Solapur Zilla Madhyamik Shikshak Va Sevak Sahakari Patsanstha, Solapur V. CIT, IV, Pune, Pune

ITA 443/PUN/2012

• Counselvise Citation: 44324514 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Assessment record; Revised return
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.443/PN/2012 (ASSESSMENT YEAR : 2007-08) SOLAPUR ZILLA MADHYAMIK SHIKSHAK VA SEVAK SAHKARI PATSANSTHA, PLOT NO.21, SHIVAJINAGAR, BALE, SOLAPUR-PUNE HIGHWAY, SOLAPUR 413 001. PAN : AAAAS9588G . APPELLANT VS. COMMISSIONER OF INCOME TAX-IV, PUNE. . RESPONDENT ASSESSEE BY : MR. PRAMOD S. SHINGTE DEPARTMENT BY : MR. M. K. SINGH (CIT) DATE OF HEARING : 30-01-2014 DATE OF PRONOUNCEMENT : 28-02-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 29.12.2011 PASSED BY THE COMMISSIONER OF INCO ME TAX-IV, PUNE (IN SHORT THE COMMISSIONER) U/S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WHEREBY THE ASSESSMENT ORDER PASSED BY T HE ASSESSING OFFICER U/S 143(3) OF THE ACT ON 18.12.2009 HAS BEEN HELD TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND THE SAME HAS BEEN SET-ASIDE WITH DIRECTIONS TO PASS A FRESH ASSESSMENT ORDER IN ORDER TO EXAMINE ASSESSEES ENTITLEMENT FOR CLAIM OF DEDUCTION U/S 8 0P OF THE ACT. 2. IN THIS APPEAL, THE BRIEF FACTS ARE THAT APPELLA NT IS A CO-OPERATIVE CREDIT SOCIETY FORMED BY SOLAPUR DISTRICT SECONDARY TEACHE RS/STAFF APPOINTED BY GOVERNMENT IN ZILLA PARISHAD SCHOOLS. THE ASSESSEE CO-OPERATIVE SOCIETY IS REGISTERED UNDER THE PROVISIONS OF MAHARASHTRA CO-O PERATIVE SOCIETIES ACT, 1960 AND IS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE APPELLANT FILED ITS RETURN OF INCOME IN FORM NO. IT R-V ON 31.10.2007 FOR ITA NO.443/PN/2012 A.Y. 2007-08 ASSESSMENT YEAR 2007-08 WHICH WAS SUBJECT TO A SCRU TINY ASSESSMENT. IN THE ASSESSMENT FINALIZED U/S 143(3) OF THE ACT DATED 18 .12.2009 THE RETURNED INCOME WAS ACCEPTED AND TOTAL INCOME HAS BEEN ASSES SED AT NIL AFTER ALLOWING EXEMPTION UNDER SECTIONS 80P((2)(A)(I) AND SECTION 80P(2)(D) OF THE ACT WITH RESPECT TO GROSS TOTAL INCOME OF RS.1,46,3 7,696/- DECLARED BY THE ASSESSEE. 3. SUBSEQUENTLY, THE COMMISSIONER INVOKED HIS REVIS IONARY JURISDICTION CONTAINED IN SECTION 263 OF THE ACT AND HAS HELD TH E SAID ASSESSMENT ORDER AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. AS PER THE COMM ISSIONER, THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL T O THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT ON TWO GROUNDS. FIRSTLY, ACCORDING TO THE COMMISSIONER, ASSESSEE DID NOT CLA IM ANY DEDUCTION UNDER CHAPTER VIA IN THE RETURN OF INCOME FILED BY IT AND THEREFORE THE ASSESSING OFFICER COULD NOT HAVE ALLOWED DEDUCTION U/S 80P OF THE ACT IN THE ASSESSMENT PROCEEDINGS. SECONDLY, ACCORDING TO THE COMMISSION ER, A PERUSAL OF THE RECORD SHOWED THAT THE ASSESSING OFFICER DID NOT MA KE ANY ENQUIRIES WITH REGARD TO ASSESSEES ENTITLEMENT OF DEDUCTION U/S 8 0P OF THE ACT AND THUS THE DEDUCTION U/S 80P OF THE ACT WAS ALLOWED BY THE ASS ESSING OFFICER WITHOUT VERIFICATION. CONSIDERING THE AFORESAID TWO ERRORS , THE COMMISSIONER HAS SET- ASIDE THE ASSESSMENT ORDER DATED 18.12.2009 AND HAS DIRECTED THE ASSESSING OFFICER TO MAKE AN ASSESSMENT AFRESH AND EXAMINE TH E ASSESSEES ENTITLEMENT OF DEDUCTION U/S 80P OF THE ACT IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT, (2006) 284 ITR 323 (SC). THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) HAS BEEN REFERRED BY TH E COMMISSIONER FOR THE PROPOSITION THAT THE ASSESSING OFFICER CANNOT ENTER TAIN A FRESH CLAIM OF DEDUCTION U/S 80P OF THE ACT WHICH WAS NOT MADE IN THE RETURN OF INCOME, ITA NO.443/PN/2012 A.Y. 2007-08 WITHOUT ASSESSEE HAVING FILED A REVISED RETURN OF I NCOME. AGAINST THE AFORESAID DECISION OF THE COMMISSIONER, ASSESSEE IS IN APPEAL BEFORE US. 4. IN THE PROCEEDINGS BEFORE US, THE LEARNED COUNSE L FOR THE ASSESSEE HAS FURNISHED A PAPER BOOK CONTAINING COPIES OF THE NOT ICE ISSUED BY THE COMMISSIONER U/S 263; THE REPLY OF THE ASSESSEE TO THE COMMISSIONER; COPY OF THE COMPUTATION OF TOTAL INCOME; AND, THE COPY O F THE RETURN OF INCOME FILED AS ALSO A COPY OF THE REPLIES SUBMITTED TO THE ASSE SSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, ETC. . THE LEARNED CIT(DR) HAS PRODUCED THE RELEVANT ASSESSMENT RECORDS FOR THE PERUSAL OF THE BENCH. THE RIVAL CONTENTIONS HAVE BEEN HEARD IN THE ABOVE BACKGROUND AND THE RELEVANT MATERIAL PERUSED. 5. THE FIRST AND FOREMOST PLEA OF THE APPELLANT IS THAT THE COMMISSIONER HAS ERRED IN HOLDING THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT BECAUSE IT WAS NOT A CASE WHERE DEDUCTION U /S 80P OF THE ACT WAS NOT CLAIMED IN THE RETURN OF INCOME. THE LEARNED COUNS EL HAS REFERRED TO A DETAILED REPLY DATED 08.12.2011 FURNISHED TO THE CO MMISSIONER, WHICH ACCORDING TO HIM, HAS BEEN UNJUSTLY DISREGARDED BY THE COMMISSIONER IN FORMING A BELIEF THAT THE ASSESSMENT ORDER WAS ERRO NEOUS WITHIN THE MEANING OF SECTION 263 OF THE ACT. 6. ON THE OTHER HAND, THE LEARNED CIT(DR) APPEARING FOR THE REVENUE HAS DEFENDED THE ACTION OF THE COMMISSIONER FOR THE REA SONS ASSIGNED IN THE IMPUGNED ORDER, WHICH WE HAVE ALREADY NOTED IN PARA 3 ABOVE AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RELEVANT MATERIAL ON RECORD. ITS A TRITE LAW THAT JURISDICTION U/S 263 OF THE ACT CAN BE EXERCISED BY THE COMMISSIONER IF TWO CIRCUMS TANCES CONTAINED IN ITA NO.443/PN/2012 A.Y. 2007-08 SECTION 263 OF THE ACT EXIST. THE TWO CIRCUMSTANCE S WHICH MUST EXIST IN ORDER TO ENABLE THE COMMISSIONER TO INVOKE SECTION 263 OF THE ACT ARE, NAMELY, (I) THAT THE ORDER IN QUESTION SHOULD BE ERRONEOUS; AND , (II) THAT BY VIRTUE OF SUCH ERROR A PREJUDICE IS CAUSED TO THE INTERESTS OF THE REVENUE. IT IS ALSO A WELL- SETTLED PROPOSITION THAT THE AFORESAID TWO CONDITIO NS MUST BE CUMULATIVELY SATISFIED SO AS TO ENABLE THE COMMISSIONER TO INVOK E SECTION 263 OF THE ACT. 8. IN THE PRESENT CASE, THE CASE MADE OUT BY THE CO MMISSIONER IS THAT IN THE RETURN OF INCOME FILED IN FORM NO. ITR-V NO DED UCTION UNDER CHAPTER VIA, NAMELY, SECTION 80P OF THE ACT, HAS BEEN CLAIMED, T HOUGH INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS HAS BEEN SHOWN A T RS.1,46,37,696/-. THEREFORE, ACCORDING TO HIM, THE ASSESSMENT ORDER D ATED 18.12.2009 (SUPRA) ASSESSING THE TOTAL INCOME AT NIL, AFTER ALLOWING DEDUCTION UNDER SECTION 80P(2)(A)(I) AND SECTION 80P(2)(D) OF THE ACT IS ER RONEOUS AS NO SUCH CLAIM OF DEDUCTION WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME. 9. ON THIS ASPECT, THE PLEA OF THE ASSESSEE BEFORE THE COMMISSIONER AS WELL AS BEFORE US IS TO THE FOLLOWING EFFECT. ACCO RDING TO THE LEARNED COUNSEL, THE RETURN OF INCOME WAS FILED WITH THE HELP OF THE SOFTWARE AND THAT THE DEDUCTION U/S 80P OF THE ACT WAS DULY CLAIMED AT TH E TIME OF PREPARING THE RETURN OF INCOME. A REFERENCE WAS INVITED TO THE C OPY OF COMPUTATION OF TOTAL INCOME ANNEXED WITH THE RETURN OF INCOME, WHICH CLE ARLY REFLECTED THE CLAIM OF DEDUCTION; SECONDLY, A COPY OF ACKNOWLEDGEMENT OF F ILING OF RETURN HAS BEEN REFERRED TO SHOW THAT THE RELEVANT DEDUCTION UNDER CHAPTER VIA, NAMELY, SECTION 80P WAS CLAIMED. IT WAS POINTED OUT THAT T HE RETURN OF INCOME GENERATED BY THE SOFTWARE DID NOT SHOW THE CLAIM OF DEDUCTION U/S 80P OF THE ACT AND THEREFORE, IT WAS NOT APPEARING IN FORM NO. ITR-V, BUT HAVING REGARD TO THE COMPUTATION OF INCOME ANNEXED WITH THE RETUR N OF INCOME AS ALSO ACKNOWLEDGEMENT OF THE RETURN OF INCOME SHOWED THAT ASSESSEE CLAIMED DEDUCTION U/S 80P OF THE ACT. THE AFORESAID ANOMAL Y WAS ATTRIBUTED TO AN ERROR IN THE SOFTWARE, BECAUSE ON ONE HAND THE DEDU CTION UNDER CHAPTER VIA ITA NO.443/PN/2012 A.Y. 2007-08 WAS NOT BEING REFLECTED AS A REDUCTION FROM TOTAL I NCOME, WHEREAS THE TOTAL TAX LIABILITY WAS WORKED OUT BY THE SOFTWARE AT NIL, THEREBY INDICATING NO TAXABLE INCOME. THE LEARNED COUNSEL EXPLAINED THAT THE TAX LIABILITY COULD NOT HAVE BEEN CALCULATED BY THE SOFTWARE AT NIL IF THE TOT AL INCOME DECLARED AT RS.1,46,37,696/- WAS NOT ALLOWED EXEMPTION AS PER S ECTION 80P OF THE ACT. THIS ANOMALY, ACCORDING TO THE LEARNED COUNSEL, SHO WED MAL-FUNCTIONING OF THE SOFTWARE, IN TERMS OF WHICH THE RETURN OF INCOME WA S ELECTRONICALLY UPLOADED. APART THEREFROM, THE LEARNED COUNSEL POINTED OUT TH AT EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO FU RNISH DETAILS OF THE CLAIM OF DEDUCTION U/S 80P OF THE ACT AND IN RESPON SE A WRITTEN REPLY WAS FURNISHED, COPY OF WHICH HAS BEEN PLACED AT PAGES 8 - 9 OF THE PAPER BOOK. IN THIS REPLY, ASSESSEE HAD CATEGORICALLY EXPLAINED TH E DETAILS OF INCOME AND ALSO THE DEDUCTION CLAIMED U/S 80P(2)(D) OF THE ACT. IT WAS THEREFORE POINTED OUT THAT IT WAS WRONG ON THE PART OF THE COMMISSIONER T O ASSERT THAT THE DEDUCTION WAS NOT CLAIMED IN THE RETURN OF INCOME OR THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND WHILE ALLOWING THE DEDUCTION U/S 8 0P OF THE ACT. 10. ON THE CONTRARY, THE LEARNED CIT(DR) ASSERTED T HAT THE CLAIM OF DEDUCTION U/S 80P OF THE ACT WAS NOT APPEARING IN F ORM NO. ITR-V WHICH WAS SUBMITTED TO THE DEPARTMENT AND THEREFORE IT COULD NOT BE SAID THAT THE CLAIM OF DEDUCTION U/S 80P OF THE ACT WAS MADE IN THE RETURN OF INCOME FILED. 11. ON THIS ASPECT, WE HAVE CAREFULLY CONSIDERED TH E RIVAL STANDS AND PERUSED THE ASSESSMENT RECORDS, WHICH HAS BEEN PROD UCED BY THE REVENUE BEFORE US. OSTENSIBLY, THE DISCUSSION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DATED 18.12.2009 IS QUITE BRIEF, T HOUGH HE HAS NOTICED THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED U NDER THE PROVISIONS OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 AND IS ENGAGED IN PROVIDING CREDIT FACILITY TO ITS MEMBERS. HE HAS FURTHER NOTICED THAT ASSESSEE HAS FURNISHED COPIES OF ANNUAL REPORT, AUDIT REPORT AND THAT THE GROSS INCOME EARNED FROM THE ACTIVITY IS RS.1,46,37,696/-, WHICH HAS BEEN CLAIMED EXEMPT ITA NO.443/PN/2012 A.Y. 2007-08 UNDER SECTION 80P(2)(A)(I) AND SECTION 80P(2)(D) OF THE I.T. ACT, 1961. A PERUSAL OF THE ASSESSMENT ORDER DOES NOT INDICATE T HE ABSENCE OF ASSESSEES CLAIM FOR EXEMPTION U/S 80P OF THE ACT AT THE TIME OF ASSESSMENT PROCEEDINGS. MOREOVER, WE FIND THAT AFTER THE RECEIPT OF THE RET URN OF INCOME ON 31.10.2007, THE ASSESSING OFFICER HAS MADE AN ORDER-SHEET NOTIN G DATED 19.09.2008 IN THE ASSESSMENT FOLDER. IN TERMS OF SUCH ORDER-SHEET NO TING, THE CASE OF THE ASSESSEE HAS BEEN SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE U/S 143(2) OF THE ACT WAS DIRECTED TO BE ISSUED. THE REASON R ECORDED BY THE ASSESSING OFFICER TO SELECT THE CASE FOR SCRUTINY IS DEDCUTION CLAIMED UNDER CHAPTER VI-A EXCEEDS RS.25 LACS . OSTENSIBLY, THE ASSESSING OFFICER COULD NOT HAVE RECORDED THE AFORESAID POSITION UNLESS ASSESSEES C LAIM FOR DEDUCTION UNDER CHAPTER VI-A, NAMELY, SECTION 80P OF THE ACT WAS BE FORE HIM. THE CIRCUMSTANCES EXPLAINED BY THE ASSESSEE AS WELL AS THE AFORESAID ORDER-SHEET ENTRY RECORDED BY THE ASSESSING OFFICER ON 19.09.20 08 CLEARLY REFLECTS THAT CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80P OF THE ACT WAS VERY MUCH BEFORE THE ASSESSING OFFICER EVEN BEFORE HE PICKED-UP THE RETURN OF INCOME OF THE ASSESSEE FOR A SCRUTINY ASSESSMENT UNDER SECTION 14 3(3) OF THE ACT. THEREFORE, THE ANOMALY IN THE DEPICTION OF THE CLAI M OF DEDUCTION UNDER SECTION 80P OF THE ACT ON ACCOUNT OF A SOFTWARE GLITCH, AS EXPLAINED BY THE ASSESSEE, IS NOT ONLY PLAUSIBLE BUT APPEARS TO BE BORNE OUT O F RECORD. HAVING REGARD TO THE AFORESAID POSITION EMERGING ON A PERUSAL OF THE ASSESSMENT RECORDS MAINTAINED BY THE DEPARTMENT, WE ARE UNABLE TO UPHO LD THE ASSERTION OF THE COMMISSIONER TO THE EFFECT THAT THE ASSESSING OFFIC ER ENTERTAINED AND ALLOWED THE DEDUCTION U/S 80P OF THE ACT IN THE ABSENCE OF ANY SUCH CLAIM IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THEREFORE, THE FI RST PREMISE ENTERTAINED BY THE COMMISSIONER TO HOLD THE ASSESSMENT ORDER AS ER RONEOUS IS HEREBY SET- ASIDE AS NOT BEING FACTUALLY TENABLE. THE SECOND P OINT MADE BY THE COMMISSIONER THAT THE ASSESSING OFFICER DID NOT MAK E ANY ENQUIRIES WITH REGARD TO ENTITLEMENT OF ASSESSEE TO THE DEDUCTION U/S 80P OF THE ACT IS ALSO, IN OUR VIEW, NOT JUSTIFIED HAVING REGARD TO THE MATERI AL ON RECORD. IN THIS CONTEXT, ITA NO.443/PN/2012 A.Y. 2007-08 WE FIND THAT IN THE COURSE OF ASSESSMENT PROCEEDING S, ASSESSEE GAVE DETAILS OF THE INCOMES EARNED AS ALSO THE CLAIM OF DEDUCTIO N U/S 80P(2)(D) OF THE ACT IN ITS COMMUNICATION WHICH IS ON RECORD. EVIDENTLY , THE CLAIM OF THE ASSESSEE WAS ALLOWED BY THE ASSESSING OFFICER AFTER BEING SA TISFIED WITH THE EXPLANATION OF THE ASSESSEE, THOUGH THE DISCUSSION IN THE ASSES SMENT ORDER IS QUITE BRIEF ON THE ASPECT. SO HOWEVER, THE DECISION OF THE ASS ESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN THE ASSESSME NT ORDER HE HAS NOT MADE AN ELABORATE DISCUSSION IN THIS REGARD IN TERM S OF THE PARITY OF REASONING LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. GABRIEL INDIA LTD., 203 ITR 108 (BOM). AS A MATTER OF PASS ING, WE MAY ALSO OBSERVE THAT THE COMMISSIONER HIMSELF, EVEN AFTER INITIATIN G PROCEEDING FOR REVISION AND HEARING THE ASSESSEE HAS NOT DEMONSTRATED AS TO IN WHAT MANNER THE ALLOWANCE OF DEDUCTION 80P OF THE ACT WAS ERRONEOUS IN LAW AND THAT SUCH A CLAIM WAS UNSUSTAINABLE IN LAW. THUS, CONSIDERING THE ENTIRETY OF CIRCUMSTANCES WE ARE UNABLE TO ACQUIESCE TO THE CHA RGE OF THE COMMISSIONER THAT THE ASSESSMENT ORDER DATED 18.12.2009 (SUPRA) IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITH IN THE MEANING OF SECTION 263 OF THE ACT. 12. IN VIEW OF THE AFORESAID DISCUSSION, WE SET-ASI DE THE ORDER OF THE COMMISSIONER AND THE ASSESSMENT ORDER DATED 18.12.2 009 (SUPRA) PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT IS HERE BY RESTORED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 28 TH FEBRUARY, 2014 SUJEET ITA NO.443/PN/2012 A.Y. 2007-08 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-IV, PUNE; 4) THE DR, A BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE