JAY NANDA MATAJI CO.OP. CREDIT SOCIETY LTE, MUMBAI V. INCOME TAX OFFICER WD 31(2) (1) , MUMBAI

ITA 257/MUM/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2263 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC-1
• Assessment Year: 2017-2018
• Appeal Filed On: 09-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 144; 80P; 69A; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC-1” MUMBAI BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 257/MUM/2022 Assessment Year: 2017-18 Jay Nanda Mataji Co-operative Credit Society Limited, Shop No. 153/5/6, General Arunkumar Vaidya Marg, Goregaon (East), Mumbai-400065. Vs. Income Tax Officer Ward 31(2)(1), R. No. 615, 6 th floor, Kautilya Bhavan, C-41 to C-43, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. PAN No. AAAAJ 5397 E Appellant Respondent Assessee by : Mr. G.C. Lalka, AR Revenue by : Mr. Kiran P. Unavekar, DR Date of Hearing : 02/06/2022 Date of pronouncement : 28/06/2022 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against the order dated 07.11.2021 passed by the National Faceless Appeal Centre (NFAC) (hereinafter referred as ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds: 1. The Assessing Officer erred in making an addition of ₹33,33,677/ by invoking the provisions of section 69A of the Income Tax Act, 1961. It was submitted that the deposits made in to the bank out of collections from various members of Co Society. The same was upheld by the CIT(A). 2. At the outset, the Ld. counsel of the assessee submitted that there was a delay in filing the appeal by 33 days. The Ld. counsel referred to the affidavit filed by the Secretary of the assessee society wherein he has submitted that due to pandemic environment in Mumbai, filing of appeal was delayed. He has further stated that there is no malafide intention in delaying the filing of appeal. In this case, the order of the Ld. CIT(A) has been passed on 07.11.2021 which, the assessee has claimed to be received on 09.11.2021 and therefore, the due date of filing the appeal before the ITAT was on 08.01.2022 whereas the assessee has filed appeal on 10. 3. The Ld. DR did not controvert the fact that the period o falls in the Covid-19 Pandemic period. Jay Nanda Mataji Co The Assessing Officer erred in making an addition of 33,33,677/- on account of cash deposits made during the year by invoking the provisions of section 69A of the Income Tax Act, 1961. It was submitted that the deposits made in to the bank out of collections from various members of Co-operative Credit ety. The same was upheld by the CIT(A). At the outset, the Ld. counsel of the assessee submitted that there was a delay in filing the appeal by 33 days. The Ld. counsel referred to the affidavit filed by the Secretary of the assessee society he has submitted that due to pandemic environment in filing of appeal was delayed. He has further stated that there is no malafide intention in delaying the filing of appeal. In this case, the order of the Ld. CIT(A) has been passed on 07.11.2021 the assessee has claimed to be received on 09.11.2021 and therefore, the due date of filing the appeal before the ITAT was on whereas the assessee has filed appeal on 10. The Ld. DR did not controvert the fact that the period o 19 Pandemic period. As the assessee has Jay Nanda Mataji Co-operative Credit Society Limited ITA NO. 257/M/2022 2 The Assessing Officer erred in making an addition of on account of cash deposits made during the year by invoking the provisions of section 69A of the Income Tax Act, 1961. It was submitted that the deposits made in to the bank out operative Credit At the outset, the Ld. counsel of the assessee submitted that there was a delay in filing the appeal by 33 days. The Ld. counsel referred to the affidavit filed by the Secretary of the assessee society he has submitted that due to pandemic environment in filing of appeal was delayed. He has further stated that there is no malafide intention in delaying the filing of appeal. In this case, the order of the Ld. CIT(A) has been passed on 07.11.2021, the assessee has claimed to be received on 09.11.2021 and therefore, the due date of filing the appeal before the ITAT was on whereas the assessee has filed appeal on 10.02.2022. The Ld. DR did not controvert the fact that the period of delay As the assessee has reasonably explained reasons for the delay in filing the appeal, we condoned the said delay and admit 4. Briefly stated, the facts of the case are that the a Credit Co-operative Society. The Assessing Officer observed from the data analysis carried exercise of “operation clean money cash of more than ₹33,33,677/ monetization period (9 not filed Income-Tax Return for the assessment year under consideration and therefore, the Assessing Officer issued notice u/s 142(1) directing the assessee to file the return of return of income was filed the Assessing Officer completed the assessment as best judgment assessment section 144 of the Income Tax Act, 1961 (in short ‘the Act’) Jay Nanda Mataji Co reasonably explained reasons for the delay in filing the appeal, we condoned the said delay and admitted the appeal for adjudication. Briefly stated, the facts of the case are that the a operative Society. The Assessing Officer observed from the data analysis carried by the Income-Tax Department under operation clean money” that assessee has deposited 33,33,677/- in his bank account monetization period (9 th November to 30 December, 2016) Tax Return for the assessment year under consideration and therefore, the Assessing Officer issued notice u/s 142(1) directing the assessee to file the return of return of income was filed the Assessing Officer completed the assessment as best judgment assessment on 20.12.2019 section 144 of the Income Tax Act, 1961 (in short ‘the Act’) Jay Nanda Mataji Co-operative Credit Society Limited ITA NO. 257/M/2022 3 reasonably explained reasons for the delay in filing the appeal, we ted the appeal for adjudication. Briefly stated, the facts of the case are that the assessee is a operative Society. The Assessing Officer observed from Tax Department under that assessee has deposited in his bank account during the ‘de- November to 30 December, 2016)’ but had Tax Return for the assessment year under consideration and therefore, the Assessing Officer issued notice u/s 142(1) directing the assessee to file the return of income. As no return of income was filed the Assessing Officer completed the on 20.12.2019 in terms of section 144 of the Income Tax Act, 1961 (in short ‘the Act’) and made addition for said cash deposits of credited by bank thereon 5. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) issued notices for hearing but in view of no compliance, the Ld. CIT(A) upheld the additio “6.1 Grounds no. 1 and 2: These grounds or appeal ave related and hence are being taken up together. The appellant has earned interest income from fixed deposits worth Rs. 5,51,357/ that there was no return of i assessment year due to internal problems in the cooperative society. In view of the same, the assessing officer is correct in adding back this interest as income of the assessee for the year in question. Further, as no return of income had been filed, there is no question of allowing deduction under section 80P of the Income tax Act. In view of the above, these grounds of appeal are dismissed. 6.2 Ground No. 3: During assessment proceedings the appellant was asked about the credit entries in the bank account which were explained as deposits received in cash from the members of the co operative. It is incumbent upon the taxpayer to prove the genuineness of the transaction, the identity of the and the creditworthiness or financial strength of the creditor/subscriber/ lender, as held in CIT vs. Precision Finance Pvt. Ltd.: 208 ITR 465 Jay Nanda Mataji Co made addition for said cash deposits of ₹33,33,677/ thereon of ₹5,51,357/-, totaling to ₹ Aggrieved, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) issued notices for hearing but in view of no compliance, the Ld. CIT(A) upheld the additions, observing as under: 6.1 Grounds no. 1 and 2: These grounds or appeal ave related and hence are being taken up together. The appellant has earned interest income from fixed deposits worth Rs. 5,51,357/- The assessee admits that there was no return of income filed during the relevant assessment year due to internal problems in the cooperative society. In view of the same, the assessing officer is correct in adding back this interest as income of the assessee for the year in question. Further, as n of income had been filed, there is no question of allowing deduction under section 80P of the Income tax Act. In view of the above, these grounds of appeal are dismissed. Ground No. 3: During assessment proceedings the appellant was asked about the credit entries in the bank account which were explained as deposits received in cash from the members of the co operative. It is incumbent upon the taxpayer to prove the ess of the transaction, the identity of the and the creditworthiness or financial strength of the creditor/subscriber/ lender, as held in CIT vs. Precision Finance Pvt. Ltd.: 208 ITR 465 Jay Nanda Mataji Co-operative Credit Society Limited ITA NO. 257/M/2022 4 77/- and interest ₹38,85,034/-. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) issued notices for hearing but in view of no observing as under: 6.1 Grounds no. 1 and 2: These grounds or appeal ave related and hence are being taken up together. The appellant has earned interest The assessee admits ncome filed during the relevant assessment year due to internal problems in the cooperative society. In view of the same, the assessing officer is correct in adding back this interest as income of the assessee for the year in question. Further, as n of income had been filed, there is no question of allowing deduction under section 80P of the Income tax Act. In view of the Ground No. 3: During assessment proceedings the appellant was asked about the credit entries in the bank account which were explained as deposits received in cash from the members of the co- operative. It is incumbent upon the taxpayer to prove the ess of the transaction, the identity of the and the creditworthiness or financial strength of the creditor/subscriber/ lender, as held in CIT vs. Precision Finance Pvt. Ltd.: 208 ITR 465 (Cal), Divine Leasing and Finance Ltd. & Ors: 299 ITR 268 and affirmed in CIT v. Lovely Export (P) Ltd.: 319 ITR (st.) 5 (SC). This has also been reiterated by the Hon'ble Supreme Court in its order in the case of NRA Iron & Steel Pvt. Ltd (Arising out of SLP (Civil) No. 29855 of 2018) pronounced on March 5, 2019. This coul proved to producing the details of the contributors and proving their capacity to pay, however, this was not done. This onus on the tax payer has neither been discharged at the assessment stage nor at the appellate stage. 6.2.2 As mentio account of the assessee during the demonetization period and these have not been explained. In the case of Commissioner Of Income Tax, Salem vs K. Chinnathamban on 24 July, 2007, [2007] 162 Taxman 459 (SC)(20071 292 ITR 682 (SC)/(2007] 211 CTR 86 (SC), the hon'ble SC has stated in para 5 of its order, "In order to find out whether the assessee is the owner of any money in terms of Section 69A of the said Act, the principle of Common Law Jurisprudence in Section 110 of the Evidence Act, 1872 can be applied. In the case of Chuharmal v. C.I.T. reported in (1988) 3 SCC 588 it has been held by this Court that the word 'income' in Section 69A of the Income Tax Act has wide meaning which meant anything which came in In the present case, the assessee did not adduce any evidence to show that the aforestated amount did not belong to him. In the facts of this case, therefore, the Department was right in drawing inference that the assessee had the aforestated amo subject to tax under Section 69A." The same was upheld in Leela Devi vs. ITO ITAT(DELHI). Appeal Number: ITA. No. 1423/Del/1420, Jay Nanda Mataji Co (Cal), Divine Leasing and Finance Ltd. & Ors: 299 ITR 268 and d in CIT v. Lovely Export (P) Ltd.: 319 ITR (st.) 5 (SC). This has also been reiterated by the Hon'ble Supreme Court in its order in the case of NRA Iron & Steel Pvt. Ltd (Arising out of SLP (Civil) No. 29855 of 2018) pronounced on March 5, 2019. This could have easily been proved to producing the details of the contributors and proving their capacity to pay, however, this was not done. This onus on the tax payer has neither been discharged at the assessment stage nor at the appellate stage. As mentioned earlier, large cash deposits were made in the account of the assessee during the demonetization period and these have not been explained. In the case of Commissioner Of Income Tax, Salem vs K. Chinnathamban on 24 July, 2007, [2007] 162 Taxman 20071 292 ITR 682 (SC)/(2007] 211 CTR 86 (SC), the hon'ble SC has stated in para 5 of its order, "In order to find out whether the assessee is the owner of any money in terms of Section 69A of the said Act, the principle of Common Law Jurisprudence in ion 110 of the Evidence Act, 1872 can be applied. In the case of Chuharmal v. C.I.T. reported in (1988) 3 SCC 588 it has been held by this Court that the word 'income' in Section 69A of the Income Tax Act has wide meaning which meant anything which came in In the present case, the assessee did not adduce any evidence to show that the aforestated amount did not belong to him. In the facts of this case, therefore, the Department was right in drawing inference that the assessee had the aforestated amount as his income which was subject to tax under Section 69A." The same was upheld in Leela Devi vs. ITO ITAT(DELHI). Appeal Number: ITA. No. 1423/Del/1420, Jay Nanda Mataji Co-operative Credit Society Limited ITA NO. 257/M/2022 5 (Cal), Divine Leasing and Finance Ltd. & Ors: 299 ITR 268 and d in CIT v. Lovely Export (P) Ltd.: 319 ITR (st.) 5 (SC). This has also been reiterated by the Hon'ble Supreme Court in its order in the case of NRA Iron & Steel Pvt. Ltd (Arising out of SLP (Civil) No. 29855 d have easily been proved to producing the details of the contributors and proving their capacity to pay, however, this was not done. This onus on the tax payer has neither been discharged at the assessment stage nor at the ned earlier, large cash deposits were made in the account of the assessee during the demonetization period and these have not been explained. In the case of Commissioner Of Income Tax, Salem vs K. Chinnathamban on 24 July, 2007, [2007] 162 Taxman 20071 292 ITR 682 (SC)/(2007] 211 CTR 86 (SC), the hon'ble SC has stated in para 5 of its order, "In order to find out whether the assessee is the owner of any money in terms of Section 69A of the said Act, the principle of Common Law Jurisprudence in ion 110 of the Evidence Act, 1872 can be applied. In the case of Chuharmal v. C.I.T. reported in (1988) 3 SCC 588 it has been held by this Court that the word 'income' in Section 69A of the Income Tax Act has wide meaning which meant anything which came in as gain. In the present case, the assessee did not adduce any evidence to show that the aforestated amount did not belong to him. In the facts of this case, therefore, the Department was right in drawing inference that unt as his income which was subject to tax under Section 69A." The same was upheld in Leela Devi vs. ITO ITAT(DELHI). Appeal Number: ITA. No. 1423/Del/1420, pronounced on 11.02.2021 and by Hon'ble Patna HC in Sapta Panchait Kirshk Seva Swablambi Sahkari Sa (CIVIL WRIT JURISDICTION CASE NO. 3665 OF 2020. OCTOBER 16. 2020). 6.2.3 It is settled law that where the assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be justified in making the as held in Kale Khan Mohammad Hanif v CIT|19631 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [19771 107 ITR 938 (SC). This onus on the tax payer has neither been discharged at the assessment the appellate stage. Thus this ground of appeal is dismissed. 6. Before us, the Ld. counsel of the assessee submitted that notices were not served upon the assessee and therefore, assessee could not represent before the Ld. CIT(A). He submitted that the assessee is willing to cash deposits, therefore to the assessee for appearing bef stand. Jay Nanda Mataji Co pronounced on 11.02.2021 and by Hon'ble Patna HC in Sapta Panchait Kirshk Seva Swablambi Sahkari Samiti Ltd.v. Union of India (CIVIL WRIT JURISDICTION CASE NO. 3665 OF 2020. OCTOBER 16. 6.2.3 It is settled law that where the assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be justified in making the additions back into the income of the assessee as held in Kale Khan Mohammad Hanif v CIT|19631 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [19771 107 ITR 938 (SC). This onus on the tax payer has neither been discharged at the assessment stage nor at late stage. Thus this ground of appeal is dismissed. Before us, the Ld. counsel of the assessee submitted that notices were not served upon the assessee and therefore, assessee could not represent before the Ld. CIT(A). He submitted that the s willing to pursue its appeal and explain therefore, one more opportunity should be provided the assessee for appearing before the Ld. CIT(A) and explain Jay Nanda Mataji Co-operative Credit Society Limited ITA NO. 257/M/2022 6 pronounced on 11.02.2021 and by Hon'ble Patna HC in Sapta miti Ltd.v. Union of India (CIVIL WRIT JURISDICTION CASE NO. 3665 OF 2020. OCTOBER 16. 6.2.3 It is settled law that where the assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be additions back into the income of the assessee as held in Kale Khan Mohammad Hanif v CIT|19631 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [19771 107 ITR 938 (SC). This onus on the stage nor at late stage. Thus this ground of appeal is dismissed.” Before us, the Ld. counsel of the assessee submitted that notices were not served upon the assessee and therefore, assessee could not represent before the Ld. CIT(A). He submitted that the pursue its appeal and explain the source of one more opportunity should be provided ore the Ld. CIT(A) and explain its 7. We have heard the rival submissions of the parties on issue-in-dispute and perused the relevant material on record. We find that before both the Assessing Officer as well as CIT(A), the explanation of the assessee in respect of cash deposits is not on record due to non Before us, the Ld. counsel of the assessee has that assessee is willing to submit necessary evidence in support of source of cash deposits and co before the Ld. CIT(A). 7.1 In view of the above and we restore this matter back to the file of the Ld. CIT(A) for deciding afresh in accordance with law after providing adequate opportunity of being heard to both the assessee as well as the Assessing O The grounds raised by the assessee are accordingly statistical purposes. Jay Nanda Mataji Co We have heard the rival submissions of the parties on dispute and perused the relevant material on record. We before both the Assessing Officer as well as CIT(A), the explanation of the assessee in respect of cash deposits is not on record due to non-compliance on the part of the assessee. Before us, the Ld. counsel of the assessee has given that assessee is willing to submit necessary evidence in support of source of cash deposits and co-operate in appellate proceedings before the Ld. CIT(A). f the above and in the interest of substantial justice, we restore this matter back to the file of the Ld. CIT(A) for deciding afresh in accordance with law after providing adequate opportunity of being heard to both the assessee as well as the Assessing O The grounds raised by the assessee are accordingly Jay Nanda Mataji Co-operative Credit Society Limited ITA NO. 257/M/2022 7 We have heard the rival submissions of the parties on the dispute and perused the relevant material on record. We before both the Assessing Officer as well as before the Ld. CIT(A), the explanation of the assessee in respect of cash deposits is t of the assessee. an undertaking that assessee is willing to submit necessary evidence in support of operate in appellate proceedings in the interest of substantial justice, we restore this matter back to the file of the Ld. CIT(A) for deciding afresh in accordance with law after providing adequate opportunity of being heard to both the assessee as well as the Assessing Officer. The grounds raised by the assessee are accordingly, allowed for 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Court on Sd/- (KULDIP SINGH JUDICIAL MEMBER Mumbai; Dated: 28/06/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// Jay Nanda Mataji Co In the result, the appeal filed by the assessee is allowed for Order pronounced in the Court on 28/06/2022. Sd/- KULDIP SINGH) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary ITAT, Mumbai Jay Nanda Mataji Co-operative Credit Society Limited ITA NO. 257/M/2022 8 In the result, the appeal filed by the assessee is allowed for 28/06/2022. - OM PRAKASH KANT) MEMBER Sr. Private Secretary) ITAT, Mumbai