Joshaba Self Employment and Training Services Co.op. Ltd., Nashik V. Income-tax Officer,

ITA 230/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0484 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 16-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMITRA BANERJI
• Keywords: Additional evidence
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 40A(3); 271(1)(b); 139; 92; 40(a)(ia); 80P; 201

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 230 /PN/201 5 / ASSESSM ENT YEAR : 20 0 9 - 1 0 JOSHABA SELF EMPLOYMENT AND TRAINING SERVICES CO - OP. LTD., BRAMHAGIRI HSG. SOCIETY, JAIL ROAD, NASHIK ROAD, NASHIK 422101 . / APPELLANT PAN: A A AAJ4144M VS. THE INCOME TAX OFFICER , WARD 1(1), NASHIK . / RESPONDENT WARD 1(1), NASHIK . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SMT. SUMITRA BANERJI / DATE OF HEARING : 0 4 . 1 0 .201 6 / DATE OF PRONOUNCEMENT: 11 . 1 1 .201 6 / ORDER P ER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 06 . 0 1 .20 1 5 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 23 0 /PN/20 1 5 JOSHABA SELF EMPLOYMENT AND TRAINING SERVICES CO - OP. LTD. 2 2 . THE ASSE SSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1] THE LEARNED CIT(A) ERRED IN DENYING THE DEDUCTION U/S 80P TO THE 1] THE LEARNED CIT(A) ERRED IN DENYING THE DEDUCTION U/S 80P TO THE ASSESSEE SOCIETY ON ITS ASSESSED INCOME ON THE GROUND THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION . 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE SOCIETY WAS NOT ENGAGED IN THE ACTIVITY OF 'COTTAGE INDUSTRY' AND HENCE , IT WAS NOT ELIGIBLE TO CLAIM THE DEDUCTION U/S 80P(2)(A)(II) OF THE ACT . 3] THE ASSESSEE SUBMITS THAT IT WAS ENGAGED IN COLLECTIVE DISPOSAL OF THE LA BOUR OF I TS MEMBERS AND HENCE, THE INCOME ASSESSED OF RS.25 , 94,010 / - WAS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(VI) OF THE ACT . 4] THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE U/S 40A(3) OF RS.8 , 44 , 200 / - WITHOUT APPRECIATING THAT THE SAID DISALL OWANCE WAS NOT RS.8 , 44 , 200 / - WITHOUT APPRECIATING THAT THE SAID DISALL OWANCE WAS NOT WARRANTED ON FACTS OF THE CASE. 5] THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE U/S 40(A)(IA) OF RS.59,000 / - WITHOUT APPRECIATING THAT NO DISALLOWANCE WAS JUSTIFIED IN THE CASE OF THE ASSESSEE. 6] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION U/S 68 OF RS.3,79,500 / - WITHOUT APPRECIATING THAT THE SAID DISALLOWANCE WAS NOT WARRANTED ON FACTS OF THE CASE. 7] WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSESSEE SUBMITS THAT IF AT ALL, THE DEDUCTION U/S 80P(2)(A) IS GRANTED TO THE ASSESSEE SOCIETY, THEN THE SAID DEDUCTION MAY ALSO BE ALLOWED IN RESPECT OF THE ADDITIONS THE SAID DEDUCTION MAY ALSO BE ALLOWED IN RESPECT OF THE ADDITIONS SUSTAINED , IF ANY , UNDER SECTION 40A(3) , 40(A)(IA) AND SECTION 68 OF THE ACT . 8] THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL EVIDENCE IF ANY, TO SUPPORT ITS CLAIM. 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. THE APPEAL WAS FIXED FOR THE FIRST TIME ON 28.06.2016 ON WHICH DATE, NONE APPEARED ON BEHALF OF THE ASSESSEE. FURTHER, ON 19. 07.2016, THE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMENT. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE ON THAT DATE. THE MATTER WAS ADJOURNED TO 16.08.2016 AND THEREAFTER TO 04.10.2016. IT SEEMS THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THE APPEAL AND HENCE, THE SAME IS DECIDED EXPARTE THE ASSESSEE. ITA NO. 23 0 /PN/20 1 5 JOSHABA SELF EMPLOYMENT AND TRAINING SERVICES CO - OP. LTD. 3 4. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(II) / ( VI ) OF THE ACT BY WAY OF GROUNDS OF APPEAL NO.1 TO 3. FURTHER, THE ASSESSEE IS AGGRIEV ED BY THE ORDER OF CIT(A) IN MAKING DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT AT RS. 8,44,200/ - AND UNDER SECTION 40(A)(IA) OF THE ACT AT RS. 59,000/ - . THE ASSESSEE IS ALSO IN APPEAL AGAINST THE ADDITION UNDER SECTION 68 OF THE ACT AT RS.3,79,500/ - BY WA Y OF GROUND OF APPEAL NO.6. THE ASSESSEE WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL HAVE ALSO MADE AN ALTERNATE CLAIM THAT IN CASE THE DEDUCTION UNDER SECTION 80P(2)(A)(II) IS GRANTED TO THE ASSESSEE, THEN THE DEDUCTION IS TO BE ALLOWED IN RESPECT O F ADDITIONS SUSTAINED, BY WAY OF GROUND OF APPEAL NO.7. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IS A CO - OPERATIVE SOCIETY CLAIMED TO BE ENGAGED IN THE BUSINESS OF COTTAGE INDUSTRIES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80P OF THE ACT AT RS.13,61,308/ - . THE ASSESSING OFFICER NOTED THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE AND CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A) OF THE ACT. HOWEVER, ON GOING THROUGH THE RECORDS AND SUBMISSIONS MADE BY THE ASSESSEE, THE ASSESSING OFFICER NOTED THAT THE ACTIVITIES DID NOT FALL UNDER ANY OF THE CLAUSES OF SECTION 80P(2) OF THE ACT AS NONE OF THE ACTIVITIES WERE CARRIED OUT BY THE ASSESSEE. THUS, IT WAS HELD THAT THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM THE AFORESAID DEDUCTION EXCEPT DEDUCTION OF RS.50,000/ - UNDER SECTION 80P(2)(C) OF THE ACT. THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION S 80P(2)(A) , 80P(2)(A)(III) OR 80P(2)(A)(IV) OF THE ACT WAS HELD TO BE NOT ALLOWABLE TO THE ASSESSEE. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAD MADE CASH PAYMENTS EXCEEDING RS.20,000/ - AND DISALLOWANCE UNDER SECTION 40A(3) ITA NO. 23 0 /PN/20 1 5 JOSHABA SELF EMPLOYMENT AND TRAINING SERVICES CO - OP. LTD. 4 OF THE ACT WAS MADE TO THE TUNE OF RS. 8,44,200/ - . FURTHER, THE ASSESSEE HA D FAILED TO PROVE THE IDENTITY, CREDITW ORTHINESS OF THE LOAN CREDITOR TO THE EXTENT OF RS.3,79,500/ - . ANOTHER ADDITION MADE IN THE HANDS OF ASSESSEE WAS FOR NON - DEDUCTION OF TAX AT SOURCE UNDER SECTION 40(A)(IA) OF THE ACT. 6. BEFORE THE CIT(A), THE ASSE SSEE FILED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED UNDER PARA 5 AT PAGES 2 TO 5 OF THE APPELLATE ORDER. THE CIT(A) FIRST DECIDED THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80P(2) (A) OF THE ACT . THE FINDINGS OF CIT(A) VIDE PARA 6 AND 6.1 ARE AS UNDER: - 6. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, FACTS OF THE CASE AND THE SUBMISSION OF THE APPELLANT. THE AO IN THE ASSESSMENT ORDER HAS DENIED DEDUCTION U/S 80P(2)(A)(II), 80P(2)(A)(III) AND 80P(2)(A)(IV) AS CLAIMED BY THE APPELLANT IN ITS RE TURN OF INCOME. THE AO WAS OF THE VIEW THAT THE APPELLANT CO - OPERATIVE SOCIETY IS NOT ENGAGED IN ANY OF THE ACTIVITIES MENTIONED IN SECTION 80P(2)(A) OF THE ACT. THE APPELLANT IN ITS STATEMENT OF ACCOUNTS HAS CLAIMED THAT IT WAS ENGAGED IN THE BUSINESS OF COTTAGE INDUSTRIES, MARKETING OF THE AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS, PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTOCK, OR OTHER ARTICLES INTENDED FOR AGRICULTURAL FOR THE PURPOSE OF LIVESTOCK, OR OTHER ARTICLES INTENDED FOR AGRICULTURAL FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS. HOWEVER, A PERUSAL OF THE DETAILS AVAILABLE ON ASSESSMENT FOLDER AS WELL AS FURNISHED BY THE APPELLANT REVEALS THAT THE APPELLANT WAS ENGAGED IN SELF EMPLOYMENT TRAINING AND PWD PROJECTS CONTRACTS FOR MEMBERS. FORM 3CD OF THE TAX AUDIT REPORT FOR A.Y. 2009 - 10 IN COLUMN 8(A) CATEGOR ICALLY MENTIONED THE ABOVE FACT. THERE WAS NO CHANGE IN THE ACTIVITIES OF THE APPELLANT SOCIETY AS PER COLUMN 8(B ) OF FORM NO.3CD, OF THE TAX AUDIT REPORT. A PERUSAL OF THE COLUMN 28(B) OF THE FORM NO.3CD OF THE TAX AUDIT REPORT FURTHER REVEALS THAT THE AP PELLANT SOCIETY DID NOT MANUFACTURE ANYTHING DURING THE YEAR UNDER APPEAL. THE OPENING STOCK OF THE RAW MATERIAL, PURCHASES, SALES AND FINISHED GOODS WERE SHOWN AT RS. NIL. THE APPELLANT'S CLAIM THAT IT WAS ENGAGED IN THE BUSINESS OF COTTAGE INDUSTRIES IS, THEREFORE, INCORRECT. A PERUSAL OF THE DETAILS CORROBORATES THAT THE APPELLANT SOCIETY DID NOT MANUFACTURE OR PRODUCE ANYTHING DURING THE YEAR UNDER APPEAL. HENCE ITS CLAIM THAT IT WAS ENGAGED IN COTTAGE INDUSTRIES IS NOT TENABLE AND HENCE REJECTED. 6.1 A S REGARDS APPELLANT'S OTHER ACTIVITIES I. E. MARKETING OF AGRICULTURAL PRODUCE, ET C . THE APPELLANT WAS SPECIFICALLY ASKED TO FURNISH THE DETAILS OF AGRICULTURAL IMPLEMENT, SEEDS, FERTILIZERS, ETC. THAT IT HAD PURCHASED AND SOLD DURING THE YEAR. THE APPE LLANT W AS ALSO SPECIFICALLY ASKED TO FURNISH THE DETAILS OF PROCESSING OF AGRICULTURAL PRODUCE THAT IT HAS CLAIMED TO HAVE UNDERTAKEN IN THE STATEMENT OF FACTS. THE APPELLANT WAS ALSO ASKED TO FURNISH THE DETAILS OF THE WORKS AWARDED BY THE STATE GOVERN MENT FOR COLLECTIVE DISPOSAL OF LABOUR AND PRODUCE LABOUR MUSTER AND DETAILS OF PAYMENTS MADE TO THEM. THE APPELLANT WAS ALSO GIVEN AN OPPORTUNITY TO FURNISH JUSTIFICATION FOR CLAIMING DEDUCTION U/S 80P(2)(A) OF THE ACT. THE APPELLANT, HOWEVER, COULD NOT FURNISH ITA NO. 23 0 /PN/20 1 5 JOSHABA SELF EMPLOYMENT AND TRAINING SERVICES CO - OP. LTD. 5 ANY MATERIAL IN SUPPORT OF ITS CLAIM FOR DEDUCTION U/S 80P(2)(A) OF THE ACT. IT CONTINUED TO SAY THAT IT WAS ENGAGED IN COTTAGE INDUSTRIES AND CLAIMED DEDUCTION U/S 80P(2)(A)(II) OF THE ACT. ONE OF THE CONDITIONS FOR COTTAGE INDUSTRY IS THAT IT MU ST CARRY ON THE ACTIVITY OF MANUFACTURE, PRODUCTION OR PROCESSING AND IT SHOULD NOT BE ENGAGED MERELY IN TRADING I.E. PURCHASE AND SALE OF THE SAME COMMODITY. A PERUSAL OF THE SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD CLEARLY ESTABLISHES THAT TH E APPELLANT WAS NOT ENGAGED IN THE ACTIVITY OF MANUFACTURING OR PRODUCTION OR PROCESSING. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT ALSO ESTABLISHES THAT THE APPELLANT WAS ENGAGED IN VARIOUS PWD RELATED CONTRACTS SUCH AS AURANGABAD PROJECT, J ALNA PROJECT, LATUR PROJECT, NASHIK PROJECT AND OSMANABAD PROJECT. THE PROFIT AND LOSS ACCOUNT ALSO ESTABLISHES THAT THE APPELLANT SOCIETY WAS EARNING INCOME ON ACCOUNT OF PROVIDING TRAINING SUCH AS YCMOU TRAINING FEES, EMU TRAINING, KAJU CASHU PROJECT TRAINING, ETC. THE BALANCE SHEET ALSO CORROBORATES THE FACT THAT THE APPELLANT SOCIETY WAS ENGAGED IN TRAINING ACTIVITIES AS IT HAS INVESTED IN A HOSTEL BUILDING WORTH RS. 1,00,09,343/ - . IN VIEW OF THE ABOVE, THE APPELLANT'S CLAIM FOR DEDUCTION U/S 80P(2)(A)(II) IS DEVOID OF MERIT AND HENCE REJECTED. AO WAS, THEREFORE, JUSTIFIED IN DENYING DEDUCTION U/S 80P(2)(A) OF THE ACT TO THE APPELLANT SOCIETY. 7. THE ASSESSEE HA D FAILED TO ESTABLISH ITS CASE OF BEING ENGAGED IN COTTAGE INDUSTRIES . THE FINDING OF CIT(A) IS THAT THE ASSESSEE HAD NOT CARRIED ON THE ACTIVITY OF MANUFACTURE, PRODUCTION OR PROCESSING, WHICH WAS THE REQUIREMENT OF CLAIMING THE SAID DEDUCTION. THE ASSESSEE DURING THE YEAR REQUIREMENT OF CLAIMING THE SAID DEDUCTION. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SHOWN THE OPENING STOCK OF RAW MATERIAL, PURCHASES, SALES AN D FINISHED GOODS AT NIL. SO, THE CLAIM OF ASSESSEE THAT IT WAS ENGAGED IN THE BUSINESS OF COTTAGE INDUSTRIES WAS HELD TO BE INCORRECT. THE ASSESSEE HAS NOT CONTROVERTED THE FINDING OF CIT(A) IN THIS REGARD. 8. ANOTHER ASPECT NOTED BY THE CIT(A) FROM THE PERUSAL OF PROFIT & LOSS ACCOUNT WAS THAT THE ASSESSEE WAS ENGAGED IN VARIOUS PWD RELATED CONTRACTS FOR EARNING INCOME ON ACCOUNT OF PROVIDING TRAINING UNDER VARIOUS SCHEMES. ACCORDINGLY, THE ORDER OF CIT(A) IS UPHELD IN DENYING THE CLAIM OF DEDUCTION UN DER SECTION 80P(2)(A)(II) OF THE ACT . ITA NO. 23 0 /PN/20 1 5 JOSHABA SELF EMPLOYMENT AND TRAINING SERVICES CO - OP. LTD. 6 9. IN RESPECT OF OTHER CLAIMS MADE IN THE GROUNDS OF APPEAL UNDER SECTION 80P(2)(A)( V I) OF THE ACT , NO PLEA HAS BEEN RAISED BEFORE THE AUTHORITIES BELOW EXCEPT FOR CLAIMING DEDUCTION UNDER SECTION 80P(2)(A)(II) OF THE ACT AND HENCE, THE SAME ALSO IS REJECTED. THE GROUNDS OF APPEAL NO.1 TO 3 ARE THUS, DISMISSED. 10. IN RESPECT OF NEXT ISSUE VIDE GROUND OF APPEAL NO.4 I.E. DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT, THE ASSESSEE HAD FAILED TO GIVE ANY JUSTIFICATION F OR MAKING CASH PAYMENTS EXCEEDING RS.20,000/ - BEFORE THE CIT(A) AND HENCE, THE ADDITION WAS CONFIRMED. EVEN BEFORE THE TRIBUNAL, THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM AND HENCE, THE SAID CLAIM IS ALSO REJECTED. 11. SIMILARLY, THE ASSESSEE HAD FA ILED TO EXPLAIN THE NON - DEDUCTION OF TAX AT SOURCE OUT OF PAYMENTS TO SHRI GOVIND CHAWSARIA ON ACCOUNT OF CONSULTANCY SOURCE OUT OF PAYMENTS TO SHRI GOVIND CHAWSARIA ON ACCOUNT OF CONSULTANCY CHARGES AT RS.59,000/ - AND THE SAME IS ALSO CONFIRMED. THE GROUNDS OF APPEAL NO.4 AND 5 ARE THUS, DISMISSED. 12. NOW, COMING TO THE GROU ND OF APPEAL NO. 6 WHICH IS AGAINST THE ADDITION MADE UNDER SECTION 68 OF THE ACT. THE FINDING OF CIT(A) IN THIS REGARD WAS THAT THE SAID AMOUNT W ERE RECE IVED FROM VARIOUS PERSONS, WHO DID NOT HAVE PROPER IDENTITY AND CREDITWORTHINESS, IN MOST OF THE CASES , THE AMOUNT OF EACH LOAN WAS RS.20,000/ - . SINCE THE ASSESSEE HAD FAILED TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF LOANS AMOUNTING TO RS. 3,79,500/ - RECEIVED DURING THE YEAR, THE ADDITION OF THE SAME WAS HELD TO BE JUSTIFIED BY THE CIT(A). THE ASSESSEE HAS FAILED TO ESTABLISH ANY OF THREE INGREDIENTS OF ITA NO. 23 0 /PN/20 1 5 JOSHABA SELF EMPLOYMENT AND TRAINING SERVICES CO - OP. LTD. 7 SECTION 68 OF THE ACT BEFORE THE TRIBUNAL IN THE PRESENT APPEAL AND HENCE, THE ADDITION IS UPHELD. 13. BY WAY OF GROUND OF APPEAL NO.7, THE ASSESSEE HAS RAISED AN ALTERNATE PLEA WHICH IS NOT MAINTAINABLE AS THE ASSESSEE WAS NOT FOUND TO BE ELIGIBLE FOR CLAIMING THE DEDUCTION UNDER SECTION 80P(2)(A)(II) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 1 4 . IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. O RDER PRONOUNCED ON THIS 11 TH DAY OF NOVEMBER , 201 6 . SD/ - (SUSHMA CHOWLA) (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 11 TH NOVEMBER , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. / THE CIT - 1 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE