THE ANIGANDLAPADU PACS LTD, KRISHNA DIST V. INCOME TAX OFFICER, WARD(1)1 VIJAYAWADA, VIJAYAWADA

ITA 300/VIZ/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3235 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-03-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 01-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Keywords: Principle of natural justice; Condonation of delay
• Section: 147; 56; 142(1); 80P; 143(2)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.300/Viz/2023 (ननधधारण वर्ा / Assessment Year : 2020-21) The Anigandlapadu Pacs Ltd. 10-1, Anigandlapadu Village Penuganchiprolu Post Penuganchiprolu Mandal Krishna Dist. [PAN : AACAT7983Q] Vs. Income Tax Officer Ward-1(1) Vijayawada (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri ASRSS Sivaprasad, AR प्रत्यधथी की ओर से / Respondent by : Dr.Aparna Villuri, DR सुनवधई की तधरीख / Date of Hearing : 25.03.2024 घोर्णध की तधरीख/Date of Pronouncement : 27.03.2024 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : Condonation of Delay : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No. ITBA/NFAC/S/250/2023-24/1055304612(1) dated 22.08.2023, arising out of order passed u/s 147 r.w.s.144C of the Income Tax Act, 1961 (in short ‘Act’) dated 28.09.2022 for the Assessment Year (A.Y.) 2020-21 2 I.T.A. No.300/Viz/2023, A.Y.2020-21 Anigandlapadu Pacs Ltd, Krishna Dist. with the delay of 42 days. The assessee filed petition for condonation of delay and submitted that the CEO of the Anigandlapadu Pacs Ltd. was suffering from BP and diabetes and the appeal could not be filed before the Tribunal within the due date i.e. 20.10.2023 due to his irregular health condition. The assessee further submitted that they were engaged in recovery sanction and disbursement of loans since it was a crop season. He, therefore, pleaded to condone the delay and admit the appeal for hearing in the interest of justice. 2. We have gone through the condonation petition filed by the assessee. In the instant case, appeal against the order of the Ld.CIT(A) dated 22.08.2023 ought to have been filed before the Tribunal by 21.10.2023, but the assessee could file appeal before the Tribunal on 02.12.2023 with the delay of 42 days. We find there is a reasonable and sufficient cause for the assessee to file appeal belatedly. We, therefore, condone the delay and admit the appeal for hearing in the interest of justice. 3. Brief facts of the case are that the assessee is a cooperative society, provides credit facilities to it’s members i.e. sanction of crop loans out of deposits collected from it’s members. It also provides services i.e. supply of fertilisers and manures, marketing of paddy and other ancilliary 3 I.T.A. No.300/Viz/2023, A.Y.2020-21 Anigandlapadu Pacs Ltd, Krishna Dist. services relating to agriculture among its members. The assessee filed it’s return of income for the A.Y.2020-21 declaring Nil income after claiming deduction u/s 80P of the Act. Notices u/s 142(1) and 143(2) of the Act were issued and served on the assessee and the Assessing Officer (AO) assessed the assessee’s income at Rs.1,28,78,616/- on account of income from other sources u/s 56 of the Act, which was added back to the income of the assessee. 4. Aggrieved, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) upheld the addition made by the AO and dismissed the appeal of the assessee ex-parte since the assessee failed to substantiate it’s claim. 5. Aggrieved, the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : 1. Both in law and in facts of the case, the order made by the Ld.Commissioner of Income Tax (Appeals), NFAC, Delhi confirming the addition of interest is bad in law, arbitrary, contrary to the provisions of law and against the principles of natural justice. 2. On the facts and circumstances of the case and in law the Ld.Commissioner of Income Tax (Appeals), NFAC, Delhi erred in confirming the addition made by the assessing officer of interest of Rs.1,28,78,616/- under the head Income from other sources. 3. The Ld.Commissioner of Income Tax (Appeals), NFAC, Delhi is not justified in confirming the addition by the Assessment Unit invoking the provisions of section 56 of the Income Tax Act, 1961 4 I.T.A. No.300/Viz/2023, A.Y.2020-21 Anigandlapadu Pacs Ltd, Krishna Dist. since interest on income from operations of the society cannot be taxed under the head income from other sources. 4. The Assessment unit is wrong in assessing the income of the society under head Income from Other Sources as interest earned by the society is only income from its operations which is chargeable under the head Profits and Gains of Business or Profession before allowing deduction under section 80P. 5. The Ld.Commissioner of Income Tax (Appeals), NFAC, Delhi should have appreciated the carrying of the objects by the society as per bye laws and the income earned from which is eligible for deduction under section 80P of the Income Tax Act, 1961. 6. Additions made on mere presumptions and surmises are against the provisions of law. 5. At the outset, the Ld.AR submitted that the assessee received interest of Rs.1,28,78,616/- which is earned from interest on credit facilities provided to it’s members and interest on investments made by the assessee cooperative society with KDCC bank. The assessee, after claiming the expenditure incurred in day to day operations of the society claimed deduction u/s 80P amounting to Rs.18,45,754. The Ld.AR further submitted that the AO without considering the expenditure incurred in earning the income and also without considering the eligibility of the assessee to claim deduction u/s 80P, disallowed the entire income from interest amounting to Rs.1,28,78,616/- for the reason that the assessee failed to provide the bifurcation of interest income and added to the total income of the society u/s 56 of the Act, which was upheld by the 5 I.T.A. No.300/Viz/2023, A.Y.2020-21 Anigandlapadu Pacs Ltd, Krishna Dist. Ld.CIT(A). The Ld.AR further submitted that the assessee society earned income from interest while carrying out the objects, for which the society is established. The Ld.AR further submitted that the AO is not justified in treating the income from interest on advances and investments as income under the head “income from other sources”, whereas, the income from interest is covered under the head “income from business” and the same is eligible for deduction u/s 80P of the Act. The assessee filed paper book before us and relying on various judicial case laws, submitted that the revenue authorities are not justified in making the addition on mere presumptions and surmises, which is against the provisions of law. Therefore, the Ld.AR pleaded to afford an opportunity before the Ld.CIT(A) to substantiate it’s case with the material evidences available, in the interest of justice. 6. Per contra, the Ld.DR submitted that the assessee was given sufficient opportunities before the Ld.CIT(A), but the assessee neither appeared before the Ld.CIT(A) nor filed any submissions, information or documents in support of the grounds raised before the Ld.CIT(A). She, therefore, submitted that the Ld.CIT(A) is justified in dismissing the appeal of the assessee ex-parte. She, therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee. 6 I.T.A. No.300/Viz/2023, A.Y.2020-21 Anigandlapadu Pacs Ltd, Krishna Dist. 7. We have heard both the parties and perused the material available on record. It is undisputed fact that the assessee is a cooperative society, carrying out the objects of the society as per it’s bye laws. In the instant case, the AO made addition of interest of Rs.1,28,78,616/- under the head “income from other sources”, which was confirmed by the Ld.CIT(A). The only contention of the assessee is that the interest earned is chargeable under the head “Profits and Gains of Business or Profession” and the assessee is eligible for claiming deduction u/s 80P of the Act. The assessee has pleaded for affording an opportunity of being heard before the Ld.CIT(A) to substantiate assessee’s case with credible material evidences available. In view of the foregoing facts and circumstances of the case and keeping in view the principles of natural justice, we are inclined to remit the matter back to the file of the Ld.CIT(A) for giving an opportunity of being heard to the assessee and pass order after examination of the material evidences furnished by the assessee society. The assessee is also directed to adhere to the notices issued and cooperate with the revenue authorities during the proceedings. Accordingly, the grounds raised by the assessee are allowed for statistical purpose. 7 I.T.A. No.300/Viz/2023, A.Y.2020-21 Anigandlapadu Pacs Ltd, Krishna Dist. 8. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 27 th March, 2024. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 27.03.2024 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee – The Anigandlapadu Pacs Ltd., 10-1, Anigandlapadu Village, Penuganchiprolu Post, Penuganchiprolu Mandal Krishna Dist. 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-1(1), CR Buildings, Vijayawada 3. The Principal Commissioner of Income Tax, Vijayawada 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam