M/s Sree Bhyraveshwara Credit Co-operative Society Limited , Bangalore V. The Income Tax Officer Ward-3(2)(2), Bangalore

ITA 3172/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3411 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 27-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R N SIDDAPP A JI
• Keywords: Opportunity of being heard; Period of limitation; Time period of passing order
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI B. R. BASKARA N , ACCOUNTANT MEMBER ITA NO S . 3172 TO 3174 /BANG/201 8 ASSESSMENT YEAR S : 2010 - 11, 2013 - 14, 2014 - 15 M/S. SREE BHYRAVESHWARA CREDIT CO-OPERATIVE SOCIETY LTD., #1, 8 TH MAIN, 22 ND CROSS, MRCR LAYOUT, VIJAYANAGAR, BANGALORE 560 040. PAN : A A AAS 6789 B VS. THE INCOME TAX OFFICER, WARD 3(2)(2), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI. PRADIP KUMAR JAIN, CA REVENUE BY : SHRI. R. N. SIDDAPPAJI, ADDL. CIT DATE OF HEARING : 19.02.2019 DATE OF PRONOUNCEMENT : 21.02.2019 O R D E R PER B. R. BASKARAN, ACCOUNTANT MEMBER ALL THESE APPEALS OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY LEARNED CIT(A)-3, BANGALORE AND THEY RELATE TO THE ASSESSMENT YEARS 2010-11, 2013-14 AND 2014-15. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF REFERENCE AND CONVENIENCE. ITA NOS.3172 TO 3174/BANG/2018 PAGE 2 OF 7 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA CO- OPERATIVE SOCIETIES ACT, 1959. IT IS ENGAGED IN THE BUSINESS OF PROVIDING FINANCIAL ASSISTANCE TO ITS MEMBERS AS PER ITS BYE LAWS. 3. WE SHALL FIRST TAKE UP THE APPEALS RELATING TO ASSESSMENT YEARS 2010-11 AND 2013-14. IN BOTH THE YEARS, THE LEARNED CIT(A) HAS DISMISSED THE APPEALS ON THE REASONING THAT BOTH THE APPEALS ARE BARRED BY LIMITATION. THE LEARNED CIT(A) HAS NOTICED THAT THE APPEALS FILED FOR ASSESSMENT YEAR 2010-11 IS BARRED BY LIMITATION BY 178 DAYS AND THE APPEAL FILED FOR ASSESSMENT YEAR 2013-14 IS BARRED BY LIMITATION BY 175 DAYS. ACCORDINGLY, HE HAS DISMISSED THE APPEALS ON LIMITATION ISSUE. 4. THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED THE APPEALS FOR THE ABOVE SAID TWO YEARS BEFORE THE CIT(A) MANUALLY WITHIN THE LIMITATION PERIOD. SUBSEQUENTLY, IT CAME TO THE NOTICE OF THE ASSESSEE THAT THE APPEALS HAVE TO BE FILED ELECTRONICALLY AND ACCORDINGLY THE ASSESSEE FILED THE APPEALS AGAIN FOR BOTH THE ASSESSMENT YEARS BY ELECTRONIC MODE. THE LD CIT(A) HAS TAKEN COGNIZANCE OF THE DATE OF FILING APPEAL ELECTRONICALLY AND HENCE HE HAS HELD THAT THEY WERE BARRED BY LIMITATION BY THE DAYS MENTIONED ABOVE. THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAD FILED THE APPEALS MANUALLY IN TIME AND THE DELAY HAS OCCURRED IN FILING THE APPEALS ELECTRONICALLY. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) SHOULD HAVE BEEN CONDONED THE DELAY. ACCORDINGLY, THE LEARNED AR PRAYED THAT THE DELAY IN FILING THE APPEALS ELECTRONICALLY MAY KINDLY BE CONDONED AND THE MATTER MAY BE DECIDED ON MERITS. ON THE CONTRARY, THE LEARNED DR PLACED RELIANCE ON THE ORDERS PASSED BY THE LEARNED CIT(A). ITA NOS.3172 TO 3174/BANG/2018 PAGE 3 OF 7 5. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH IN THE CASE OF WEP SOLUTIONS INDIA LTD., VS. ITO (ITA NO.480/BANG/2018 DATED 13.04.2018) WHEREIN THE CO-ORDINATE BENCH HAS EXPRESSED THE VIEW THAT THE APPEAL OF THE ASSESSEE CANNOT BE REJECTED ON THE GROUND THAT IT WAS NOT FILED ELECTRONICALLY BUT WAS FILED MANUALLY. FOR THE SAKE OF CONVENIENCE, WE EXTRACT THE OPERATIVE PORTION OF THE ORDER PASSED BY THE CO- ORDINATE BENCH IN THE ABOVE SAID CASE: 3. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT IN ORDER TO FACILITATE FILING OF THE APPEALS, THE GOVERNMENT HAS MADE THE NECESSARY CHANGES IN THE RULES FOR FILING THE APPEALS ELECTRONICALLY BUT THAT DOES MEAN THAT IF ELECTRONICALLY FILING OF THE APPEAL IS NOT POSSIBLE, THE ASSESSEE CANNOT FILE THE APPEAL MANUALLY. WE HAVE NOT FOUND ANY PROVISION IN THE ACT WHICH DEPRIVES ASSESSEE FROM FILING THE APPEAL MANUALLY AFTER PARTICULAR DATE. IF THE APPEAL IS FILED MANUALLY, THE SAME SHOULD HAVE BEEN DISPOSED BY THE CIT(A) OR ATLEAST HE CAN ASK THE ASSESSEE TO UPLOAD THE APPEAL ONLINE ALSO BESIDES FILING MANUALLY. BUT HE CANNOT REJECT THE APPEAL OF THE ASSESSEE ON THE GROUND THAT IT WAS NOT FILED ELECTRONICALLY AND WAS FILED MANUALLY. I, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO ADJUDICATE THE APPEAL ON MERIT BY PASSING A REASONED ORDER AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IF NEED BE, ASSESSEE MAY BE DIRECTED TO FILE APPEAL ELECTRONICALLY ALSO. 6. IN THE INSTANT CASE, THE ASSESSEE HAS FILED THE APPEALS MANUALLY FOR THE ABOVE SAID TWO YEARS WITHIN THE LIMITATION PERIOD AND THE DELAY HAS OCCURRED ONLY IN FILING THE APPEALS ONCE AGAIN ELECTRONICALLY. IN THE CASE OF WEP SOLUTIONS INDIA LTD ITA NOS.3172 TO 3174/BANG/2018 PAGE 4 OF 7 (SUPRA), THE CO-ORDINATE BENCH HAS EXPRESSED THE VIEW THAT THE APPEAL CANNOT BE REJECTED FOR THE REASON THAT IT WAS FILED MANUALLY. HENCE, WE ARE OF THE VIEW THAT THE DELAY IN FILING APPEALS ELECTRONICALLY SHOULD NOT COME IN THE WAY OF RENDERING JUSTICE TO THE ASSESSEE. ACCORDINGLY, WE CONDONE THE DELAY THAT OCCURRED IN FILING THE APPEALS ELECTRONICALLY. SINCE THE LEARNED CIT(A) HAS NOT ADJUDICATED THE APPEAL ON MERITS, WE DEEM IT APPROPRIATE TO RESTORE THESE APPEALS TO HIS FILE FOR ADJUDICATING THEM ON MERITS. ACCORDINGLY, WE SET ASIDE THE ORDERS PASSED BY LEARNED CIT(A) FOR THESE TWO YEARS UNDER CONSIDERATION AND RESTORE THESE APPEALS TO HIS FILE FOR ADJUDICATING IT ON MERITS. 7. NOW LET US TAKE THE APPEAL FILED FOR ASSESSMENT YEAR 2014-15. AS NOTICED EARLIER, THE ASSESSEE IS A CREDIT CO-OPERATIVE SOCIETY AND IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE CLAIMED DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. THE AO TOOK THE VIEW THAT THE DEFINITION OF INCOME GIVEN IN SEC.2(24) HAS AMENDED BY INSERTING CLAUSE (VIIA). THE SAID CLAUSE (VIIA) READS AS UNDER:- THE PROFITS AND GAINS OF ANY BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED ON BY A CO-OPERATIVE SOCIETY WITH ITS MEMBERS THE AO ACCORDINGLY HELD THAT THE INCOME OF THE ASSESSEE IS TAXABLE UNDER THE ACT. BY TAKING SUPPORT OF SEC.80P(4) OF THE ACT, THE AO HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. EVEN THOUGH THE ASSESSEE PLACED ITS RELIANCE ON THE DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S SRI BILURU GURBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT (ITA NO.5006/2013), YET THE AO REJECTED THE SAME WITHOUT EXAMINING THE ITA NOS.3172 TO 3174/BANG/2018 PAGE 5 OF 7 DECISION BY OBSERVING THAT THE REVENUE HAS FILED SLP AGAINST THE SAID DECISION. 8. THE LD CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LTD VS. ACIT (2017)(84 TAXMANN.COM 114)(SC). 9. THE CASE OF THE LD A.R IS THAT THE DECISION RENDERED IN THE CASE OF CITIZEN CO- OPERATIVE SOCIETY IS NOT APPLICABLE TO THE FACTS OF THE CASE, SINCE THE ASSESSEE HAS NOT LENT ANY MONEY TO ANY OF THE MEMBERS WHO ARE NOT ENTITLED TO PARTICIPATE IN THE PROFITS OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS PROVIDED CREDIT FACILITIES ONLY TO ITS REGULAR MEMBERS AND ASSOCIATED MEMBERS. HE SUBMITTED BOTH THE MEMBERS ARE ENTITLED TO PARTICIPATE IN THE PROFITS. HE SUBMITTED THAT THE ASSESSEE HAS NOT PROVIDED CREDIT FACILITIES TO ANY MEMBER WHO IS NOT ENTITLED TO PARTICIPATE IN THE PROFITS OF THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS GENERATED INCOME BY WAY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND ALSO FROM DEPOSITS KEPT WITH BANKS. 10. WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT THE LD CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY PLACING RELIANCE ON THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE ABOVE CITED CASE, WITHOUT EXAMINING THE FACTS AVAILABLE IN THE INSTANT CASE. ACCORDING TO LD A.R, THE FACTS AVAILABLE IN THE INSTANT CASE ARE DIFFERENT FROM THE ONE AVAILABLE IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY ITA NOS.3172 TO 3174/BANG/2018 PAGE 6 OF 7 (SUPRA), CONSIDERED BY HONBLE SUPREME COURT. WE NOTICE THAT THE FACTUAL ASPECTS OF THE CASE HAVE NOT BEEN EXAMINED BY ASSESSING OFFICER ALSO. 11. THE AO HAS TAKEN SUPPORT OF SEC.2(24) TO HOLD THAT THE INCOME OF THE ASSESSEE IS TAXABLE. THE ISSUE HERE IS ABOUT THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80P OF THE ACT. THE QUESTION OF ALLOWING DEDUCTION U/S 80P WOULD ARISE ONLY IF THE INCOME IS TAXABLE. FURTHER THE AO HAS DECLINED TO EXAMINE THE DECISION RENDERED BY JURISDICTIONAL HIGH COURT. HENCE THE REASONING GIVEN BY THE AO TO REJECT THE CLAIM OF THE ASSESSEE IS NOT SUSTAINABLE. THE AO HAS ALSO NOT GIVEN REASONS FOR APPLYING THE PROVISIONS OF SEC.80P(4) OF THE ACT IN THE HANDS OF THE ASSESSEE. 12. SINCE THE FACTS PREVAILING IN THE INSTANT CASE REQUIRE EXAMINATION; SINCE THE SCOPE OF TAXABILITY OF TWO STREAMS OF INCOME OF THE ASSESSEE HAS ALSO NOT BEEN EXAMINED AND SINCE THE AO HAS NOT GIVEN CORRECT REASONING TO REJECT THE CLAIM OF THE ASSESSEE, WE ARE OF THE OPINION THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO. 13. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) IN ASSESSMENT YEAR 2014-15 AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE CLAIM OF THE ASSESSEE AFRESH. ITA NOS.3172 TO 3174/BANG/2018 PAGE 7 OF 7 14. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF FEBRUARY, 2019. SD/- SD/- BANGALORE. DATED: 21 ST FEBRUARY, 2019. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE. ( N. V. VASUDEVAN ) ( B. R. BASKARAN ) VICE PRESIDENT ACCOUNTANT MEMBER