPUR V. A.C.I.T., CIRCLE - 38, PASCHIM MEDINIPUR, PASCHIM MEDINIPUR

ITA 1376/KOL/2024

AI Insights

The case involves Bala Samabay Krishi Unnayan Samity Ltd., an agricultural cooperative society, appealing against the orders of the National Faceless Appeal Centre, Delhi, which upheld the assessments made by the ACIT, Circle 38, Midnapur. The assessments for A.Y. 2017-18 and 2018-19 included additions under various heads and disallowances of deductions under section 80P of the Income Tax Act, 1961. The tribunal found that the additions made were not in line with the reasons recorded for reopening the assessment under section 148, leading to the quashing of the assessment orders. However, the penalty imposed for delay in filing the Tax Audit Report was upheld due to the society's failure to provide a satisfactory reason for the delay.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473976 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 21-06-2024
• Other Referred Cases: Jet Airways (I) Ltd. vs. DCIT, Sheela Foam Ltd. Vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANINDYA KUMAR BANDOPADHYAY
• Assessee Lawyers: SAUMITRA CHOUDHURY
• Keywords: Set aside; Difference of opinion; Change of opinion; Reasonable cause
• Section: 147; 148; 144; 143(3); 142(1); 143(2); 250; 139(1); 80P; 44AB; 273B; 271B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA Nos. 1376 to 1378/KOL/2024 Assessment Years: 2017-18 & 2018-19 Bala Samabay Krishi Unnayan Samity Ld. Vill. & P.O. Bala, Ghatal, West Midnapur, West Bengal-721201 Vs ACIT, Circle 38, Raja N.L. Khan Road, Paschim Medinipur, West Bengal- 721101 (Appellant) (Respondent) PAN: AAABB0497N Present for: Appellant by : Shri Saumitra Choudhury, AR Respondent by : Shri Anindya Kumar Bandopadhyay, DR Date of Hearing : 07.11.2024 Date of Pronouncement : 19.11.2024 O R D E R PER ANIKESH BANERJEE, JUDICIAL MEMBER: A bunch of appeal was filed by the assessee against the order of the National Faceless Appeal Centre, Delhi [in brevity ‘the learned CIT (A)’], order passed under Section 250 of the Income-tax Act, 1961 (in brevity, ‘the Act’) for A.Ys. 2017-18 & 2018-19 vide order dated 24.04.2024 and 03.05.2024 respectively. The impugned orders are emanated from the order of the learned ACIT, Circle 38, Midnapur (in brevity, ‘the learned AO’), date of order 28.12.2019, order passed u/s 144 of the Act for AY 2017-18 and the assessment unit Income tax department order passed u/s 147 read with section 144B of the Act date of order 27.03.2023 for 2018-19 and order passed u/s 271B of the Act date of order 14.09.2023 for A.Y. 2018-19. Page | 2 ITA No.1376 to 1378/KOL/2024 Bala Samabay Krishi Unnayan Samity ltd.; A.Y. 2017-18 & 2018-19 2. Two appeals are same nature of fact and having common issue related to ITA No.1376 and 1377/KOL/2024. ITA No. 1376/KOL/2024 for A.Y. 2017-18, is taken as lead case and proceed for adjudication. The appeal, ITA No. 1378/Kol/@024 is related to penalty and adjudicated separately. 3. The grounds in ITA No. 1376/Kol/2024 raised by the assessee are reproduced below:- “1. For that on the facts of the case, the order passed by the Ld. CIT(A) on 24.04.2024 which is completely arbitrary, unjustified and illegal. 2. For that on the facts of the case, the impugned order is at best capable of being classified as a case of mere change of opinion, hence, the assessment is bad in law should be quashed. 3. For that on the facts of the case, the Ld. CIT(A) was wrong in dittoing the order of the A.O. and not justified in confirming the addition of Rs. 4,73,145/- as profit as per profit & loss account of the society chargeable to tax denying deduction u/s. 80P of the I.T. Act which is completely arbitrary, unjustified and illegal. 4. For that on the facts of the case, A.O. was wrong in not considering the fact that the assessee being a registered co-operative society is carrying on business and providing credit facilities to its members and the assessee is eligible for deduction u/s. 80P(2) of the Income Tax Act under chapter VIA, as such the action of the Ld. CIT(A) is baseless and should be quashed. 5. For that on the facts of the case, the Ld. CIT(A) was wrong in dittoing the order of the A.O. and not justified in confirming the disallowance of Provision for NPA- Unsecured Loan Rs. 15,31,490/- and Provision for NPA- OD Interest on Loan Rs. 4,50,048/- aggregating Rs. 19,81,538/- debited in the P&L Account which is completely arbitrary, unjustified and illegal. 6. For that the appellant. A primary agricultural co-operative credit society registered under the West Bengal Co-operative Societies Act, and its accounts is statutorily audited by Government co-operative auditor appointed by the Registrar of Co-operative Societies, Co- operation Department, Govt. of West Bengal who has submitted his Page | 3 ITA No.1376 to 1378/KOL/2024 Bala Samabay Krishi Unnayan Samity ltd.; A.Y. 2017-18 & 2018-19 Audit Report along with audited accounts on 23.08.2020, thus the assessee could not file its Return in due time. The loan advances to the members are for agricultural purposes and also engaged in marketing of agricultural product grown by its members and the provisions so debited in the profit & Loss account for the doubtful recovery of loans/advances are made wholly and exclusively for the purpose of the banking business, therefore, the disallowance confirmed by the Ld. CIT(A) is completely arbitrary, unjustified and illegal. 7. For that on the facts of the case, the A.O. wrongly has treated provision of NPA- unsecured loan and OD interest on loan as become the part of the profit from banking business, then the appellant is eligible for the deduction u/s. 80P(2), as such the finding of the Ld. CIT(A) is completely arbitrary, unjustified and illegal. 8. For that the charging interest u/s 234 at ₹2,19,066/-, u/s 234B at ₹2,49,282 are completely arbitrary, unjustified and illegal.” 4. Brief facts of the case are that the assessee is primarily agricultural society and govern by the West Bengal Co-Operative Societies Act, 2006. For A.Ys. 2017-18 and 2018-19, notices u/s 148 of the Act were issued for deposit cash in bank account. Finally, the assessment was framed and addition was made under the head disallowance of deduction u/s 80P of the Act, amount to ₹4,73,145/- and addition of the provision for Non-Performing Assets (NPAs) amount to ₹19,81,538/- which works out the total amount of ₹24,54,683/-. Aggrieved, assessee filed the appeal before the ld. CIT (A) and challenged both legal ground and on merit. The ld. CIT (A) passed the order and upheld the assessment order. Being aggrieved, the assessee filed an appeal before us. 5. The ld. Authorized Representative (in short ld. AR) vehemently argued and filed the written submission which is kept in the record. The ld. AR argued that the assessment was re- opened u/s 148 of the Act for depositing cash amount of ₹1,80,03,500/- in the bank account of the assessee-society. The Page | 4 ITA No.1376 to 1378/KOL/2024 Bala Samabay Krishi Unnayan Samity ltd.; A.Y. 2017-18 & 2018-19 assessee-society claimed the amount was deposited on repayment of loans received from the members of the society and out of the proceeds from sales of fertilizers, etc. The ld. AR vehemently challenged the legal issue related to the jurisdiction of assessment u/s 147 of the Act. In continuation, the ld. AR stated that the addition was made by the ld. AO on the head of provision for NPAs amount of ₹15,31,490/-, unsecured loan of ₹4,50,048/- for OD interest on loan, which works out total amount to ₹19,81,538/- and the disallowance of profit claimed u/s 80P amount to ₹4,73,145/- which works out total amount of ₹24,54,683/-. But the reason was recorded U/s 148 for depositing cash which was not the point of addition in impugned assessment order. The assessee had not filed any return of income for A.Y. 2017-18. But the same was filed for AY 2018-19. The ld. AR has only focused his argument on legal ground as no addition was made from recorded reason. He respectfully relied on the order of Hon'ble Bombay High Court in case of Jet Airways (I) Ltd. (2010) 331 ITR 236 (BOM.) and also respectfully relied on the order of the co-ordinate Bench of ITAT, Delhi, ‘G’ bench in the order of Sheela Foam Ld. Vs. DCIT in ITA No.4096/DEL/2018 date of order 27.04.2020. The relevant para no.6 is reproduced as below:- “6. The Ld.AR referred to the reasons recorded for re-opening the assessment u/s 147 of the Act, which are placed at pages 188 & 189 of the Paper Book and pointed out that the reasons are only in respect of the accommodation entry received of Rs.10 Lakhs only. He then referred to the letter dated 16.11.2012 wherein the Assessing Officer talks of notice issued u/s 142(1) of the Act; but do not talk of any notice issued u/s 143(2) of the Act. He stressed that in the absence of any notice issued u/s 143(2) of the Act, the assessment completed u/s 147 r.w.s. 143(3) of the Act is not valid.” Page | 5 ITA No.1376 to 1378/KOL/2024 Bala Samabay Krishi Unnayan Samity ltd.; A.Y. 2017-18 & 2018-19 6. The ld. DR argued and fully relied on the orders of the revenue authorities. But had not rebutted by submitting any distinguishable judgement against the submissions of the ld. AR. 7. We heard the rival submissions and considered the documents available in the record. We find that the issue recorded in recorded reason is not the part of addition in impugned assessment order passed U/s 147 of the Act. The reopening was made by noting the issue related to cash deposits in bank account of the assessee during the de-monetization period but the ld. AO without considering the recorded reasons added back in different heads. We find that the order of Hon'ble Bombay High Court (supra) and the order of the co-ordinate Bench ITAT Delhi (supra) are squarely covered in assessee’s case. The legal issue was also agitated before the ld. CIT (A) but the ld. CIT (A) rejected the assessee’s plea. The ld. AR had not argued on the merit of the case. We direct that the impugned appeal order is duly set aside. The impugned assessment order is bad in law and quashed. The legal ground of the assessee is succeeded. 8. ITA No.1376/KOL/2024 is in favour of the assessee, so the ITA No.1377/KOL/2024 mutatis mutandis is applicable and followed accordingly. ITA NO. 1378/KOL/2024 9. The ld. AR agitated the issue related to imposition of penalty u/s 271B of the Act. He placed that the assessee is governed by the West Bengal Co-Operative Societies Act, 2006. A separate audit is conducting under the West Bengal Co-Operative Societies Act, 2006. The delay in filing the Tax Audit Report due delay in receiving the Audit report under Cooperative Act. Through the written Page | 6 ITA No.1376 to 1378/KOL/2024 Bala Samabay Krishi Unnayan Samity ltd.; A.Y. 2017-18 & 2018-19 submission the assessee submitted the facts of the case which is reproduced as below:- “1. Learned Assessing Officer (i.e., Ld. AO) has initiated the penalty proceedings u/s 271B of the Act for alleged failure to get our accounts audited as required u/s 44AB of the Act. 2. Ld. AO, while issuing the penalty notice u/s 271B of the Act, has erred on the following grounds: a) The Appellant Society is a Co-Operative Society registered under West Bengal Co-Operative Societies Act, 2006 and its accounts are subjected to audit by the Auditor appointed by the Co-Operation Department Government of West Bengal and the said Society Auditor conducts the job of audit under the statute of the Society Act who are not the practicing Chartered Accountants. In the instant case, the Society Auditor submitted their Report along with the audited accounts of 4 (four) years at a time together for the financial years 2016-17 to 2019-2020 on 23.08.2020 which was even after the end of the assessment year 2019-2020. The said auditor's report alongwith the audited accounts are being furnished herewith and marked as Page 3 to 12 for the needful consideration of your honour. Thus, it was remained beyond the control of the Appellant Society to get its accounts audited u/s 44AB of the Act within the specified time and to file its ITR within the due date of filing the ITR as specified u/s. 139(1) of the Act. The said audited accounts alongwith the audit report were not available with the Appellant Society till 23.08.2020. It goes without saying that Appellant Society is bound by the Society Law of the State and has to get its accounts audited from such Society Auditor as appointed by Society Registrar, Co-Operation Department, Government of West Bengal and for filing the e-ITR, it has to wait for Society Auditor's Report with audited accounts. b) In view of the submission made in point (a) above, there remained sufficient reasonable cause for the failure to get our accounts audited u/s 44AB of the Act and hence no penalty u/s 271B of the Act is imposable as per the mandate provided in the provisions of Section 273B of the Act since the situation Page | 7 ITA No.1376 to 1378/KOL/2024 Bala Samabay Krishi Unnayan Samity ltd.; A.Y. 2017-18 & 2018-19 i.e., getting the audit report done/ completed by the Government Auditor remained beyond our control. Hence, your honour is fervently requested to kindly drop the penalty proceedings u/s 271B by invoking the provisions of section 273B of the Act.” 10. We have heard the rival submissions and considered the documents available on record. The assessee filed the Tax Audit report with delay. The Tax Audit Report U/s 44AB of the Act is certified by the Chartered Accountant & directed to file within due date. The reason for delay filing of report is stated by the ld. AR is not satisfactory before the bench. We find that the ld. AO rightly imposed the penalty U/s 271B of the Act amount to Rs. 1,50,000/- for impugned assessment year. We are not intervening the impugned appeal order. 11. Accordingly, appeal of the assessee is dismissed. 12. In the result, the appeals of the assessee bearing ITA Nos.1376 & 1377/KOL/2024 are allowed and ITA No.1388/KOL/2024 is dismissed. Order pronounced as per Rule 34(4) of the Income Tax (Appellate Tribunal) Rule, 1963 on dated 19th November 2024. Sd/- Sd/- (RAKESH MISHRA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Kolkata, Dated 19.11.2024 *SS, Sr.Ps Page | 8 ITA No.1376 to 1378/KOL/2024 Bala Samabay Krishi Unnayan Samity ltd.; A.Y. 2017-18 & 2018-19 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. संबंतिि आयकर आयुक्त / Concerned Pr. CIT 4. आयकर आयुक्त ( अिीि ) / The CIT(A)- 5. तिभागीय प्रतितिति , अतिकरण अिीिीय आयकर , कोिकािा/DR,ITAT, Kolkata, 6. गार्ड फाईि / Guard file. आदेशािुसार/ BY ORDER, TRUE COPY Sr. PS/ Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Kolkata "