Sri Bijaynagar Kray Vikraya Sahakari Samiti Ltd., Bikaner V. Addt./Jt/Dy.CIT/ITO, NFAC, Delhi

ITA 512/JODH/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7830 (ITAT-JODHPUR)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 28-01-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 10-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Search and seizure; Rule of consistency; TDS; Co-operative Credit Society
• Section: 132; 143(3); 143(1); 80P; 143(2); 64; 72; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR (SMC). BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 512/Jodh/2023 Assessment Year: 2018-19 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. Bagree Mohallan, Bikaner- 334001. [PAN:AAATS 4003 P] (Appellant) Vs. Addt./Jt./Dy. CIT/ITO National e-Assessment Centre, Delhi. (Respondent) Appellant by Sh. Suresh Ojha, Adv. & Sh. Shashank Khatri, Adv. Respondent by Ms. Nidhi Nair, Sr. DR Date of Hearing 29.01.2024 Date of Pronouncement 16.04.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the National Faceless Appeal Centre, Delhi dated 20.10.2023 [here in after “ld.CIT(A)(NFAC)”] for assessment year 2018-19 which in turn arise from the order dated 20.04.2021 passed under section 143(3) r.w.s. 144B of the Income Tax Act, by the AO. I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 2 2. In this appeal, the assessee has raised following grounds: - “ 1. That the order passed by the Income Tax Officer and sustained by the Commissioner of Income Tax (Appeals) is illegal and against the law. 2. That the order sustained by the Commissioner of Income Tax (Appeals) are not justified and bad in law because assessee society is fulfilling the requirement of law and such the claim of deduction was in accordance with the law and the disallowance is not justified in view of various judicial pronouncement as well as legal position of the law regarding the claim. 3. The order passed kindly is declared against judicial decorum and judicial discipline because the binding nature judgment was not adjudicated by the Commissioner of Income Tax (Appeals) while deciding the appeal. 4. The provisions of section 80P (2) (d) of the act is crystal clear and the claim is rightly made by the assessee. The rejection by the CIT (A) without a reason and speaking order. 5. The Commissioner of Income Tax (Appeals) fails to follow the president of consistency in the law because in the case of the assessee himself, the deduction was allowed for the assessment year 2011-12 and 2012 13 in the same set of circumstances therefore following the judgment of the Hon'ble Supreme Court as well as this Tribunal the disallowance is not justified. 6. Without prejudice, the Commissioner of Income Tax (appeals) should have appreciated that the amount in question was not voluntary deposited but by virtue of direction of the government as such the inference drawn by CIT (A) is not justified in view of document before him. The government interference. is also having direct 7 Fails to follow the judgment referred before him falls within the definition of contempt of court therefore the order may kindly be passed to declared as contempt and cost me kindly be awarded in respect of arbitrary Disallowing and sustaining the addition. 8. That the rejection is without following the judgment having the character is binding nature therefore cost may kindly be awarded.” 3. Brief fact of the case is that the assessee is a Co-operative Credit Society registered under Co-operative Act and is engaged in the business of marketing of produce of members of society and purchase of seeds, pesticides, fertilizers etc for supply to the members. The assessee had filed its return of income for I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 3 the A.Y 2018-19 in the status of "AOP" on 24.09.2018 declaring total income at Nil/- after claiming deduction of Rs. 6,189/- u/s 80P of the Act. The return was processed by the CPC u/s 143(1) of the Income Tax Act, 1961. Return of the assessee was selected through CASS for complete scrutiny assessment under the E-assessment scheme, 2019. During the assessment proceedings, the assessee had furnished the details and explanation called for by the AO. After careful examination of the submissions made by the assessee the ld. AO found that the assessee has earned an interest Income of Rs 5,91,394/- from the Co-operative Bank. The assessee has treated the interest income of Rs 5,91,394/- received from the deposits from Co-operative Bank as its operational income. In this connection, the assessee was asked to clarify how the interest receipts from Cooperative Banks/Commercial Banks can be claimed as exempt u/s 80P(2)(d) of the Act. In response, the assessee has furnished submission along with related case laws. Subsequently the AO after considering the facts and submission of the case has completed the assessment proceedings assessing the income of the assessee at Rs 5,97,583/- (wrongly mentioned at Rs.6,189/-) wherein disallowance of Rs. 5,91,394/- u/s 80P(2)(d) of the Act was made. 4. Aggrieved from the order of the assessing officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds of the appeal so raised by the assessee, the relevant finding of the ld. CIT(A) is reiterated here in below:- I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 4 “5.1 DECISION: I have carefully considered the facts of the case, assessment order, statement of facts and case-laws relied on by the appellant. It can be seen from the records that the appellant has earned interest income from the surplus invested in the Co-operative bank other than the Co-operative societies which was held non operational income by the AO as the same was not attributed to the business activities of the appellant. The AO has disallowed the appellant's claim of deduction u/s 80P(2)(d) on the ground that the said amount of income was earned by the appellant in the form of interest from FDs made in the banks other than Co-operative Societies. Thus, it should be brought to tax under the head "other sources". The AO relied on the decision of Hon'ble Supreme Court in the case of Totagars Co- operative Sale Society Ltd, vs. Income-tax Officer, Karnataka [2010] and decision of Hon'ble Karnataka High Court in the case of M/s Totagar's Cooperative Sale Society( 2017) has disallowed the deduction claimed by the appellant in respect of the interest income earned on deposits made in the Co-operative Bank. Relevant part of the assessment order is reproduced as under: ******************************* 5.2. In view of the above facts and keeping it in mind the law as it stands today, it appears to me that the AO has correctly disallowed the deduction u/s 80P(2)(d) of the Act thereby following the decision of Hon'ble Karnatka High Court in the case of M/s Totagar's Cooperative Sale Society (2017) and decision of Hon'ble Gujarat High Court in the case of State Bank of India v. CIT [2016] 389 ITR 578/241 Taxman 163/72 taxmann.com 64, wherein it is held that "the income by way of interest earned by deposit or investment of idle or surplus funds does not change its character irrespective of the fact whether such income of interest is earned from a scheduled bank or a co-operative bank and, thus, section 80P of the Act would not apply". In the present case the appellant has earned interest income from the deposits made out of the funds in the Ganganagar Kendriya Sahakari Bank Ltd. which is not a Co-operative Society and accordingly the same do not qualify for the purpose of claiming deduction u/s 80P(2)(d) of the Act. The observations and the findings of the AO appears to be in order and the case law relied on by the AO seems to be correct. Hence, does not allow me to take a divergent view from the findings of the AO in the order passed u/s 143(3) of the Act. Accordingly the addition made by the AO is Rs. 5,91,394/- is upheld and the grounds raised in this issue are dismissed.” 5. As the assessee did not find any favour from the order of the ld. CIT(A)/NFAC, the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the ld. AR of the assessee, has filed the written submissions and the same is reproduced herein below: I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 5 “ KINDLY DECIDE ALL GROUND FOLLOWING THE JUDGMENT OF RAJASTHAN HIGH COURT in view of Ramesh Chandra Modi. 249 ITR 323 Commissioner of Income- Tax.vs Ramesh Chand Modi. In this respect it is stated that the appeal of the assessee was decided by the Commissioner of Income Tax appeals faceless. From the perusal of the order, you will observe that the appellate Authority rejected the appeal without following the binding judgments and ALSO IGNORING THE JUDGMENT OF RAJASTHAN HIGH COURT AND ORDER OF ITAT JAIPUR BENCH. Surprisingly enough in para four, it has been mentioned that a reply was filed and the same was considered. But none of the judicial decision was followed and discuss in the order. I WANT TO HUMBLY SUBMIT THAT THE ASSESSEE IS IN APPEAL AND THE DEPARTMENT IS NOT IN CROSS OBJECTION OR IN CROSS APPEAL THEREFORE THE LIMITATION IS THERE FOR RELYING UPON AND REPLYING. HOPE THE HON’BLE BENCH WILL CONSIDER IT. Now it is submitted as under ground wise:- As regards ground no, 01, that the order passed by the Income Tax Officer and sustained by the Commissioner of Income Tax (Appeals) is illegal and against the law, IN THIS RESPECT I ALSO WANT TO DRAW YOUR ATTENTION TOWARDS THE ARTICLE 141 OF THE CONSTITUTION OF INDIA IN RESPECT OF BINDING NATURE JUDGMENT WHICH HAS TO BE FOLLOWED BY THE INDIAN COURT/TRIBUNAL. THE DETAILS OF JUDGMENT IS AVAILABLE IN THE WRITTEN SUBMISSION WHICH IS AT PAGE 1 OF THE PAPER BOOK . From The perusal of the document and written arguments you will observe that THERE IS A GROSS NEGLIGENCE ON THE PART OF THE COMMISSIONER OF INCOME TAX (APPEALS), the order of CIT (A) you will observe that it is nothing in the order of appeal but there is an attempt of putting the assessee in the pit of litigation reason best known to the Commissioner of Income Tax (Appeals). THE CIT (A) IGNORE THE FACT AND DOCUMENT AND ADDED WRONG FACT. The CIT (A) not followed the binding nature judgment. In this respect your kind attention is invited towards the fact that the AO not followed binding nature in this connection your kind attention is invited toward the ITA No.41 & 42/Agr/2021 M/s MAHADEV COLD STORAGE. The relevant portion is as under: - “16. National Judicial academy had published one article on 14 September 2018 written by Hon’ble Justice ( Retd)B.S. Chauhan of SC , the relevant extract of the said article are as under : The text of Mahabharata says ‘that path is the right path which has been followed by virtuous men.’ The concept of precedent is based on this theory. The edifice of the common law is made up of judicial decisions. The doctrine of precedents grew in England in absence of codified laws. The rule of law requires not over turning precedents too often. Aristotle said “the habit of lightly changing the laws is an evil”. Precedents: A source of “law” under the Constitution of India Article 141 of the Constitution lays down that the “law declared” by the Supreme Court is binding upon all the courts with the territory of India. The “law declared” has to be construed as a principle of law that emanates from a judgment, or an interpretation of a law or judgment by the Supreme Court, upon which, the case is decided. Hence, it flows from the above that the “law declared” is the principle culled out on the reading of a judgment as a whole in the light of the questions I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 6 raised, upon which the case is decided. (See: Fida Hussain v. Moradabad Development Authority (2011) 12 SCC 615; Ambica Quarry Works v. State of Gujarat (1987) 1 SCC 213; and CIT v. Sun Engg. Works (P) Ltd. (1992) 4 SCC 363).” The CIT (A) not followed the judgment referred in the written submission submitted before the CIT (A) which is from page no 1 to 13 of Paper book as such the order passed by the CIT(A) is illegal. The illegality is being mentioned separately in subsequent submission. As regards ground no,02, that the order sustained by the Commissioner of Income Tax (Appeals) are not justified and bad in law because assessee society is fulfilling the requirement of law and such the claim of deduction was in accordance with the law and the disallowance is not justified in view of various judicial pronouncement as well as legal position of the law regarding the claim. The assessee is a society and received interest from another co-operative society acting as a co-operative bank. The issue under consideration is whether the interest received by the assessee from the Cooperative Bank is eligible for deduction under section 80P (2) (d) of the Income Tax Act? The Hon’ble Rajasthan High Court and ITAT, Jaipur Bench states that, the Cooperative Bank would be considered as a Cooperative Society for the purposes of section 80P (2)(d) as per the judgment of Shahpura Gram Seva Sahakari Samiti Ltd on page no 08-12 on case law paper book, Solitrate CHS Ltd is page no 13-16 on case law paper book and Rajasthan Rajya Sahakari Kray Vikray Sangh Ltd on page no 29-33 on case law paper book. Accordingly, in view of the fact of judgment the interest received by the assessee from the said Cooperative Bank is eligible for deduction under section 80P (2)(d) of the Act. In this connection it will be worthwhile to submit that the assessing officer not accepted the Cooperative Bank as a cooperative society for the purpose application of section 80P (2) (d) of Income Tax Act. The Co-operative society is the main status and if the activity is banking in that case that is called Co-operative Bank but the status is and shall be the Co-operative society. IN PAST THIS PRACTICE WAS FOLLOWED CANNOT BE CHANGED. The copy of orders of assessment for the period A.y. 2011-12 and 2012-13 is at page 31-33 on paper book where the deduction was allowed. The past history is also very important and relevant. In this connection I want to draw your kind attention towards the order of Income-tax Appellate Tribunal, Special Bench reported in 105 ITD page 1 in case of M/s Allied Co. on case law paper book on page 20-26 in which it has been held that past history is best gauze and guide. You are, therefore, requested that the same may kindly be accepted. As regards ground no 03, the order passed kindly is declared against judicial decorum and judicial discipline because the binding nature judgment was not adjudicated by the Commissioner of Income Tax (Appeals) while deciding the appeal About not accepting the case law The assessee comes forward with the judgments/ orders in the written submission which is at page 01 to 13. The assessee relied upon order of ITAT Jaipur also in the submission and other judgment. The Order of the High Court and Tribunal is having the character of binding nature. I want to submit the legal position of the character of the order of the Income Tax Appellate Tribunal, in this respect it is stated as under: I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 7 In case of Avon Apparels V/s ITO reported in 22 Tax World 399 held that order of the Tribunal is binding on the lower authorities. Relevant portion of the observation of the Hon’ble Tribunal is being reproduced hereunder:- “Further held that in the Rajasthan, the department is bound to follow the decision of the Jaipur Bench of the Tribunal and that the CIT (A) has committed a mistake which is not curable.” “Also held that CIT (A) was not right at all in not considering and following the decision of this bench when the decision was directly on identical issue”. From the perusal of the above order of the Hon’ble Tribunal you will observe that issue before the Hon’ble Bench was in respect of judicial discipline and the Hon’ble Bench while adjudicating the judicial discipline held that subordinate authorities are under an obligation to follow the decision of the superiors. In this case also the judgment of Hon’ble Tribunal in toto is applicable. I also want to let you know that to the best of our knowledge the order of the Hon’ble Tribunal is neither suspended nor stayed or reversed, therefore is a valid order. I want to emphasis on the binding nature of the order of the Tribunal and just want to request that the order of the Tribunal is having the character of binding nature and the lower authority cannot brush aside or flout the order of the Tribunal and judgment referred before any authority without just cause. As far as the judgment of High Court and Supreme Court are having the character of binding nature but the order of Tribunal is also having the character of binding nature. In this respect I further want to draw your kind attention towards the judgment of Hon’ble Supreme Court in case of M/s Kamalakshi Finance Corporation Ltd. reported in (1991) 53 ELT 433, 72 Taxmann 43. The copy of judgment is at page 17-18 of the case law paper book. Fate of binding nature I have referred to many case laws in the return submission submitted before the Commissioner of Income Tax Appeals and all of the case laws are having a binding nature. In the case of M/s Kamaluxmi Finance Corporation Ltd, The Hon’ble Supreme Court in clear terms held that the order of the Income-tax Appellate Tribunal is binding upon the lower authority. For your ready reference relevant portion thereof is being reproduced hereunder: “72 Taxman-Magazine Page43 Union of India Vs. Kamalaksmi Finance Corpn. Ltd. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunals binding on the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the order of the higher appellate authorities should be followed unreservedly by the subordinate authorities.” As such you will observe that the order of the tribunal and other judgments are having a binding nature, as far as the judgment of the Supreme Court is concerned, the same is binding as per Article 141 of the constitution of India. Under the circumstance, it is submitted that the order passed by the CIT(A) may kindly be declared illegal. As regards ground no 04, the provisions of section 80P (2) (d) of the act is crystal clear and the claim is rightly made by the assessee. The rejection by the CIT (A) without a reason and speaking order. I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 8 That the disallowance of deduction of rupees 591394 sustained by the CIT(A) is not justified in the fact and circumstances of the case and sustained by the CIT(A). In this connection it will be worthwhile to submit that the assessing officer not accepted the Cooperative Bank as a cooperative society for the purpose application of section 80P (2) (d) of Income Tax Act. The Co-operative society is the main status and if the activity is banking in that case that is called Co-operative Bank but the status is and shall be the Co-operative society. IN PAST THIS PRACTICE WAS FOLLOWED CANNOT BE CHANGED. The reference of amendment is not correct there was no amendment with effect from 01.04.2007 but there is insertion of explanation with effect from 01.04.2007. The Honorable Tribunal of Jaipur in following case law also had drawn the inference. I want to submit the submission regarding past history as well as consistency in latter para but as far as the judicial pronouncement are concerned it is stated that our office is in the Rajasthan state and the judgment of Tribunal of Rajasthan are having the character of binding nature . In this respect I want to draw your kind attention towards following two orders delivered by the ITAT, Jaipur bench, Jaipur. The judgments are squarely applicable. To the best of my knowledge same have not so far been reversed by any of the competent authority and are having the character of binding nature. Case Name: Shahpura Gram Seva Sahakari Samiti Ltd. Vs ITO (ITAT Jaipur) Appeal Number: ITA No. 767/JP/2019 Date of Judgement/Order: 15/10/2020 Related Assessment Year: 2015-16 Courts: ITAT Jaipur The issue under consideration is whether the interest received by the assessee from the Cooperative Bank is eligible for deduction under section 80P (2) (d) of the Income Tax Act? THIS JUDGMENT IS ON THE JUDGMENT OF RAJASTHAN HIGH COURT. COPY THEREOF IS AT PAGE 08 TO 12 AND 29 TO33 OF CASE LAW PAPER BOOK. Accordingly, in view of the fact that Bank is a Cooperative Society registered under Cooperative Societies Act, the interest received by the assessee from the said Cooperative Bank is eligible for deduction under section 80P(2)(d) of the Act. The disallowance/addition made by the AO and confirmed by the ld. CIT (A) is deleted. In the result, appeal of the assessee is allowed. Both the above order is order/judgment of jurisdictional Tribunal and High Court of the assessee therefore having the binding nature. The order of Hon’ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur is binding on the lower authorities in view of judgment of the Supreme Court in case of Kamalakshi Finance Company. As regards ground no 05, the Commissioner of Income Tax (Appeals) fails to follow the president of consistency in the law because in the case of the assessee himself, the deduction was allowed for the assessment year 2011-12 and 2012 13 in the same set of circumstances therefore following the judgment of the Hon’ble Supreme Court as well as this Tribunal the disallowance is not justified Principle of consistency That the assessing officer should as well s CIT (A) have followed the principle of consistency and past history in view of various judgments of the Honorable Supreme Court as well as Rajasthan High Court, because in the past also the same type of interest was also paid to the assessee by the same bank in the same set of circumstances. I want to submit that judicial propriety demands that a Bench of the Tribunal must follow the judgment of a co-ordinate Bench. Taking a contrary decision is disregarding the I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 9 directions of the Hon’ble Supreme Court which is not only illegal but also destructive of the reputation of the institution. I also want to draw your kind attention is invited towards the judgment of Rajasthan High Court in case of Malobrought Polychem Pvt is at page no 19 of case law paper book. The Principal of consistency is followed. I further want to draw your attention towards Hariyan State Industrial Devlopment 326 ITR 640 (Punjab & Haryana) and Radhasoami Satsang vs. CIT 193 ITR 321 (S.C) on the subject of consistency. It is therefore submitted following the consistency and following the binding judgment above referred case you are requested to kindly adopt the consistency in respect of query of deduction etc. As regards ground no 6, without prejudice, the Commissioner of Income Tax (appeals) should have appreciated that the amount in question was not voluntary deposited but by virtue of direction of the government as such the inference drawn by CIT (A) is not justified in view of document before him. The government is also having direct interference. The CIT (A) in para 5 to relied on ITR 389 page 578 observed “ the income BY WAY OF INTEREST EARNED BY DEPOSIT OR INVESTMENT OF IDLE OR SURPLUS FUNDS DOES NOT CHANGE ITS CHARACTER IRRESPECTIVE OF THE FACT whether such income of interest is earned from a scheduled bank or a co-operative bank and thus,, section 80P of the Act would not apply”. This observation is baseless and by ignoring the certificate submitted before him which is at page 17 of paper book. In these fact and circumstances the rejection of claim is illegal. I AM ALSO ATTACHING ONE CERTIFICATE IN RESPECT OF THE FACT THAT THE DEPOSIT IS AS PER THE DIRECTION OF THE REGISTRAR OF COOPERATIVE SOCIETY AND SAME IS BINDING THEREFORE THE DEPOSIT IS BY VIRTUE OF DIRECTION OF GOVERNMENT. IN THESE CIRCUMSTANCES SAME IS AS PER LAW. The CIT (A) pass the order by closing their eye. As regards ground no 07, Fails to follow the judgment referred before him falls within the definition of contempt of court therefore the order may kindly be passed to declared as contempt and cost me kindly be awarded in respect of arbitrary Disallowing and sustaining the addition. Please refer to page no 1 to 13 wherein the order of ITAT Jaipur and judgment of Supreme Court refereed beside other High Court and Tribunal but the CIT(A) ignore the same. That ignoring the judgment of the Supreme Court and the High Court and jurisdictional Tribunal falling within contempt of court may kindly referred for contempt. In the case of Palitana Sugar Mills Pvt. Ltd. & Anr. Vs. State Of Gujarat & Ors [2004] 12 SCC 645, Hon`ble Supreme Court has heavily come down and has stated in its judgment that IGNORING THE JUDGMENT OF THE SUPREME COURT SHALL BE CONSIDERED AS AN ATTEMPT TO CONTEMPT OF THE COURT. The relevant extract of the judgment is given below: “It is well settled that the judgments of this Court are binding on all the authorities under Article 142 of the Constitution of India and it is not open to any authority to ignore a binding judgment of this Court on the ground that the full facts had not been placed before this court and/or the judgment of this Court in the earlier proceedings had only collaterally or incidentally decided the issues raised in the show cause notices. Such an attempt to belittle the judgments and the orders of this Court, to say the least, is plainly perverse and amounts to I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 10 gross contempt of this Court. We are pained to say that the then Deputy Collector has scant respect for the orders passed by the Apex Court. “ Hon`ble Supreme Court has very well stated that all the judgments of the Supreme Court shall be binding on all the authorities and any authority shall not ignore the judgment. THE CIT (A) HAS IGNORED THE DECISION OF THE RAJASTHAN HIGH COURT AND SUPREME COURT; THIS IS PROVED BY THE SUBMISSION SUBMITTED IN THE PAPER BOOK PAGE NO 1 TO 13. IT IS THEREFORE REQUESTED TO KINDLY REFER THE MATTER TO THE CONTEMPT OF COURT. Both the department and the appellant are equal before you. The financial loss of the appellant can be easily estimated and assessed and no other officer is responsible for it except the Commissioner of Income Tax Appeals. This is an offense that is not condoned in the Service Conduct Rules. Many decisions are available to post on the concerned authorities, some of them are written below. I want to draw your attention to the following cases. – In view of the judgment CHARANJILAL TAK SHYAM PARWANI & PARTY vs. UNION OF INDIA & ORS reported at 252 ITR 333 (Raj), the assessee is entitled to cost. Observation is as under:- “Litigation is not a luxury and/or amusement or entertainment. It is not pleasure or pleasant to come to the courts. Only when the Union or a State or its officers make it unavoidable, do the litigants come up before the court for redressal of their grievances or for enforcement of their legal or fundamental rights? The litigation is heavily cost (sic-costs heavily) and in the matter of awarding the cost, the court should have to keep in mind this aspect in such matters. It is no use or desirable that on the success of the litigant, he has been given only the token cost or the cost for the sake of the cost of the litigation. The litigants spent a huge amount in filing litigations.” BALWANT SINGH BHANGAL vs. INCOME TAX OFFICER & ANR. (Punjab) Civil Writ Petn. No. 3405 of 2003 Source (2004) 188 CTR (P&H) 157: (2004) 137 TAXMAN 200 (P&H) While disposing of this writ petition in the above terms, we are of the view that the assessee petitioner deserves to be compensated at least qua the costs. The same is assessed at Rs. 2,500 and shall be borne personally by the official who is found to be responsible for causing the delay. The CIT, Jalandhar-II, shall conduct the necessary inquiry on this behalf and fix the responsibility. He shall complete the exercise within one month from the date of the receipt of the certified copy of this order. The office is directed to supply a copy of this order to the CIT, Jalandhar-II, for necessary compliance. COMMISSIONER OF INCOME TAX vs. MITSUBISHI CORPORATION (Delhi) IT Appeal No. 1129 of 2005 Source (2008) 306 ITR 260 (Del) : (2008) 218 CTR (Del) 85 : (2008) 172 TAXMAN 13 5. No substantial question of law arises for consideration. In view of the decision of the Supreme Court in Madras Port Trust (1979) 4 SCC 176 the appeal is dismissed with costs. Counsel's fee is assessed at Rs. 10,000. The Revenue will deposit this amount in the registry of this Court by a crossed cheque drawn in favour of the Registrar General within four weeks from today. Supreme Court of India I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 11 State Of Maharashtra vs Narayan Vyankatesh Deshpande on 31 March, 1976 Equivalent citations: 1976 AIR 1204, 1976 SCR (3) 980 The State Governments should not adopt a litigious approach and waste public revenues on fruitless and futile litigation where there - are no chances of success. It is unfortunately a fact that it costs quite a large sum of money to come to this Court and this Court has become untouchable and unapproachable by many litigants who cannot afford the large expense involved in fighting litigation in this Court. It is, therefore, all the more necessary that State Governments, which have public accountability in respect of their actions, should not lightly rush to this Court to challenge a judgment of the High Court which is plainly and manifestly correct and drag the opposite party in unnecessary expense, part of which would, in any event, not be compensated by an award of cost. We accordingly dismiss the appeal with costs. S.R. Appeal dismissed. The present appeal is an instance of the kind of unnecessary and futile litigation which can be avoided if the CIT (A) could have taken the pain to verify the only date of the order. As regards ground no 8, that the rejection is without following the judgment having the character is binding nature therefore cost may kindly be awarded. That without rejecting the books of account any addition cannot be made. In this connection it is stated that the Hon’ble Income-tax Appellate Tribunal, Jaipur Bench, Jaipur in case of the Income-tax Officer V/s Mewar Textile Mill reported in 64 TTJ page 502 have held as under. The relevant portion is being reproduced here under: On the above observations, the Hon’ble High Court has allowed the appeal of the assessee. 6.2. In case of CIT vs. Maharaja Shree Umaid Mills Ltd. (1991) 96 CTR (Raj) 72 : (1991) 192 ITR 565 (Raj), the Hon’ble Rajasthan High Court has held that the Tribunal was justified in holding that since books of accounts had not been rejected, the mere fact that there had been a fall in the G.P. rate would not lead to the inference that the expenditure had been inflated. 6.3. In case of CIT vs. Padamchand Ram Gopal (1970) 76 ITR 719 (SC), the Hon’ble Supreme Court has held that no addition is justified if the books of accounts are not rejected. 6.4. We have also seen the other case law relied upon by the learned authorised representative and we find that the book results cannot be ignored if the books of accounts are not rejected or any defect were not pointed out by the AO. Therefore, we do not see any infirmity in the order of the CIT(A). On the reasons given by CIT (A) and on the reasons given here by us, the order of the CIT (A) is confirmed here by us. The judgment of Hon’ble Supreme Court reported in 76 ITR Page 719 held that without rejection of the books of account no addition whatsoever can be made. The relevant portion is being reproduced here under: 76 ITR Page 719 Commissioner Of Income-Tax, West Bengal. vs Padamchand Ramgopal. Facts The assessee, a HUF carrying on business in various items including money-lending produced his account books. The ITO rejected those accounts as unreliable and assessed the assessee on the basis of best judgment by adding to the income returned by him various sums ranging from Rs. 17,951 for the asst. yr. 1956-57 to Rs. 21,536 for the asst. yr. 1954-55. The five assessments years are 1953-54, 1954-55, 1955-56, 1956-57 and 1957-58. The ITO in his order did not give any reason for not relying on the accounts submitted. I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 12 Issue Whether the Tribunal was justified in holding that the ITO had rightly added income in the subsequent assessment years. Findings Appeal dismissed. Reasoning It was not justified in holding that the additions made by the ITO were in accordance with law. Those additions were arbitrarily made. No reasons were given to reject the accounts relating to the asst. yrs. 1954-55, 1955-56, 1956-57, and 1957-58. Further, the method adopted for determining the escaped income appears to be highly capricious. From the perusal of entire order you will observe that books of accounts have not been rejected therefore in absence of rejection of books of accounts the addition /disallowance made by the Income-Tax Officer is illegal and against the law. It is, therefore, humbly submitted that the addition made by the Income Tax Officer and sustained by the CIT (A) may kindly be deleted and the appeal of the assessee may kindly be accepted. Hope, you will consider the request sympathetically.” 6. To support the contention so raised in the written submission the ld. AR of the assessee placed on record the following evidences: S. No. Particulars Page no. 1. Copy of written submission submitted before National Faceless Appeal Centre (National Faceless Appeal Centre, (NFAC), Delhi submitted by the assessee. 1-13 2. Copy of clarification on newly inserted provisions under IT Act, 1961 issued by the Joint Commissioner of Income Tax (TDS jaipur dated 24.08.2015. 14-15 3. Copy of letter dated 27.08.2015 issued by The Rajasthan State Cooperative Bank Ltd in respect of clarification of deduction of TDS. 16 4. Copy of certificate dated 17.05.2021 issued by the Ganganagar Kendriy Sahakari Bank Ltd, Sriganganagar. 17 5. Copy of notice u/s 143(2) r.w.s. 143(3A) and 143 (3B) of the Income Tax Act dated 28.09.2019 issued by the National e-assessment Centre (NeAC), Delhi 18-20 6. Copy of notice u/s142(1) of the Income Tax Act dated 28.01.2020 issued by the National e-Assessment Centre (NeAC), Delhi. 21 7. Copy of notice u/s142(1) of the Income Tax Act dated 20.03.2020 issued by the National e-Assessment Centre (NeAC), Delhi. 22 8. Copy of notice u/s142(1) of the Income Tax Act dated 09.09.2020 issued by the National e-Assessment Centre (NeAC), Delhi. 23 9. Copy of reply of notice u/s142(1) of the Income Tax Act dated 09.09.2020 submitted before the National e-Assessment Centre (NeAC), Delhi. 24 10. Copy of notice u/s142(1) of the Income Tax Act dated 25.03.2021 issued by the National e-Assessment Centre (NeAC), Delhi. 25 I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 13 11. Copy of reply of notice u/s142(1) of the Income Tax Act dated 25.03.2021 submitted before the National e-Assessment Centre (NeAC), Delhi. 26 12. Copy of show cause noticed dated 15.04.2021 issued by the National e-Assessment Centre (NeAC), Delhi. 27-29 13. Copy of reply of show cause notice dated 15.04.2021 submitted before the National e-Assessment Centre (NeAC), Delhi. 30 14. Copy of Assessment order of the himself assessee for the A.Y. 2011- 12 for consistency. 31 15. Copy of Assessment order of the himself assessee for the A.Y. 2012- 13 for consistency. 32 16. Copy of computation of income with audit report of the assessee for the A.Y. 2012-13. 33-40 7. The ld. AR of the assessee vehemently argued that even though assessee cited the binding precedent of the jurisdictional high court the ld. NFAC has not considered it and the deduction was denied. The ld. AR of the assessee also submitted that the assessee has to incur the cost of appeal filling fees and thereby the fees of counsel even though the matter is covered. The ld. CIT(A) grossly failed to appreciate the facts placed on record. 8. Per contra, the ld. DR relied upon the orders of the lower authorities. 9. We have heard the rival contentions and perused the material available on record. The bench noted that the assessee is a Co-operative Credit Society registered under Co-operative Act and is engaged in the business of marketing of produce of members of society and purchase of seeds, pesticides, fertilizers etc for supply to the members. The assessee had filed its return of income for I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 14 the A.Y 2018-19 on 24.09.2018 declaring total income at Nil/- after claiming deduction of Rs. 6,189/- u/s 80P of the Act. The return was processed by the CPC u/s 143(1) of the Income Tax Act, 1961. Return of the assessee was selected through CASS for complete scrutiny assessment under the E- assessment scheme, 2019. During the assessment proceedings, the assessee had furnished the details and explanation called for by the AO. The ld. AO noted that the assessee has earned an interest Income of Rs 5,91,394/- from the Co- operative Bank. The assessee has treated the interest income of Rs 5,91,394/- received from the deposits from Co-operative Bank as its operational income. In this connection, the assessee was asked to clarify how the interest receipts from Cooperative Banks/Commercial Banks can be claimed as exempt u/s 80P(2)(d) of the Act. In response, the assessee has furnished submission along with related case laws. Subsequently the AO after considering the facts and submission of the case has completed the assessment proceedings assessing the income of the assessee at Rs 5,97,583/- (wrongly mentioned at Rs.6,189/-) wherein disallowance of Rs. 5,91,394/- which was claimed u/s 80P(2)(d) of the Act was not allowed. The ld. CIT(A) has dismissed the appeal of the assessee holding that “the income by way of interest earned by deposit or investment of idle or surplus funds does not change its character irrespective of the fact whether such income of interest is earned from a scheduled bank or a co-operative bank and thus, section of 80P of the Act would not apply.” The assessee has challenged I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 15 this finding of the ld. CIT(A) in this appeal stating that the assessee is a co- operative society and not co-operative bank. The assessee has received the interest from another co-operative society (though co -operative society is acting as bank) is eligible for deduction u/s. 80(P)(2)(d) of the Act. The assessee has relied upon the various case laws on the issue of allowability of deduction. The bench noted that the present appeal has been sought, for adjudicating, as to whether or not the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order. In our considered view, the issue involved in the present appeal hinges around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. The view advanced that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with the cooperative bank, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not cooperative societies therefore, the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. After necessary I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 16 deliberations, we are unable to persuade ourselves to concur with the view taken by the lower authority. On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other cooperative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other co-operative society. We are in agreement with the view taken by the lower authority with the insertion of sub-section (4) to Sec. 80P of the Act, vide the Finance Act, 2006 with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to the view that the aforesaid amendment would jeopardize the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co- operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. Our attention was invited to the binding judgment of Rajasthan High Court in the case of Rajasthan Rajya I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 17 Sahakari Kray Vikray Sangh Ltd., in DB ITA no. 139/2002 wherein the high court held that ‘Sec.80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the cooperative society from its investment with any other cooperative society. This provisions does not make any distinction in regard to source of the investment because this section envisage deduction in respect of any income derived by the cooperative society from any investment with a cooperative society. It is immaterial whether any interest paid to the cooperative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the cooperative society from its investment in any other cooperative society. Therefore, we do not agree with the argument advanced by the learned counsel for the Revenue. In our opinion, the learned Tribunal was right in allowing deduction under Sec.80P(2) (d) of the Income Tax Act, 1961. In respect of interest of Rs. 4,00,919/- on account of interest received from Nawanshaln Central Cooperative Bank without adjusting the interest paid to the bank. Therefore, the reference is answered against the Revenue in the affirmative and in favour of the assessee.' Since the ld. DR did not bring to our notice any other binding judgment we considered the allowability of deduction I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 18 u/s. 80P(2)(d) to the assessee and based on the discussion we considered the appeal of the assessee in ground no. 1 to 8 except ground no. 7 which is raised for cost. 10. Ground no. 7 raised with regard to the award of cost we have considered the rival arguments made by both sides. In our opinion the learned Commissioner of Income-tax (Appeals) has passed an order which is based on the set of facts placed or understood by him. Since, the appeal of the assessee has been disposed under the faceless regim the contention that the officer should be made responsible is not possible under this faceless regime, where the personal contact is avoided and therefore, no prejudiced caused to the assessee. The judgement based on the set of facts understood by the ld. CIT(A) while discharging duty, action might have caused some hardship to the assessee due to error of judgement but that in our opinion does not warrant levy of cost on the Department. The hon'ble Supreme Court in the case of Pooran Mal v. Director of Inspection [1974] 93 ITR 505, while adjudicating relief claimed in respect of action taken under section 132 of the Income-tax Act has observed as under (at pages 518 and 519) : "We are, therefore, to see what are the inbuilt safeguards in section 132 of the Income tax Act. In the first place, it must be noted that the power to order search and seizure is vested in the highest officers of the Department. Secondly, the exercise of this power can only follow a reasonable belief entertained by such officer that any of the three conditions mentioned in section 132(1)(a), (b) and (c) exists. In this connection it may be further pointed out that under sub-rule (2) of I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 19 rule 112, the Director of Inspection or the Commissioner, as the case may be, has to record his reasons before the authorisation is issued to the officers mentioned in sub-section (1). Thirdly, the authorisation for the search cannot be in favour of any officer below the rank of an Income-tax Officer. Fourthly, the authorisation is for specific purposes enumerated in (i) to (v) in sub-section (1), all of which are strictly limited to the object of the search. Fifthly, when money, bullion, etc., is seized the Income-tax Officer is to make a summary enquiry with a view to determine how much of what is seized will be retained by him to cover the estimated tax liability and how much will have to be returned forthwith. The object of the enquiry under sub-section (5) is to reduce the inconvenience to the assessee as much as possible so that within a reasonable time what is estimated due to the Government may be retained and what should be returned to the assessee may be immediately returned to him. Even with regard to the books of account and documents seized, their return is guaranteed after a reasonable time. In the meantime the person from whose custody they are seized is permitted to make copies and take extracts. Sixthly, where money, bullion, etc., is seized, it can also be immediately returned to the person concerned after he makes appropriate provision for the payment of the estimated tax dues under sub-section (5), and, lastly, and this is most important, the provisions of the Criminal Procedure Code relating to search and seizure apply, as far as they may be, to all searches and seizures under section 132. Rule 112 provides for the actual search and seizure being made after observing normal decencies of behaviour. The person in charge of the premises searched is immediately given a copy of the list of articles seized. One copy is forwarded to the authorising officer. Provision for the safe custody of the articles after seizure is also made in rule 112. In our opinion, the safeguards are adequate to render the provisions of search and seizure as less onerous and restrictive as is possible under the circumstances. The provisions, therefore, relating to search and seizure in section 132 and rule 112 cannot be regarded as violative of articles 19(1)(f) and (g). A minor point was urged in support of the above contention that section 132 contains provisions which are likely to affect even innocent persons. For example, it was submitted, an innocent person who is merely in custody of cash, bullion or other valuables, etc., not knowing that it was concealed income is likely to be harassed by a raid for the purposes of search and seizure. That cannot be helped. Since the object of the search is to get at concealed incomes, any person, who is in custody without enquiring about its true nature, exposes himself to search. Sub-section (4) of section 132 shows the way how such an innocent person can make the impact of the search on him bearable. All that he has to do is to tell the true facts to the searching officer explaining on whose behalf he held the custody of the valuables. It will be then for the Income-tax Officer to ascertain the person concerned under sub-section (5)." I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 20 11. In that case, it was observed that it causes serious invasion of the privacy of a person. Still the hon'ble Court held that even though the innocent is likely to be harassed by a raid for the purpose of search and seizure that cannot be helped. In the instant case, there is no such action of search and seizure which causes serious invasion in the privacy of the person. The Commissioner was discharging her quasi-judicial duty. Further, there is nothing on record to suggest that the action of the Commissioner of Income-tax was mala fide. Therefore, we do not find any merit in the submission of learned counsel for the assessee to award cost. Based on these discussion ground no. 7 raised by the assessee is dismissed. 12. The decisions relied on by learned counsel for the assessee are distinguishable as in the decision of the hon'ble Rajasthan High Court in the case of Chiranji Lal Tak (supra) is concerned, there also facts were different. In that case, the respondent Income-tax Officer issued illegal notice to the petitioner and later withdrew the same. Under these circumstances, the court directed the respondent to pay for the advocate fee and litigation expenses incurred by the petitioner in prosecuting writ proceedings. However, in the instant case, there is no prim facie illegality in issuing the intimation which is also system based and even the proceeding before the first appellate authority was on faceless regime. We, therefore, do not find any merit in the argument of I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 21 learned counsel for the assessee to award cost. The ground raised by the assessee is accordingly dismissed. 13. In the result, the appeal of the assessee is partly allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member *Ganesh Kumar, PS (On Tour) Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order I.T.A. No.512/Jodh/2023 Sri Bijaynagar Kray Vikraya Sahkari Samiti Ltd. 22 Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order