M/s Jamkhandi Credit Co-op Credit Society Limited , Jamkhandi V. Income Tax Officer Ward-2 , Bagalkot

ITA 180/PAN/2019

AI Insights

The case involves Jamkhandi Co-operative Credit Society Limited appealing against the order of the CIT(A), Belgaum, which upheld the Assessing Officer's disallowance of a Section 80P deduction and addition of unexplained cash credits under Section 68 for the assessment year 2015-2016. The Tribunal examined whether the CIT(A) and the Assessing Officer erred in their application of the law regarding the deduction under Section 80P and the treatment of cash credits. The Tribunal found that the CIT(A) and the Assessing Officer did not adequately consider the submissions and the legal precedents applicable to the case, leading to the reversal of their decisions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136833 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 11-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 14-05-2019
• Other Referred Cases: Citizen Co-op Society vs. State of Karnataka, Mavilayi Service Co-operative Bank Ltd. vs. CIT, Collector, Land Acquisition vs. MST Katiji
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Deduction Disallowance

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI (THROUGH VIRTUAL HEARING) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA.No.180/PAN./2019 Assessment year 2015-2016 Jamkhandi Co-operative Credit Society Limited, Opp. Post Office, Main Road, Jamkhadi. C/o. Shri S. Parthasarathi, Advocate, 3/1, Pranava Complex, 5 th Cross, Malleswaram, Bengaluru. PIN – 560 003 PAN AAAAJ3399J State of Karnataka. vs., The Income Tax Officer, Ward -2, Bagalkot. (Appellant) (Respondent) For Assessee : Smt. Pratibha R. Advocate For Revenue : Shri N. Shrikanth Date of Hearing : 12.07.2023 Date of Pronouncement : 18.07.2023 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal for the assessment year 2015- 2016, arise against the CIT(A), Belgaum’s order ITA.No.CIT(A)/ BGM/10165/2018-19 dated 08.03.2019, involving proceedings u/sec.143(3) of the Income Tax Act, 1961 (in short "the Act"). Heard both the parties. Case file perused. 2 ITA.No.180/PAN./2019 2. The assessee raises the following substantive grounds in the instant appeal : 1. “The learned CIT(A) erred in upholding the order of the Assessing Officer without considering the submissions made by the appellant. 2. The learned CIT(A) erred in not considering the submissions made by the appellant and went ahead to make a disallowance u/s.80P(2)(a)(i) without appreciating the fact that the Hon’ble Supreme Court decision in the case of Citizen Co-op Society is not squarely applicable to the appellant’s case. [Rs.13,25,273/-]. 3. The learned CIT(A) ought to have appreciated the fact that the appellant society has not violated any provisions u/s.80P(2)(a)(i) of the Act and the same are enforced in the by-laws of the society. 4. The learned CIT(A) erred in confirming the order of the AO by not considering the fact nor the judgment held that the interest earned by credit co-operative societies on deposits with banks is an income attributable to business and hence eligible for claim of deduction. 3 ITA.No.180/PAN./2019 5. The learned CIT(A) erred in confirming the additions, made u/s.68 of the Act without considering the facts submitted by the appellant. [Rs.60,00,000/-] 6. The learned CIT(A) ought to have accepted the explanation given by the appellant regarding cash deposits made in BDCC Bank and as such should have refrained from confirming the additions made u/s.68 of the Act. 7. The learned CIT(A) erred in not appreciating the fact the cash deposits made were genuine and that the appellant was not given adequate opportunity to prove the source of such deposits and therefore should not have confirmed the additions made by the AO. 8. Without prejudice, the disallowances/ additions are excessive, arbitrary and unreasonable and liable to be deleted in full. 9. For these and other grounds that may be urged at the time of hearing of the appeal, the appellant prays that the appeal may be allowed.” 3. We next note that the CIT(A)'s detailed discussion has upheld the Assessing Officer’s action both disallowing sec.80P deduction claim of Rs.13,25,273/- as well as making 4 ITA.No.180/PAN./2019 sec.68 addition of unexplained cash credits of Rs.60 lakhs as under : 5 ITA.No.180/PAN./2019 6 ITA.No.180/PAN./2019 7 ITA.No.180/PAN./2019 4. We find no merit in the Revenue’s vehement contentions supporting the learned lower authorities action on both these grounds. This is for the precise reason that so far as the first and foremost issue of the impugned sec.80P deduction disallowance being disallowed on account of the fact that the assessee is also having nominal members, hon’ble apex court’s landmark decision in Mavilayi Service Co- operative Bank Ltd., vs. CIT [2021] 431 ITR 1 (SC) elaborately guides us in holding that the same could hardly form a reason to deny the relief in issue to an eligible assessee only for the reason of distinction in categories of memberships having voting rights and others. 5. Coming to the latter issue of sec.68 addition of unexplained cash credits, we note that it is not the assessee but it’s customers/depositors (supra) who had credited the same, involving varying sums in their respective accounts. This clinching fact has nowhere been denied either in the course of assessment or in the CIT(A)'s order. Learned lower authorities nowhere doubt the veracity of the concerned 8 ITA.No.180/PAN./2019 account holders. We thus see no justification in the learned lower authorities adding all these deposits made in customers’ accounts as allowable to be taxed in assessee’s hands. The same is directed to be deleted. 6. Delay of 05 days in filing the instant appeal before the tribunal is condoned. Hon’ble apex court’s landmark decision Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) has settled the law long back that all such technical aspects must make way for the cause of substantial justice. We, therefore, condone the impugned delay. 7. No other ground or argument has been pressed before us. 8. This assessee’s appeal is allowed in above terms. Order pronounced in the open court on 18.07.2023. Sd/- Sd/- [G.D. PADMAHSHALI] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 18 th July, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The CIT(A), Belagavi 4. The Pr. CIT, Belagavi 5. D.R. ITAT, Panaji Bench, Panaji. 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches, Pune.