Shri Virpur Juth Seva Sahakari Mandli Ltd. , Virpur, Taluka: - Jetpur, Dist. Rajkot V. The Pr. CIT-1, Rajkot, Rajkot

ITA 198/RJT/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0888 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-07-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 08-06-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANALI KAMDAR
• Section: 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.198/RJT/2023 (Assessment Year: 2018-19) (Hybrid Hearing) Shri Virpur Juth Seva Sahakari Mandli Ltd., Virpur; Taluka: Jetpur, Dist. Rajkot Vs. The Pr. CIT-1, Rajkot, Rajkot Ahmedabad èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAAAV2569G (अपीलाथȸ/Appellant) (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरतीकȧओरसे/Assessee by : Ms. Manali Kamdar and Shri Nitin Kamdar, ARs राजèवकȧओरसे/Revenue by : Ms. Jaya Chaudhary, CIT-DR स ु नवाईकȧतारȣख/ Date of Hearing : 09/07/2024 घोषणाकȧतारȣख/Date of Pronouncement : 19/07/2024 आदेश/ORDER PER DINESH MOHAN SINHA, JM: Captioned appeal filed by the Assessee, is directed against the order passed by the Learned Pr. Commissioner of Income Tax-1, Ahmedabad, (in short ‘(the Ld. Pr. CIT)’, dated 21.03.2023, under section 263 of the Income Tax Act, 1961 (in short, ‘the Act’). 2. The Grounds of appeal raised by the assessee are as follows:- I.T.A No. 198/Rjt/2023 A.Y. 2018-19 Shri Virpur Juth Seva Sahakari Mandli Ltd. vs. Pr. CIT 2 “The Grounds of appeal mentioned herein below are without prejudice to one another. 1. The order u/s. 263 of the Act is bad in law. 2. The learned Pr. CIT has erred in law as well as on facts in not considering the submissions of the appellant on the strength of which the assessment order was neither erroneous nor prejudicial to the interest of revenue and therefore, the provisions of Section 263 of the Act were not applicable to the case of the appellant. 3. The learned Pr. CIT has erred in law as well as on facts in setting aside the assessment order passed by the Id. A.O. u/s. 143(3) and directing de-novo assessment for verification of the eligibility of deduction claimed of Rs. 12,02,567 u/s. 80P(2) in respect of interest earned from the Cooperative Bank on Fixed Deposit” 3. At the time of hearing, the ld. Counsel for the assessee has not pressed the ground nos. 4 and 5 of the appeal. Therefore, the ground nos. 4 & 5 of the appeal are dismissed as not pressed. 4. The object and activities of the society is to supply fertilizers, seeds, pesticides and other agricultural equipments to its members. The co-operative society also provides its members with short term co-operative loan, catering specially to their agricultural need. For A.Y. 2018-19, the assessee has filed return of income showing nil profit. The case was selected for limited scrutiny and during the scrutiny, the assessee society has submitted all the relevant documents and the assessment completed on nil income vide assessment order dated 25-03-2021. That the Ld. PCIT has noticed that the above co-operative society has an interest of Rs. 12,02,567/- earned as interest income on FD from Rajkot District I.T.A No. 198/Rjt/2023 A.Y. 2018-19 Shri Virpur Juth Seva Sahakari Mandli Ltd. vs. Pr. CIT 3 Co-operative Bank. The interest income on FD with the bank need to be disallowed with a view from the latest decision of Hon’ble Gujarat High Court that said interest income is not eligible for deduction u/s. 80P(2)(d) of the Act. Observing to this, Hon’ble PCIT has started proceedings u/s. 263 of the Act. Considering that the order of the ld. ITO u/s. 143(3) of the Act dated 25-03-2021 is erroneous and prejudicial to the interest of Revenue. A notice u/s. 263 of the Act issued on 20-02-2023 whereby the assessee was asked to explain about the interest income earned from Rajkot District Rajkot Co-operative Bank. This notice remained un- complied with. Reminders to notice were also issued to the assessee on 2 nd March, 2023 and 9 th March, 2023. Again, the assessee has given no response. The Ld. PCIT passed an order with undermentioned observation:- “4.21 In view of above discussion, it is found that the assessment passed by the A.O. u/s.143(3) order of the Act dated 25/03/2021 is erroneous and prejudicial to the interest of the revenue. By virtue of the powers vested in me u/s. 263 of the 1.T. Act, 1 hereby set-aside the order u/s.143(3) of the Act dated 25/03/2021 on the issues discussed above and direct the Assessing Officer to pass a fresh assessment order after denying deduction u/s 80P(2)(d) on such interest income Rs. Rs. 12,02,567/-. The A.O. is also directed to verify if the society has claimed any dividend or interest from Savings account of Co-operative bank, the A.O. should disallow deduction u/s 80P(2)(d) or 80P(2)(a)(i) of the Act on such interest income. 5. Assessing Officer shall ensure that the fresh assessment order is passed within the prescribed time limit as stipulated under section 153(3) of the Act.” I.T.A No. 198/Rjt/2023 A.Y. 2018-19 Shri Virpur Juth Seva Sahakari Mandli Ltd. vs. Pr. CIT 4 5. The assessee is in appeal before us. The A.R. of the assessee submitted that the issue of interest income on FD with Rajkot Co- operative Bank has been duly verified by the ld. ITO. During the course of hearing several documents are placed on record before the Tribunal. However, no reply has been given to the notice for hearing u/s. 263 of the Act issued by PCIT. The assessee did not file any documents and evidences in response to notice issued by the ld. PCIT u/s. 263 of the Act, however, the assessee now willing to submit required documents and details before the PCIT. That the ld. A.R. requested for one more opportunity. The ld. D.R. on behalf of the Revenue has submitted that three opportunities were given to the assessee by Ld. PCIT but the assessee has not replied to notices. Thus, order of ld. PCIT is relied by the Ld. D.R. 6. We have heard the matter and perused all the relevant materials available on record. It is noted that ld. PCIT before taking a decision u/s. 263 of the Act has given the opportunity to the assessee for hearing and the same was not availed by the assessee. During the course of hearing, the ld. A.R. requested for one more opportunity may kindly be given to comply with the notices by Ld. PCIT. We are of the view that one more opportunity be given to the assessee to present this case before ld. PCIT. Therefore, the matter is restored back to the file of Ld. PCIT to adjudicate the matter according to law after affording due opportunity of being heard to the assessee, after the reply submitted by the assessee society if any. I.T.A No. 198/Rjt/2023 A.Y. 2018-19 Shri Virpur Juth Seva Sahakari Mandli Ltd. vs. Pr. CIT 5 7. In the result, the appeal of the assessee is treated to be allowed for statistical purposes. Order pronounced in the open court on 19-07-2024 Sd/- Sd/- (A. L. SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot Dated: 19/07/2024 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Rajkot 6. Guard file. By order/आदेश से, Assistant Registrar ITAT, Rajkot