Income Tax Officer Ward-1 , Haveri V. Shree Suvarna Pattina Souharda Sahakari Niyamitha , Haveri

ITA 3235/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9515 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 04-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Rectification of order; Set aside
• Section: 143(3); 143(1); 80P; 250; 154

Judgement Text

1 ITA NO.3235/BANG/2018 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI JASON P BOAZ , ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA. NO.3 235 /BANG/2018 (ASSESSMENT YEAR: 201 4 - 15 ) INCOME TAX OFFICER, WARD 1, HAVERI. VS. M/S. SHRI SUVARNA PATTINA SOUHARDA SAHAKARI NIYAMITHA, HIGH SCHOOL ROAD, HAVERI. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI ZAIN AHMED KHAN, C.A. REVENUE BY: DR. P. V. PRADEEP KUMAR, ADDL. CIT (D.R) DATE OF HEARING : 18.06 .2019 DATE OF PRONOUNCEMENT : 26 .06 .2019 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), DAVANGE RE PASSED U/S 154 AND U/S . 250 OF THE INCOME TAX ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 2 ITA NO.3235/BANG/2018 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN AOP AND ENGAGED IN THE BUSINESS OF ACCEPTING DEPOSITS AND LENDING LOANS AND FILED THE R ETURN OF INCOME FOR THE ASST. YEAR 2014 - 15 ON 26 .9.2014 DISCLOSING NIL INCOME AFTER CLAIMING DED UCTION UNDER SECTION 80P. THE RE TURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND NOTICE WAS ISSUED UNDER SECTION 143(2) OF THE ACT TO THE ASSESSEE. THE ASSESSING OFFICER ON PERUSAL OF T HE FINANCIAL STATEMENT FOUND THAT THE ASSESSEE HAS EARNED INTER EST ON VARIOUS DEPOSITS AND INCOME FROM OTHER SOURCES FROM NATIONALIZED BANKS. THE ASSESSING OFFICER APPL IED THE PROVISIONS OF SECTION 80P OF THE ACT AND MADE ADDITION O F INTEREST INCOME FROM DEPOSITS AND A SSESSED TOTAL INCOME OF RS.82,97,749 AND 3 ITA NO.3235/BANG/2018 PASSED THE ORDER UNDER SECTION 143(3) DT.9.12.2016. SUBSEQUENTLY, A RECTIFICATION ORDER WAS ISSUED UNDER SECTION 154 ON 17.1.20 17 DETERMINING A TOTAL INCOME AT RS.65,29,407. AGGRIEVED B Y THE ORDER UNDER SECTION 154 OF THE ACT , THE ASSESSEE FILED APPEAL BEFORE THE CIT (APPEALS). THE CIT (APPEALS) AFTER CONSIDERING THE GROUNDS OF APPEAL AND SUBMISSIONS OF THE ASSESSEE AND FINDING OF THE ASSESSING OFFICER HAS RELIED ON THE JUDICIAL DECIS ION S AND TREATED THE INTEREST INCOME AS INCOME FROM OTHER SOURCES AND WORKE D OUT NET INTEREST AFTER ALLOWING THE COST OF FUNDS AND P RO - RATA ADMINISTRATIVE EXPENSES AND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION AND PARTLY ALLOWED THE APPEA L. 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPEALS), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED THAT THE LEARNED CIT (APPEALS) HAS CALCULATED THE WORKING OF THE COST OF FUN DS AND ADMINISTRATIVE EXPENSES WHICH THE ASSESSING OFFICER NEVER VERIFIED AND EXAMINED AND WAS DEPRIVED AN OPPORTUNITY A THE ASSESSEE HAS SUBMITTED THE DETAILS IN THE APPELLATE PROCEEDINGS AND PRAYED FOR ALLOWING THE APPEAL. . PER CONTRA, THE LEARNE D AUTHORISED REPRESENTATIVE RELIED ON THE ORDERS OF THE LEARNED CIT (APPEALS). 4 ITA NO.3235/BANG/2018 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LEARNED DEPARTMENTAL REPRESENTATIVE MADE SUBMISSION ON THE CALCULATIONS OF THE LEARNED CIT (APPEALS) IN RESPECT OF COST OF FUNDS AND ADMINISTRATIVE EXPENSES WHICH WERE NOT BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER AND DETERMINED NET INTEREST INCOME. WE FIND ON PERUSAL OF THE LEARNED CIT (APPEALS) ORDER, THE APPELLATE AUTHORITY HAS RE LIED ON THE JUDICIAL DECISION AND WORKED OUT THE COST OF FUNDS AND PRO - RATA ADMINISTRATIVE EXPENSES TO BE ALLOWED AS DEDUCTION FROM THE GROSS INTEREST. WE FIND STRENGTH IN THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THESE FACTS WER E NOT VERIFIED BY THE ASSESSING OFFICER NOR FILED IN THE ASSESSMENT PROCEEDINGS AND FURTHER THE LEARNED CIT (APPEALS) HAS NOT CALLED FOR REMAND REPORT/COMMENTS OF THE ASSESSING OFFICER ON SUBMISSIONS OF THE ASSESSEE , WE ARE OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE EXAMINED. A CCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT (APPEALS) AND RESTORE THE ENTIRE DISPUTED ISSUE FOR LIMITED PURPOSE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AND EXAMINE THE CLAIM OF THE ASSESSEE AND ALLOW THE GROU NDS OF APPEAL OF REVENUE FOR STATISTICAL PURPOSES . 5 ITA NO.3235/BANG/2018 6 . IN THE RE SULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH JUNE, 2019. SD/ - SD/ - ( JASON P BOAZ ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26TH JUNE, 2019. *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE