The Kuramathur Service Co-op Bank Ltd, Kannur V. ITO, Kannur

ITA 4/COCH/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8546 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: R K IYER
• Keywords: Opportunity of being heard; Question of law
• Section: 142(1); 144; 139

Judgement Text

ITA NO . 04/C/2013 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO 04/COCH/2013 ( A SST YEAR 2009 - 10 ) THE KURAMATHUR SERVICE COOP BANK LTD KURAMATHUR TALIPARAMBA KANNUR 670 142 VS THE INCOME TAX OFFICER WARD 4 KANNUR ( APPELLANT) (RESPONDENT) PAN NO. AACCK6521H ASSESSEE BY SH R K IYER REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 16 TH JUNE 2016 DATE OF PRONOUNCEMENT 17 TH JUNE 2016 OR D ER PER GEORGE GEORGE. K. J M: THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE CIT(A)S ORDER 9 TH OCT 2012. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10 2 THOUGH SEVERAL GROUNDS ARE RAISED IN THE MEMORANDUM OF APPEAL, ONLY TWO ISSUES WERE ARGUED DURING THE COURSE OF HEARING OF THIS APPEAL. THE TWO ISSUES WHICH WERE ARGUED ARE AS FOLLOWS: I) WHETHER THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION/S 80P(2) OF THE ACT AND IS NOT HIT BY INSERTION OF SECTION 80P(4) OF THE ACT ? II) WHETHER THE AO IS JUSTIFIED IN DENYING THE DEDUCTION CLAIMED U/ S 80P(2) OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 80A(5) OF THE ACT.? ITA NO . 04/C/2013 2 3 THE BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT 1969. IT IS MAINLY ENG AGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR THE RELEVANT ASSESSMENT YEAR THE RETURN WAS NOT FILED WITHIN THE TIME ALLOWED U/S 139(1) OR 139(4) OF THE ACT. THE RETURN OF INCOME CLAIMING DEDUCTION U/S 80P(2) WAS FILED PURSUANT TO A LETTER ISSUED BY THE AO STATING THAT THE ASSESSMENT WOULD BE COMPLETED U/S 144 OF THE ACT. SINCE THE RETURN WAS NOT FILED WITHIN THE TIME PRESCRIBED U/S 139(1) OR 139(4) OF THE ACT, THE CLAIM OF DEDUCTION U/S 80(2) WAS DENIED BY INVOKING THE PROVISIONS OF SECTION 80 A ( 5) OF THE ACT. 4 AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE ACTION TAKEN BY THE AO. 5 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL B EFORE US. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED IN THESE APPEALS ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE RECENT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS IN ITA NO.212 OF 2013 (JUDGMENT DATED 15 TH FEBRUARY 2016). THE LD DR PRESENT WAS DULY HEARD. ITA NO . 04/C/2013 3 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAD FILED RETURN OF INCOME FOR THE REL EVANT ASSESSMENT YEAR PURSUANT TO THE LETTER ISSUED BY THE AO STATING THAT THE ASSESSMENT WOULD BE COMPLETED U/S 144 OF THE ACT. SINCE THE RETURN OF INCOME FILED WAS NOT WITHIN THE TIME LIMIT PRESCRIBED U/S 139(1) OR 139(4) OF THE ACT, THE SAME WAS TREAT ED AS NON - EST AND THE CLAIM OF DEDUCTION U/S 80P(2) WAS DENIED BY INVOKING THE PROVISIONS OF SECTION 80 A(5) OF THE ACT. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE RECENT JUDGMENT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS (SUPRA ), HAVE HELD THAT WHEN THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80P(2) OF THE ACT IN THE RETURN OF INCOME, THOUGH THE SAME IS FILED BELATEDLY, THE DEDUCTION U/S 80P(2) HAS TO BE NECESSARILY CONSIDERED ON MERITS BY THE AUTHORITIES.. THE HONBLE JURISDICTION AL HIGH COURT WAS CONSIDERING THE FOLLOWING QUESTION OF LAWS: B) WHETHER THE TRIBUNAL IS JUSTIFIED IN DENYING THE EXEMPTION U/S 80P OF THE I T ACT, 1961ON THE MERE GROUND OF BELATED FILING OF RETURN BY THE ASSESSEE ? C) WHETHER A RETURN FILED BY THE ASSESS EE BEYOND THE PERIOD STIPULATED US 139(1)/(4) OR SECTION 142(1)/148 CAN BE HELD AS NON - EST IN LAW AND INVALID FOR THE PURPOSE OF DECIDING EXEMPTION US 80P OF THE I T ACT, 1961 ? 6.1 IN DECIDING THE ABOVE TWO QUESTIONS OF LAW, THE HONBLE JURISDICTIONAL HI GH COURT RENDERED THE FOLLOWING FINDINGS: 18 QUESTIONS B & C RELATE TO DENIAL OF EXEMPTION ON GROUND REFERABLE TO BELATED FILING OF RETURN , THAT IS TO SAY, RE TURN S FILED BEYOND THE PERIOD STIPULATED UNDER SECTION 139(I) OR SECTION 139 (4), AS THE CASE MA Y BE, AS WELL AS SECTION 142 (1) OR SECTION 148; AS THE CASE MAY BE. THERE ARE NO CASES AMONG ITA NO . 04/C/2013 4 THESE APPEAL S WHERE RETURNS WERE NOT FILED. THERE ARE CASES WHERE CLAIMS HAVE BEEN M ADE ALONG WITH THE RETURNS AND THE RETURNS WERE FILED WITHIN TIME. STILL FURT HER, THERE ARE CASES W HERE RETURNS WERE FILED BELATEDLY, THAT IS TO SAY, BEYOND THE PERIOD STIPULATED UNDER SUB - SECTION 1 OR 4 OF SECTION 139; AND, THERE ARE ALSO RETURNS FILED AFTER THE PERIOD WITH REFERENCE TO SECTIONS 142 (1) AND 148 OF THE IT ACT. 1 9 SECTION 80A(5) PROVIDES THAT WHERE THE ASSESSEE FAILS TO MAKE A CLAM IN HIS RETURN OF INCOME FOR ANY DEDUCTION, INTER ALIA U NDER ANY PROVISION OF CHAPTER VIA UNDER THE HEADING 'C. - DEDUCTION IN RESPECT OF CERTAIN INCOMES', NO DEDUCT ON SHALL BE ALLOWED ' TO HIM THEREUNDER. THEREFORE, IN CASES WHERE NO RETURNS HAVE BEEN FILED FOR A PARTICULAR ASSESSMENT YEAR, NO DEDUCTIONS SHALL BE ALLOWED. THIS EMBARGO 1N SECTION 80A(5) , WOULD APPLY, THOUGH SECTION 80P IS NOT INCLUDED IN SECTION 80AC . THIS IS SO BECAUSE , THE INHIBITION AGAINST ALLOWING DEDUCTION IS WORDED IN QUITE SIMILAR TERMS IN SECTIONS 80A(5) AND 80AC, OF WHICH SECTION 80A(5) IS A PROVISION INSERTED THROUGH THE FINANCE ACT 33/2009 WITH EFFECT FROM 21.4.2013 AFTER THE INSERTION OF SECTION80AC AS PER T HE FINANCE ACT OF 2006 WITH EFFECT FROM 1.4.2006. THIS CLEARLY EVIDENCES THE LEGISLATIVE INTENDMENT THAT THE INHIBITION CONTAINED IN SUB SECTION 5 OF SECTION 80A WOULD OPERATE BY ITSELF. IN CASES WHERE RETURNS HAVE BEEN FILED, THE QUESTION OF EXEMPTIONS OR DEDUCTIONS REFERABLE TO SECTION 80P WOULD DEFINITELY HAVE TO BE CONSIDERED AND GRANTED IF ELIGIBLE. 20 HENCE, QUESTIONS WOULD ARISE AS TO WHETHER BELATED RETURNS FILED BEYOND THE PERIOD STIPULATED U/S 139(1) OR SECTION 139(4) AS WELL AS FOLLOWING SECTI ONS 142(1) AND148 PROCEEDINGS COULD BE CONSIDERED FOR EXEMPTION. IF THOSE RETURNS ARE ELIGIBLE TO BE ACCEPTED IN TERMS OF LAW, GOING BY THE PROVISIONS OF THE STATUE AND THE GOVERNING BINDING PRECEDENTS, IT GOES WITHOUT SAYING THAT THE CLAIM FOR EXEMPTION WILL ALSO STAND AFFECTUATED AS A CLAIM DUTY MADE AS PART OF RETURNS SO FILED, FOR DUE CONSIDERATION. 21 WHEN A NOTICE U/S 142(1) IS ISSUED, THE PERSON MAY FURNISH THE RETURN AND WHILE DOING SO, COULD ALSO MAKE CLAIM FOR DEDUCTION REFERABLE TO SECTION 80P . NOT MUCH DIFFERENT IS THE SITUATION WHEN PRE - ASSESSMENT ENQUIRY IS CARRIED FORWARD BY ISSUANCE OF NOTICE U/S 142(1) OR WHEN NOTICE IS ISSUED ON THE PREMISE OF ESCAPED ASSESSMENT REFERABLE TO SECTION 148 OF THE I T ACT. THIS POSITION NOTWITHSTANDING, WHEN AN ASSESSMENT IS SUBJECTED TO FIRST APPEAL OR FURTHER APPEALS UNDER THE I T ACT OR ALL QUESTIONS GERMANE FOR, CONCLUDING THE ASSESSMENT WOULD BE RELEVANT AND CLAIMS WHICH MAY RESULT IN MODIFICATION OF THE RETURNS ALREADY FILED COULD ALSO BE ENTERTAINED PA RTICULARLY WHEN IT RELATES TO CLAIMS FOR EXEMPTION. THIS IS SO BECAUSE THE FINALITY OF ASSESSMENT WOULD NOT BE ACHIEVED IN ALL SUCH CASES, UNTIL THE TERMINATION OF ALL SUCH APPELLATE REMEDIES. ITA NO . 04/C/2013 5 UNDER SUCH CIRCUMSTANCES, THE TRIBUNAL WAS NOT JUSTIFIED IN DEN YING EXEMPTION U/S 80P OF THE I T ACT ON THE MERE GROUND OF BELATED FILING OF RETURN BY THE ASSESSEE CONCERNED. A RETURN FILED BY THE ASSESSEE BEYOND THE PERIOD STIPULATED UNDER SECTION39(1) OR 139(4) OR U/S 142(1) OR SECTION 148 CAN ALSO BE ACCEPTED AND A CTED UPON PROVIDED FURTHER PROCEEDINGS IN RELATION TO SUCH ASSESSMENTS ARE PENDING IN THE STATUTORY HIERARCHY OF ADJUDICATION IN TERMS OF THE PROVISIONS OF THE I T ACT. IN ALL SUCH SITUATIONS, IT CANNOT BE TREATED THAT A RETURN FILED AT ANY STAGE OF SUCH PROCEEDINGS COULD BE TREATED AS NON - EST IN LAW AND INVALID FOR THE PURPOSE OF DECIDING EXEMPTION U/S 80P OF THE I T ACT. WE THUS ANSWER SUBSTANTIAL QUESTIONS OF LAW B & C FORMULATED AND ENUMERATED ABOVE. 6.2 IN THE INSTANT CASE, PURSUANT TO THE LETTER I SSUED BY THE AO STATING THAT THE ASSESSMENT WOULD BE COMPLETED U/S 144 OF THE ACT, THE ASSESSEE HAD FILED RETURN OF INCOME AND CLAIMED DEDUCTION U/S 80P(2) OF THE ACT. THE CLAIM OF DEDUCTION U/S 80P(2) WAS REJECTED FOR THE REASON THAT THE RETURN OF INCO ME WAS FILED BELATEDLY. THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE CITED CASE HAD HELD THAT EVEN WHEN THE RETURN OF INCOME WA S FILED BELATEDLY, THE CLAIM OF DEDUCTION U/S 80P(2) HAS TO BE CONSIDERED ON MERITS. IN VIEW OF THE ABOVE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE AO IS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF DEDUCTION U/S 80P(2) IN LIMINE, FOR THE REASON THAT THE RETURN OF INCOME WAS FILED BELATEDLY. IT IS ORDERED ACCORDINGLY. 6.3 THE PLEA OF THE ASSE SSEE THAT IT IS ENTITLED TO DEDUCTION U/S 80P(2) WAS NOT CONSIDERED BY THE AO NOR THE CIT(A). THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, WE REMAND THE MATTER TO THE AO TO CONSIDER THE PLEA OF THE ASSESSEE WHETHER THE ASSESSEE IS ENTITLED TO THE BENE FIT OF DEDUCTION U/S 80P(2) OF THE ACT. THE ASSESSEE SHALL PROVIDE THE NECESSARY MATERIAL, INCLUDING THE CERTIFICATE FROM ITA NO . 04/C/2013 6 THE REGISTRAR OF COOPERATIVE SOCIETIES AND ITS BYE LAWS TO PROVE THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P( 2) OF THE ACT. THE AO SHALL FOLLOW THE DICTUM LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS ( SUPRA) AND SHALL DECIDE THE MATTER EXPEDITIOUSLY AS POSSIBLE IN ACCORDANCE WITH LAW AFTE R AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. NO OTHER ARGUMENTS WERE RAISED IN THE COURSE OF HEARING OF THESE APPEALS. THEREFORE, WE REFRAIN FROM ADJUDICATING THE OTHER ISSUES THAT ARE RAISED IN THE GROUNDS OF APPEAL. 7 IN THE RE SULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH , DAY OF JUNE 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 17 TH , JUNE 2016 RA J* ITA NO . 04/C/2013 7 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN