Mohol Nagari Sahakari Pat Purvatha Sanstha Maryadit, Solapur V. Principal Commissioner of Income-Tax -4, Pune

ITA 226/PUN/2022

AI Insights

The case involves Mohol Nagari Sahakari Patpurvatha Sanstha Maryadit, the appellant, contesting an order under section 263 of the Income Tax Act, 1961, issued by the Pr.CIT, Pune. The dispute arose from the assessment year 2015-16, where the Pr.CIT revised the assessment order passed under section 143(3), claiming that the Assessing Officer had not properly inquired into certain deductions under section 80P. The Tribunal heard arguments regarding the jurisdiction and the procedural validity of the Pr.CIT's order, particularly focusing on whether the assessee was given a fair opportunity to contest the revisions and whether the order was issued within the permissible time frame.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134149 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-03-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 19-04-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Audit objection; Additional evidence; TDS; Set aside
• Section: 263; 143(3)

Judgement Text

आयकर अपीलीय अिधकरण “ए” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “A” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.226/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year : 2015-16 Mohol Nagari Sahakari Patpurvatha Sanstha Maryadit, Marketyard Mohol, Tal. Mohol, Dist. Solapur – 413213. PAN: AAAAM 1185 F Vs The Pr.CIT – 4, Pune. Appellant/ Assessee Respondent / Revenue Assessee by Shri S N Puranik – AR Revenue by Shri Sardar Singh Meena – DR Date of hearing 13/03/2023 Date of pronouncement 31/03/2023 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order u/s.263 of the Income Tax Act, 1961 passed by ld.Pr.Commissioner of Income Tax, Pune-4, dated 31.03.2021 emanating from assessment order dated 24.11.2017 under section 143(3) of the I.T.Act, 1961 for the A.Y.2015-16. The Assessee for A.Y. 2015-16 has raised the following grounds of appeal: “1. The Proceedings and Order u/s 263 passed by the Pr. CIT is without Jurisdiction and Bad in law. Appellant prays to cancel the same, as Pr. CIT prohibited personal hearing sating so in Notice u/s 263 and without proper and sufficient opportunity. ITA No.226/PUN/2022 Mohol Nagari SahakariPatpurvatha Sanstha Maryadit [A] 2 2. Pr. CIT has erred in invoking provisions of Sec 263, when as per 'limited scrutiny directions’ Assessing Officer has verified the issue and concluded the allowability of claim of deduction u/s 80P. Appellant prays for cancellation of the Order u/s 263, as Order passed by Assessing Officer is not erroneous in so far as prejudicial to the Interest of Revenue. As Assessing Officer has examined the issue of allowability of Interest on Deposits with Co-operative Banks as eligible u/s 80P, Appellant prays to cancel the Order. 3. Pr. CIT has erred is issuing Notice u/s 263 and passing Order u/s 263, Revising Order u/s 143(3) dated 24/11/2017, which is time barred. Appellant Prays to Cancel the same, as extra to issue of Notice was available, But not for Pr. CIT calling and Examining reviewing Case record beyond 31.03.2020, As such Proceeding having time barred. 4. Pr. CIT has erred in issuing Notice u/s 263 and passing of the order u/s 263, when he is aware and it is brought to his Notice the Jurisdictional ITAT Decisions. Sine Assessing Officer has taken plausible view, as to allowability of deduction. 5. Pr. CIT has erred in Observing that Provision of Section 80P(2)(a)(i) are not applicable to a) Interest on deposits with Co-operative Bank Rs.3,42,23,429/- b) Interest on Loan to member the Society Kothari Agritechpvt. Lt. Rs.1,37,55,669/- c) Locker Rent Rs.99,606/- d) Interest on Income tax Refund Rs. 32,888/Of Appellant prays to allow the same. 6) Pr. CIT also further erred in giving finding that provisions of Sec 80P(2)(d) are not applicable to Interest on deposits with Co- operative Banks, in spite of High Court and Jurisdictional ITAT Cases brought to his Notice. Appellant prays to allow the same. 7) Pr. CIT is not justified in setting aside the matter to Assessing officer, when he has expressed his opinion. 8) Appellant prays to add, alter, amend, take additional grounds, submit additional evidence.” ITA No.226/PUN/2022 Mohol Nagari SahakariPatpurvatha Sanstha Maryadit [A] 3 Brief Facts of the case : 2. The brief facts of the case as emanating from the orders and submission are that the assessee filed Return of Income on 21/09/2015 declaring Total Income at Rs.NIL for AY 2015-16.The case of the assessee was selected for scrutiny. The Assessing Officer(AO) after considering the submission of the assessee accepted the returned income at NIL. The Ld.Principal Commissioner of Income Tax-4, Pune after verification of records arrived at the conclusion that the Assessing Officer has failed to consider the facts in depth and allowed deduction u/s.80P of the Act without proper inquiry. The ld.Pr.CIT mainly observed as under : (i) the interest income of Rs.3,42,23,429/- earned on investments with cooperative banks is not eligible for deduction u/s.80P(2)(a) and 80P(2)(d) of the Act. (ii) Interest amount of Rs.1,53,94,493/- earned from Kothari Agritech Pvt Ltd is not eligible for deduction u/s.80P(2)(a) of the Act. (iii) Locker rent not eligible for deduction u/s.80P (iv) Interest on Income Tax Refund not eligible for deduction u/s.80P. 2.1 Ld.Pr.CIT passed order under section 263 of the Act. ITA No.226/PUN/2022 Mohol Nagari SahakariPatpurvatha Sanstha Maryadit [A] 4 2.2 Aggrieved by the Order u/s.263, the Assessee filed appeal before this Tribunal. Submission of Ld.Authorised Representative : 3. Ld.AR submitted a paper book. The Ld.AR invited our attention to the copies of notices dated 28/07/2016, 06/01/2017, 07/09/2017 issued by the AO to demonstrate that the AO had carried out specific enquiries related to the impugned issues. The Ld.AR took us through the submission made by the Assessee dated 20/10/2017, 20/11/2017 in response to the notices to demonstrate that the assessee had filed all relevant details during the assessment proceedings. The Ld.AR submitted that the AO had carried out necessary verification and after that arrived at the decision that the assessee is eligible for deduction u/s.80P. Hence, the assessment order is not erroneous and prejudicial. The ld.AR also submitted that the notice u/s.263 was issued on 15/03/2021 and order u/s.263 was passed on 31/03/2021 whereas the assessment order was passed on 24/11/2017. Therefore, the order u/s.263 is time barred as it was not passed within two years from the end of the Financial Year in which the Assessment order was passed. Ld.AR pleaded that no proper opportunity was granted as notice u/s.263 was issued on 15/03/2021 fixing the hearing on 30/03/2021, meanwhile the ld.Pr.CIT who issued notice got transferred. The new ld.Pr.CIT issued another ITA No.226/PUN/2022 Mohol Nagari SahakariPatpurvatha Sanstha Maryadit [A] 5 notice claimed to be on 28/03/2021(Sunday) fixing hearing on 12/04/2021. Copy of the said notice dated 28/03/2021 is at page 10,11 of the paper book. However, the ld.Pr.CIT without hearing passed the order on 31/03/2021.The Ld.AR pleaded that there is no application of mind by the ld.Pr.CIT and the entire order is mere copy of the Audit Objection. The Ld.AR read out relevant portion of Audit memo issued by ITO(IAP) dated 02/03/2021 (page 3-5 of the paper book). Submission of ld.Departmental Representative (ld.DR) : 4. The Ld.DR relied on the order of the ld.Pr.CIT. Findings and Analysis: 5. We have heard both the parties and perused the records. The case of the assessee was selected for Limited Scrutiny to verify following:  Interest Expenses  Amount Disallowable u/s.40A mismatch  Deduction under Chapter VIA  Sales turnover mismatch  TDS mismatch 6. On perusal of the submissions filed by the assessee during the assessment proceedings which is part of the paper book filed by the assessee, it is observed that the assessee had not filed during the ITA No.226/PUN/2022 Mohol Nagari SahakariPatpurvatha Sanstha Maryadit [A] 6 assessment proceedings and before us, copy of the registration certificate to prove that it is a cooperative society and the assessee has also not filed copy of the bylaws. Be it as it may be. Ground No.1 : 7. Ground No.1 is about not giving proper opportunity. In this case it is fact that very short time was provided by ld.Pr.CIT to the assessee to file submission. The notice u/s.263 was issued and served on 15/03/2021 (copy of the notice has been submitted by the assessee in the paper book) and the order u/s.263 was passed on 31/03/2021. Meanwhile, there was change of incumbent on the post of ld.Pr.CIT- 4 and he issued notice dated 28/03/2021to the assessee and assessee acknowledged its receipt. Copy of the said notice is filed by the assessee in the paper book. The order u/s.263 was passed on 31/03/2021 that is within three days of notice of hearing. It is also a fact that assessee could not make any submission before the ld.Pr.CIT-4 due to the short time. In this scenario, we agree with the assessee that enough time was not provided by ld.Pr.CIT to the assessee before passing order u/s.263. In this case we cannot ignore the fact that the period was of covid pandemic and second wave had just started. The department was working with half the staff due to pandemic. In these facts and circumstances of the case we set aside the order u/s.263 to the ld.Pr.CIT for de-novo adjudication. The ITA No.226/PUN/2022 Mohol Nagari SahakariPatpurvatha Sanstha Maryadit [A] 7 ld.Pr.CIT shall provide proper opportunity to the assessee before passing the order. Accordingly, Ground No.1 of the appellant assessee is allowed for statistical purpose. Ground No. 3: 8. In this ground the assessee has alleged that the order u/s.263 is passed beyond the time prescribed u/s.263. In this case the Assessment Order was passed on 24/11/2017. Therefore, time to pass the Order u/s.263 was two years from the end of the financial year in which the Assessment order was passed. Therefore, under normal circumstances the time limit to pass the Order u/s.263 would have been 31/03/2020. But there was National Lock Down since 16 th March, 2020 due to Covid Pandemic. The Hon’ble Supreme Court vide order date 23.03.2020 extended the period of limitation prescribed under the general law or special laws whether compoundable or not with effect from 15.03.2020 till further orders. Thus, the Hon’ble Supreme Court had extended the period of Limitation with effect from 15/03/2020. On 15/03/2020, the time to pass the order u/s.263 was available, hence, by the order of the Hon’ble Supreme Court it got extended. The Hon’ble Supreme Court extended the time twice. Therefore, the order u/s.263 dated 31/03/2021 was validly passed within the statutory time limit as ITA No.226/PUN/2022 Mohol Nagari SahakariPatpurvatha Sanstha Maryadit [A] 8 extended by the Hon’ble Supreme Court. Hence, the Ground No.3 is dismissed. 9. Since we have set aside the order u/s.263 to the ld.Pr.CIT for de-novo adjudication, we do not wish to comment on the issues raised in other grounds which are on the merits of the case. Hence, all other grounds are dismissed as academic in nature. Accordingly, the appeal of the appellant assessee is allowed for statistical purpose. 10. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 31 st March, 2023. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 31 st Mar, 2023/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.