PURANDAR TALUKA NAGARI SAHAKAI PATPEDI MARYADIT, MUMBAI V. ITO 21(2)(5), MUMBAI

ITA 2659/MUM/2019

AI Insights

The case involves Purandar Taluka Nagri Shakari Patpedhi Maryadit, a credit cooperative society, appealing against the revision order passed by the Principal Commissioner of Income Tax, Mumbai. The revision was based on the grounds that the original assessment by the Assessing Officer (AO) under sections 143(3) r.w.s 147 of the Income Tax Act, 1961, was erroneous as it did not adequately address the discrepancies in reported cash deposits and misapplied provisions related to deductions under section 80P. The Tribunal found that the Pr. CIT had correctly identified these issues and that the assessee's arguments did not sufficiently challenge the basis of the revision.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 125446 (ITAT-MUMBAI)
• Duration Of Justice: 12 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-11-2022
• Assessment Year: misc
• Appeal Filed On: 29-03-2010
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Revision of order; Principle of natural justice; Reason to believe
• Section: 147; 68; 148; 263; 143(3); 142(1); 80P; 143(2); 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI BASKARAN BR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 2659/Mum/2019 (A.Y: 2009-10) Purandar Taluka Nagri Shakari Patpedhi Maryadit 01/405, Matrukrupa, Baburao Parulekar Marg, Gokhle Road, South, Dadar (E) Mumbai – 400 028. Vs. ITO, Ward 21(2)(5) Room No. 364, 3 rd Floor, Aayakar Bhavan MK Road Mumbai – 400 020. सं./ज आइआर सं./PAN/GIR No. : AABAP3583B Appellant .. Respondent Appellant by : None Respondent by : Mr. K.C. Salvamani, CIT DR Date of Hearing 29.11.2022 Date of Pronouncement 30.11.2022 आद श / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order passed by the Pr. Commissioner of Income Tax 21, Mumbai passed u/s 263 of the Act. The assessee has raised the fallowing grounds of appeal: ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 2 - 1. BREACH OF THE PRINCIPLES OF NATURAL JUSTICE 1.1 The Learned Principal Commissioner of Income-tax- 21, Mumbai ["Ld. CIT"], erred in framing the revision order u/s. 263 of the Income-tax Act, 1961 ["the Act"] by not giving proper, sufficient and effective opportunity of being heard to the Appellant. 1.1. 1.2 It is submitted that in the facts and the circumstances of the case, and in law, the revision order is required to be held as bad and illegal as the same is passed in breach of the principles of natural justice, as well as with non- application of mind to the facts and the contentions brought on record by the Appellant. WITHOUT PREJUDICE TO THE ABOVE 2. REVISION ILLEGAL 2.1 The Ld. CIT erred in passing the order u/s. 263 of the Act, revising the assessment order passed by the A.O. u/s. 143 (3) of the Act. 2.2 It is submitted that in the facts and the circumstances of the case, and in law, the order is bad, illegal and void as necessary pre - conditions for initiating the revision proceeding as well as the completion thereof were not fulfilled. Without prejudice to the generality of the above, the CIT failed to appreciate that: 2.3 (i) The assessment order framed was "erroneous" within the meaning of section 263 of the Act; and (ii) In any case, the assessment order was not "prejudicial to the interest of the revenue" within the meaning of section 263 of the Act. ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 3 - 2.4 It is submitted that in the facts and the circumstances of the case, and in law, no revision u/s. 263 of the Act was called for. 2.5 On facts and circumstances of the case and in law, Ld AO erred in issuing the notice u/s 148 without having reason to believe of escapement of income, thereby the re- assessment order u/s 147 is bad-in-law; On facts and circumstances of the case and in law, Ld AO erred in making the 2.6 addition n u/s 68 of Rs.84,14,500/- of alleged unexplained cash deposits made by the appellant; 2.7 The Ld. AO, before making the addition of cash credit of Rs.84,14,500/- ought to have considered the understated vital facts, being; a) The entire cash deposits made in the bank account are accounted and disclosed in appellants books of accounts and audited balance sheet; b) The Ld. AO had not rejected the appellants books of accounts u/s 145(3) of the Act; c) The appellant had discharged the Primary onus and the nature and source of the cash credits has adequately been explained; 2.8 On facts and circumstances of the case and in Law, Ld. AO erred in making the disallowance of deduction u/s 80P(2)(a)(i) of Rs.10,63,438/- on erroneously invoking Sec 80P(4) on treating the appellant credit society as a Co- operative bank; 2.9 The Ld. AO, before making the disallowance of Sec 80P(2), failed to consider the understated vital facts, being; ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 4 - a) The appellant is not a cooperative bank within the meaning assigned in Part-V of Banking Regulations Act, 1949, thus Sec 80P(4) shall not apply; b) The appellant had not fulfilled the conditions prescribed u/s 56(ccv) of Banking Regulations Act, 1949; c) The appellant is not engaged in business of banking prescribed u/s 5(b) of Banking Regulations Act, 1949; d) The appellant is not engaged in banking business as it does not accept the deposits from public (non-members) and does not have the cheque-book and clearing facilities, RBI license, etc; 2.10 The Ld. AO, after making the disallowance u/s 80P of Rs.10,63, 438/-, erred in further making the addition u/s 80P of Rs. 1,19,938 /-, thereby resulting into double taxation 2.11 On facts and circumstances of the case and in law, Ld. AO erred in making the addition of alleged undisclosed interest on fixed deposits of Rs. 1,19,948/-; WITHOUT FURTHER PREJUDICE TO THE ABOVE 3. ON MERITS 3.1 The CIT erred in observing that the Cash deposited in Parshwanath Co-op. Bank as income U/s. 68 of The Income Tax Act, 1961 amounting to Rs. 85,72,500/-. 3.2 The CIT erred in observing that the Provision for expenses of Rs. 4,20,000/- debited in the P&L account as provisions for various funds which is in contingent in nature. LIBERTY 4. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing. ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 5 - 2. The brief facts of the case are that the assessee is a credit cooperative society and is engaged in the business of providing credit facility to its members. The Asssesssing Officer (AO) has received the information from ADIT (Inv.), Unit-III(1), Kolhapur that there has been cash deposits in the name of the assessee in Parshwanath Co.op Bank Ltd Kolhapur in the F.Y 2008-09.The AO has reason to believe that the income has escaped assessment and issued notice u/s 147 of the Act and the Assessee has not filed the return of income. Further, the AO has issued notice u/s 143(2) and 142(1) of the Act calling for information and provided copy of reasons for reopening of assessment proceedings to the assessee. In compliance to notice, the Ld. AR of the assessee appeared from time to time and submitted the details of business activities, bank account, details of investments and loans and balance sheet and profit and loss account. The assessee has filed the computation of income by letter dated 18.10.2016 disclosing the net profit of Rs. 10,63,438/- and has claimed deduction u/s 80P of the Act. Further the AO ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 6 - has issued the show cause notice for cash deposits, in compliance the assessee has filed the reply referred at Para 6 and 7 of the AO order. The assessee also filed the various documents and information mentioned in the letter dated 19.12.2016 read as under: On 19/12/2016 Shri Rajiv Pethkar C.A. attended and furnished a reply along with ash deposts with Parwanth Co-op Bank Ledger copy for the year under consideration & stated as under which is reproduced as under: 1. As you aware that our caption client is having banking business with lower class of people. These people not having bank account and they depend on our captioned society for their daily need of financial assistant. Our caption client collect deposits and also collect repayment of loan given to their members. All the collection are made in cash only. This is the reason for depositing cash in the bank account. This is the reason for depositing cash in the bank account. We also enclose herewith the month wise cash deposit with banks. 2. We further say that the all the cash transactions considered as business transaction and reflected in the Balance Sheet. We have deposited the said amount with Banks. These banks also reflected in the balance sheet of the society. 3. We enclose herewith the CASH DEPOSIT summery with Parswanath Co.operative Bank. As per our record we have deposited Rs.85,72,500/- (Eighty Five lakhs Seventy Two Thousand Five Hundred only). We further ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 7 - say that we enclose herewith the Bank Book. We also highlighted the cash deposit entries. 3. Whereas the AO dealt on the provision of Sec. 80P of the Act and judicial decision and finally considered the facts of the services provided by the assessee and observed that the assessee has wrongly claimed deduction u/s 80P of the Act and made disallowance of deduction of Rs.10,63,438/- and also addition on account of cash deposits of Rs. 84,14,500/- and assessed the total income of Rs. 95,97,890/- and passed the order u/s 143(3) r.ws 147 of the Act dated 30.12.2016. 4. Subsequently the Pr.CIT on perusal of the records and information found that the order passed by the AO is without proper verification of documents and observed that as per the information the total cash deposits are Rs. 87,64,500/- whereas the AO has only made addition of Rs. 84,14,500/- and the Pr. CIT also dealt on the provisions of Sec. 80P of the Act and has set aside the order passed u/s 143(3) r.w.s 147 of the Act and directed the AO to reassesse the income of the assessee and passed the order u/s 263 ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 8 - of the Act dated 28.02.2019. Aggrieved by the order, the assessee has filed an appeal before the Honble Tribunal. 5. At the time of hearing none appeared on behalf of the assessee and from the record it was found that none appeared on behalf of the asssessee in the earlier hearing dates. Per Contra, Ld.DR supported the order of the Pr. CIT. 6. We heard the Ld. DR submissions and perused the material on record. The contentions of the assessee are that the order passed by the Pr.CIT is illegal and raised the grounds of appeal with respect to additions made by the Assessing officer. We found that the Pr. CIT has passed the revision order considering the difference in addition of cash deposits as per the statement Rs.87,64,500/- and whereas the AO has made addition of Rs.84,14,500/- only..Further the Pr. CIT is of the opinion that the AO has not applied his mind and passed the order which is erroneous and prejudicial to the interest of the revenue. We find that the assessee has challenged the revision order in the grounds of appeal that no ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 9 - opportunity was provided and it is illegal. The asssessee has also filed other grounds of appeal on the additions made by the Asssessing officer. Whereas the asssessee has to challenge the additions in the Assesseement order before the CIT(A) u/sec246A of the Act and not before the Pr.CIT u/s 263 of the Act. Accordingly, we found that the Pr. CIT has rightly considered the facts with respect to difference in addition made by the AO and issued directions to the A.O. Accordingly, we do not find infirmity in the order passed by the Pr. CIT and up hold the same and dismiss the grounds of appeal of the assessee. 7. In the result the appeal filed by the assessee is dismissed. Order pronounced in the open court on 30.11.2022. Sd/- Sd/- (BASKARAN BR) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 30.11.2022 KRK, PS ITA No. 2659/Mum/2019 M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. - 10 - /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. 3. सं ं आ र आ / The CIT(A) 4. आ र आ ( ) / Concerned CIT 5. "#$ % & &' , आ र ) र*, हमद द / DR, ITAT, Mumbai 6. % -. / 0 / Guard file. ान ु सार/ BY ORDER, स " & //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai