M/s.Feroke Service Co-op Bank, Calicut V. The ITO, Calicut

ITA 166/COCH/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96830 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P V VIJAYAN
• Section: 142(1)

Judgement Text

ITA 16 6 /C/2015 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN , A M & GEORGE GEORGE.K , J M ITA NO. 166/COCH/2015 (ASST YEAR 2010 - 11 ) FEROKE SERVICE COOP BANK NO. F1095 PO FEROKE KOZHIKODE 673 631 VS THE INCOME TAX OFFICER WARD 2(3), KO ZHIKODE ( APPELLANT) (RESPONDENT) PAN NO. AACAP5356P ASSESSEE BY SH P V VIJAYAN REVENUE BY SH KP GOPAKUMAR SR DR/ APPU JOSEPH JOSE, SR DR DATE OF HEARING 23 DEC 2015 DATE OF PRONOUNCEMENT 2 8 DEC 2015 ORDER PER GEORGE GEORGE. K. J M: THI S APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE CIT(A)S ORDER DATED 2.12.2014. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11. 2 THE GROUNDS RAISED READ AS UNDER: 1 THE ORDE R OF T H E LE AR N E D C I T(AS), KO ZH I K O D E , D A TED 0 2 .1 2 . 2 01 4 I S O PP OSE D T O L AW, FAC T S A ND CIR C UM S T A N C E S OF T H E CASE. 2 THE L EA R NE D FI R ST A PPELLATE A UTHORI TY HA S FA ILED TO ADJUDICATE THE G ROUND NO . 2 BE F O RE H IM , V I Z . , ' THAT THE AO HA S E R RED IN PA SSI N G THE ORDER U L S 144 W HEN HE HAS RELIED UPON THE F ACTS AND FIGURES FURNISHED IN T HE STATEMENTS FILED ALONG WITH THE RETURN OF INCOME AND THE AUDIT REPORT DATED 2 8 . 4.2012 OF THE JOINT DIRECTOR OF C O - OPERATI V E ( AUDIT ), K O Z HIKOD E' . ITA NO. 164/C/2015 1 3 T HE LEARN E D CIT (AS) H AS ERRED IN APPLYING PROVISIONS OF SEE 8 0 P (4) HOLDING THAT THE A PPELL A NT I S N O T A PACS , BASED ON THE STATISTICS FURNISHED BY THE ASSESSING OFFICER S HO WI N G T H A T M O R E T H A N 50% OF T H E L OA N S RE L AT ED TO N ON - AGRICULTURAL OPERATIONS , W HI CH I S AGA IN S T THE SPIRIT OF T HE JUDGMENT OF THE APE X COURT REPORTED IN 231 ITR 814 (FB) IN THE CASE OF KERAL A STATE CO - OPERATIVE MARKETING FEDERATION V CIT . 4 BOTH THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(AS) HAS FAILED TO CONSIDER THE CONSEQUENTIAL INSERTION OF SUB CLAUSE (VIIA) TO CLAUSE 24 OF SEC UPON THE INSERTION OF SUB SECTION 4 OF SEE 80P THROUGH THE FINANCE ACT 2006 DEFINING THE NATURE OF INCOME AS ' PROFITS AND GAINS OF ANY BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED ON BY A CO - OPERATIVE SOCIETY WITH ITS MEMBERS ; FOR WITHDRAWING THE DEDUCTION HITHERTO ALLOWED U / S 80 P(1). 5 THE LEARNED CIT(A) HAS ERRED IN DISMISSING THE APPEAL IN ITS ENTIRETY. 6 THE LEARNED FIRST APPELLATE AUTHORITY SHOULD HAVE LIMITED THE ADDITION TO THE EXTENT OF THE PROFITS AND GAINS GENERATED FROM THE BUSINESS OF BANKING. 7 THE ASSESSING OFF ICER WHILE PASSING THE IMPUGNED ASSESSMENT ORDER U / S 144 HAS FAILED TO FOLLOW THE INSTRUCTIONS CONTAINED IN CIRCULAR NO. 14 OF 2006 REPORTED IN 288 ITR 9 AT PAGES 27 - 28; AND SUBJECTING TO TAX THE ENTIRE PROFIT OF THE APPELLANT ON THE SOLE GROUND THAT MOR E THAN 50% OF THE INCOME OF THE APPELLANT SERVICE BANK WAS FROM NON - AGRICULTURAL OPERATION S . 8 FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE ENTIRE ADDITION MAY BE DELETED. 3 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969. IT IS MAINLY ENGAGED IN THE BUSINESS OF BANKING. FOR THE RELEVANT ASSESSMENT YEAR, NO RETURN WAS FILED U/S 139(1) AND THEREFORE, NOTICE U/S 142(1) WAS ISSUED BY THE AO, REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME WITHIN THE TIME SPECIFIED THEREIN. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 26.2.2013. SINCE THE RETURN OF ITA NO. 164/C/2015 2 INCOME FILED BY THE ASSESSEE WAS BEYOND THE TIME LIMIT PRESCRIBED U/S 139(1) OR 139(4) OR THE TIME SPECIFIED IN THE NOTICE ISSUED U/S 142(1) OF THE I T ACT, THE RETURN OF INCOME WAS TREATED AS NON - EST AND INVALID AND THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT BY DISALLOWING THE CLAIM OF DEDUCTION U/S 80P OF THE ACT. THE AO INVOKED THE PROVISIONS OF SECTION 80A (5) OF THE ACT. 4 AGGRIEVED, THE ASSESSEE PREFERRED APPEAL TO THE FIRST APPELLATE AUTHORITY. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS CONTENDED THAT BEST JUDGMENT ASSE SSMENT U/S 144 OF THE ACT IS INVALID, FOR THE REASONS THAT THE ASSESSMENT HAS BEEN COMPLETED ON THE BASIS OF RETURN FILED. FURTHER, THE ASSESSEE, BY RELYING ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF KERALA STATE COOPERATIVE MARKETING FEDER ATION LTD AND OTHERS VS CIT REPORTED I 231 ITR 814 CONTENDED THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80P OF THE I T ACT. THE CIT(A), HOWEVER, REJECTED THE CONTENTIONS OF THE ASSESSEE AND BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S KADACHIRA SERVICE COOP BANK LTD VS ITO REPORTED IN 153 TTJ(KOCHI) , HELD THAT THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P OF THE I T ACT IN VIEW OF BELATED FILING OF THE RETURN. THE RELEVANT FINDINGS OF THE CIT(A) READ AS UNDER: 4. I H AVE CONSIDERED THE SUBMISSION OF THE ID COUNSEL . I HAVE ALSO GONE THROUGH THE CASE LAWS RELIED BY THE ID COUNSEL WITH REGARD TO TH E DECISION OF THE HON'BLE APEX COURT IN THE CASE OF KERALA STATE CO - OPERATIVE MARKETING FEDERATION LTD AND OTHERS VS CIT (1998 ) 231 ITR 814, AND FIND THAT TH E HON'BLE SUPREME COURT WAS LOOKING AT WHETHER DIFFERENT KINDS OF LOANS DISBURSED BY THE ASSESSEE IN THAT CASE WERE ELIGIBLE FOR DEDUCTION U/S 80R OR NOT, WHICH IS NOT THE ISSUE IN OUR CASE. HERE, THE ISSUE IS WHETHER THE ASS ESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P AS SUCH OR NOT IN VIEW OF THE PROVISIONS OF SECTION 80A(5} OF THE ACT. SINCE THIS ISSUE HAS ITA NO. 164/C/2015 3 BEEN CONSIDERED BY THE HON'BLE ITAT IN THE CASE OF M/S KADACHIRA SERVICE CO - OP BANK LTD VIS ITO(2013} 153 TIJ (KOCHI) AND HELD THAT ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80P IF RETURN OF INCOME HAS NOT BEEN FILED WITHIN THE PRESCRIBED TIME. UNDOUBTEDLY, THE ASSESSEE HAS NOT FILED ITS RETURN OF INCOME WITHIN THE TIME A LLOWED U/S 139(1} OR 139(4} OR BEFORE THE PRESCRIBED DATE IN THE NOTICE U/S 142(1} . THEREFORE, FOLLOWING THE ORDER OF THE JURISDICTIONAL TRIBUNAL REFERRED ABOVE, I DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE IN THIS CASE ALSO AS THE FACTUAL MATRIX IS SAME IN BOTH THE CASES. 5. AS REGARDS THE CONTENTION OF THE ID COUNSEL THAT THE ASSESSING OFFICER CANNOT MAKE A BEST JUDGMENT UNDER SECTION 144 AFTER OBTAINING INFORMATION FROM THE ASSESSEE ABOUT THE DETAILS OF HIS INCOME IN VIEW OF THE DECISION OF HON'BLE HIGH COURT OF KERALA IN THE CASE OF MUBARAK TRADING COMPANY VS CIT (2009) 222 CTR (KER) 194 I S NOT AT ALL APPLICABLE TO THE FACTS OF THIS CASE AS THE HON'BLE HIGH COURT WAS DECIDING THE APPLICABILITY OF SECTION 184(5} RWS 144(A} , WHEN RETURN IS NOT FILED IN TIME . IN FACT, THIS CASE SUPPORTS THE REVENUE, B ECAUSE ON SIMILAR FOOTING SECTION 80P HAS TO BE DENIED WHEN RETURN IS NOT FILED IN TIME. THE SAME ARGUMENT GIVEN BY THE APPELLANT AS NOW WAS REJECTED BY THE HON'BLE HIGH COURT. 5 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. AT THE VERY OUTSET, TH E LD DR SUBMITTED THAT THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE REVENUE BY THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S KADACHIRA SERVICE COOP BANK LTD., (SUPRA). THE LD AR FAIRLY SUBMITTED THAT THE TRIBUNAL ORDER IS IN FAVOUR OF THE REVENUE AND I S IDENTICAL ON FACTS TO THE INSTANT CASE. 6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, IN THE INSTANT CASE, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE BEYOND THE TIME PRESCRIBED U/S 139(1) OR 139(4) OR THE TIME SPECIFIED IN TH E NOTICE ISSUED BY THE AO U/S 142(1) OF THE ACT. THE TRIBUNAL IN THE CASE OF M/S KADACHIRA SERVICE COOP BANK LTD (SUPRA) HAD HELD THAT THE ASSESSEE IS NOT ITA NO. 164/C/2015 4 ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P OF THE I T ACT, IF THE RETURN OF INCOME IS NOT FILED WI THIN THE PRESCRIBED TIME LIMIT. THE LD AR ALSO CONCEDED THAT THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO THE FACTS CONSIDERED BY THE TRIBUNAL IN THE CASE OF M/S KADACHIRI SERVICE COOP BANK LTD (SUPRA ) . IN VIEW OF THE ABOVE SUBMISSIONS OF THE PARTIES AND THE AFORESAID REASONING , THE APPEAL FILED BY THE ASSESSEE IS REJECTED. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 8 TH DAY OF DEC 2015 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT ME MBER JUDICIAL MEMBER COCHIN: DATED 28 TH DEC 2015 RAJ* ITA NO. 164/C/2015 5 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN