BIJAYNAGR KRAYA VIKRYA SAHAKARI SAMITI LTD., Jaipur V. INCOME TAX OFFICER, BEAWAR

ITA 177/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7944 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 07-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA JCIT LD DR DHK
• Assessee Lawyers: MAHENDRA GARGIEYA LD
• Keywords: Opportunity of being heard; Principle of natural justice; Diversion of income; Set aside
• Section: 143(3); 37(1); 80P

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S SMC, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM VK;DJ VIHY LA-@ ITA NO. 177/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 VK;DJ VIHY LA-@ ITA NO. 178/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 VK;DJ VIHY LA-@ ITA NO. 179/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 M/S. BIJAYNAGAR KRAYA VIKRYA SAHAKARI SAMITI LTD. C/O MAHENDRA GARGIEYA & ASSOCIATES, ADVOCATES & TAX CONSULTANTS, 537-538, 5 TH FLOOR, MAHIMAS TRINITY, NEAR JYOTI RAO PHULE COLLEGE, NEW SANGANER ROAD, JAIPUR - 302019. VS. I.T.O, WARD-1, BEAWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAAB0505A VIHYKFKHZ@ A PP ELL ANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA, ADVOCATE, LD.AR JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROSHANTA MEENA, JCIT, LD.DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/04/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 23/04/2019 VKNS'K@ ORDER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE SEPARATE ORDERS OF LD.CIT(A), AJMER DATED 28/11/2017 FOR THE A.YS. 2012-13, 2013- 14 AND 2014-15 IN THE MATTER OF ORDERS PASSED U/S. 143(3)/143(3) R.W.S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). ITA NOS. 177, 178 & 179/JP/2018 A.YS 2012-13, 13-14 & 14-15 M/S.BIJAYNAGAR KRAYA VIKRYA SAHAKARI SAMITI LTD. 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PE RUSED. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A CO -OPERATIVE SOCIETY REGISTERED U/S. 11(2) OF RAJASTHAN SAHAKARI SOCIETY ACT, 2001. THE ASSESSEE SOCIETY IS ENGAGED IN THE BUSINESS OF PURC HASE AND SALE OF AGRICULTURAL PRODUCE I.E. PESTICIDES, SEEDS, FERTIL IZERS, CEREALS, PULSES AND OTHER RATIONAL COMMODITIES PROVIDED BY STATE GOVT. THROUGH RAJ. FED ON RATE FIXED BY SUCH GOVT. AUTHORITIES. THE SOCIETY I S GOVERNED BY ITS BY- LAWS AND THE SOCIETY IS ESTABLISHED FOR THE BENEFIT OF GENERAL PUBLIC CONSUMERS. THE ASSESSEE SOCIETY E-FILED ITS ROI FOR A.Y 2013-14 AT RS. 50,980/- AFTER CLAIMING DEDUCTION U/S. 80P OF THE A CT OF RS. 21,79,181/- IN THE STATUS OF COOPERATIVE SOCIETY ON 28.09.2013. TH E ASSESSEE SOCIETY SHOWN GP OF RS.38,21,796/- AND NP OF RS. 24,65,052/ - ON TOTAL TURNOVER OF RS.14,65,59,007/-. THE TRANSACTIONS ARE CERTIFIE D BY THE LOCAL AUDIT AND ASSESSED BY SALES TAX AUTHORITIES AS PER VAT ANNUAL RETURN. DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT A SUM OF RS. 6,16,263/- HAS BEEN TRANSFERRED TO RESERVE FUND AND RS. 24,650/- T O EDUCATION FUND. WHEN ASKED, THE ASSESSEE VIDE LETTER DATED 16.04.20 15 SUBMITTED THAT AS PER BYE LAWS OF SOCIETY, IT IS OBLIGATORY TO CREATE RESERVE FUND OF 25% OUT OF ITS PROFIT TO MEET OUT THE LOSSES AND THE SAME S HOULD BE ALLOWED U/S. 40A(9) OF THE I.T. ACT, 1961. HOWEVER, DISSATISFIED WITH THE REPLY, THE AO FINALLY DISALLOWED THE GENERAL RESERVE AND EDUCATIO N RESERVE TOTALING TO RS.6,40,913/- DEBITED IN P & L ACCOUNT VIDE ORDER D ATED 23.03.2016. ITA NOS. 177, 178 & 179/JP/2018 A.YS 2012-13, 13-14 & 14-15 M/S.BIJAYNAGAR KRAYA VIKRYA SAHAKARI SAMITI LTD. 3 4. BY THE IMPUGNED EX- PARTE ORDERS OF THE LD. CIT( A), THE LD.CIT(A) DISMISSED THE APPEALS OF ASSESSEE. 5. IT WAS CONTENDED BY THE LD.AR OF THE ASSESSEE TH AT ON DIFFERENT DATES AS AND WHEN THE MATTER WAS FIXED, THE A/R OF THE ASSESSEE DID SENT REQUEST FOR ADJOURNMENT THROUGH E-MAILS. OUR ATTENT ION WAS INVITED TO THE ADJOURNMENT LETTERS AND THE PROOF OF SENDING TH E SAME ON MAIL (PB 19-24). HOWEVER, THE LD. CIT(A) HAS NOT AT ALL MENT IONED THIS FACT. IT WAS ONLY WHEN SOME GENUINE INABILITY OF THE A/R, ADJOUR NMENT WAS SOUGHT I.E. ON SOME OCCASIONS, THE A/R WAS TO APPEAR BEFORE THE HONBLE RAJASTHAN HIGH COURT. ON SOME OCCASIONS, THE DETAILS AND CLAR IFICATIONS WERE NOT FORTHCOMING FROM THE APPELLANT/ASSESSEE SOCIETY. T HEREAFTER, THE ASSESSEE HAD FILED A MISCELLANEOUS APPLICATION IN M A NO. 118/JP/2018 AGAINST THE ORDER U/S. 263 IN THE BASE YEAR 2012-13 , HOWEVER, THE ORDER OF THE HONBLE ITAT IN THE MA WAS PENDING WHEN THE MATTERS WERE BEING LISTED BEFORE THE LD. CIT(A), AJMER. SUCH ORDER COU LD BE RECEIVED BY THE ASSESSEE ONLY ON 05.02.2018. THEREFORE, THE A/R WAS ALSO WAITING FOR THE ORDER OF THE MA, WHICH WAS HAVING A BEARING OVER TH E ITAT ORDER PASSED I.R.T S. 263 AND WAS GOING TO HAVE THE DIRECT BEARI NG OVER THE ISSUES INVOLVED IN THE SUBJECTED YEARS. THUS, IT WAS NOT A CASE OF COMPLETE NON- COMPLIANCE ON THE PART OF THE ASSESSEE. 6. THE LD. AR FURTHER CONTENDED THAT THE LD. CIT(A ) DID NOT SEND ANY NOTICE GIVING FINAL OPPORTUNITY NOR ANY OTHER COMMU NICATION WAS MADE TO THE ASSESSEE AND OF THE FACT OF NON-COMPLIANCE. THE LD. AR ALSO ITA NOS. 177, 178 & 179/JP/2018 A.YS 2012-13, 13-14 & 14-15 M/S.BIJAYNAGAR KRAYA VIKRYA SAHAKARI SAMITI LTD. 4 CONTENDED THAT ASSESSEE WAS NEVER IN RECEIPT OF ANY SUCH NOTICE. THUS, NO REAL AND ADEQUATE OPPORTUNITY OF BEING HEARD WAS EVER PROVIDED BY THE LD.CIT(A). THEREFORE, DECIDING THE APPEAL EX-PA RTE, THIS WAY, WAS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 7. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDE RS PASSED BY THE LOWER AUTHORITIES. 8. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT NON-APPEARANCE OF THE LD. AR OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS ON REASONABLE GROUND. FROM THE RECORD, I FOUND THAT THE CONTROVERSY WITH REGARD TO THE SUBJECTED DISALLOWANCES MADE BY THE AO AND CONFIRME D BY THE LD. CIT(A) EX-PARTE, IN THE ABOVE MATTERS, FIRST TIME AROSE IN A.Y 2012-13, WHEN THE LD. CIT BY PASSING AN ORDER U/S. 263 DATED 14.03.20 16, SET ASIDE THE ASSESSMENT ORDER TO THE AO GIVING DIRECTION TO PASS FRESH ASSESSMENT ORDER, IN TERMS OF / AS INDICATED IN THE REVISIONA RY ORDER. THEREAFTER, WHEN THE ASSESSEE CHALLENGED THE SAID ORDER, THE HO NBLE ITAT VIDE ITS ORDER DATED 05.02.2018 (ASSESSEES OWN CASE) IN ITA NO. 330/JP/16 MODIFIED THOSE DIRECTIONS/OBSERVATIONS GIVEN IN TH E REVISIONARY ORDER, HOLDING AS UNDER:- 15. REGARDING THE ARGUMENTS OF THE LD AR ON MERIT REGARDING ALLOWABILITY UNDER SECTION 40A(9), SECTION 37(1) AN D DIVERSION BY OVERRIDING TITLE, WE BELIEVE THAT THE SAME CAN BE E XAMINED BY THE AO AND THE ASSESSEE SHALL BE FREE TO RAISE THE SAME BEFORE THE AO. TO THIS EXTENT, WE MODIFY THE DIRECTIONS OF THE LD PR CIT AND THE SAME SHOULD BE READ TO THE EFFECT THAT CLAIM OF THE ASSESSEE REGARDING THE CLAIM OF THE DEDUCTION TOWARDS THE TR ANSFER TO ITA NOS. 177, 178 & 179/JP/2018 A.YS 2012-13, 13-14 & 14-15 M/S.BIJAYNAGAR KRAYA VIKRYA SAHAKARI SAMITI LTD. 5 GENERAL RESERVE, EDUCATION RESERVE AND THE PROVISIO NS FOR GRATUITY SHOULD BE EXAMINED AFRESH AS PER LAW AFTER PROVIDIN G REASONABLE OPPORTUNITY TO THE ASSESSEE. 9. SINCE ALL THE ISSUES/THE GROUNDS RAISED, ARE THE SAME AND IDENTICAL FACTS ARE INVOLVED IN AS MUCH AS THE AO HAS REPEATE D THE ADDITIONS/DISALLOWANCES FOLLOWING THE ORDER U/S. 26 3 AND/OR THE RE- ASSESSMENT ORDER PASSED BY THE THEN AO U/S. 143(3)/ 263 IN A.Y 2012-13, HENCE THE SAID ORDER OF THE HONBLE ITAT SHALL BE H AVING A DIRECT BEARING OVER THE PRESENT APPEALS. 10. AFTER GOING THROUGH THE SAID ORDER OF THE TRIBU NAL ( IN ASSESSEES OWN CASE), I FOUND THAT THE HONBLE ITAT HAS NOW D IRECTED THE AO TO CONSIDER THE CLAIM OF THE ASSESSEE ON MERITS AS REG ARDS ALLOWABILITY THEREOF U/S. 40A(9), SEC. 37(1), DIVERSION OF INCOM E BY OVERRIDING TITLE. 11. I ALSO FOUND THAT RECENTLY THE AO I.E ITO, WARD -1, BEAWAR, IN THE- RE-ASSESSMENT ORDER PASSED U/S. 143(3) R/W/S 254 & 263 OF THE ACT, PURSUANT TO THE DIRECTION OF THE HONBLE ITAT, HAS AGAIN REPEATED THE DISALLOWANCES I.E ADDITION/DISALLOWANCE MADE ON ACC OUNT OF TRANSFER OF THE GENERAL RESERVE, AMOUNTS TRANSFERRED TO THE EDU CATION RESERVES AND THE PROVISION OF GRATUITY IN A.Y 2012-13 BUT WITHOU T APPLYING HIS MIND ON THE SPECIFIC DIRECTIONS GIVEN BY THIS HONBLE BENCH TO THE AO IN ITS ORDER DATED 05.02.2018. 12. IN ALL FAIRNESS, I HEREBY SET ASIDE THE IMPUGN ED EX-PARTY ORDERS OF THE LD. CIT(A) AND THE MATTER IS RESTORED BACK TO H IM FOR DECIDING/CONSIDERING THE SAID DECISION MATTER AFRES H AND THE CLAIM OF ITA NOS. 177, 178 & 179/JP/2018 A.YS 2012-13, 13-14 & 14-15 M/S.BIJAYNAGAR KRAYA VIKRYA SAHAKARI SAMITI LTD. 6 ASSESSEE ON MERITS AS REGARDS ALLOWABILITY THEREOF U/S. 40A(9)/37(1), DIVERSION OF INCOME BY OVERRIDING TITLE. WE DIRECT ACCORDINGLY. 13. SINCE THE FACTS AND CIRCUMSTANCES IN ALL THE OT HER YEARS UNDER CONSIDERATION ARE SAME, THEREFORE, THESE ARE ALSO R ESTORED BACK TO THE FILE OF THE LD.CIT(A) WITH THE SAME DIRECTION. THE ASSES SEE IS ALSO DIRECTED TO APPEAR BEFORE THE LD. CIT(A) WITHIN A PERIOD OF 60 DAYS FROM THE RECEIPT OF THIS TRIBUNAL ORDER. WE DIRECT ACCORDINGLY. 14. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 23 APRIL, 2019. SD/- JES'K LH 'KEKZ (RAMESH C SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23 APRIL, 2019 ITA NOS. 177, 178 & 179/JP/2018 A.YS 2012-13, 13-14 & 14-15 M/S.BIJAYNAGAR KRAYA VIKRYA SAHAKARI SAMITI LTD. 7 *PP/SPS VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S. BIJAYNAGAR KRAYA VIKRYA SAHAKAR I SAMITI LTD.C/O MAHENDRA GARGIEYA & ASSOCIATES, ADVO CATES & TAX CONSULTANTS, 537-538, 5 TH FLOOR, MAHIMAS TRINITY, NEAR JYOTI RAO PHULE COLLEGE, NEW SANGANER ROAD, JAIPUR-302019. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O, WARD-1, BEAWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NOS. 177,178 & 179/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR