M/S. HIMACHAL CULTURE ASSOCIATION CO-OP CREDIT SOCIETY LTD., MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX, CPC, BANGALORE

ITA 5273/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4883 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2015-2016
• Appeal Filed On: 13-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Principle of natural justice; Condonation of delay; Co-operative Credit Society; Set aside
• Section: 154; 143(1); 80P; 274; 64; 113; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.5273/M/2019 ASSESSMENT YEAR: 2015-16 M/S. HIMACHAL CULTURE ASSOCIATION CO-OP. CREDIT SOCIETY LTD., 302, 3 RD FLOOR, NIRMAL INDUSTRIAL ESTATE, PLOT NO.109, OPP. NEHRU GARDEN, SION (E), MUMBAI 400 022 PAN: AAAAH5036L VS. ACIT, CPC, POST BAG 8, EPO, BANGALORE, KARNATAKA- 560100 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : DR. P. DANIEL, A.R. REVENUE BY : SHRI GURBINDER SINGH, D.R. DATE OF HEARING : 21.01.2021 DATE OF PRONOUNCEMENT : 03.02.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 03.04.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2015-16 WHICH IN TURN A RISING OUT OF THE ORDER OF ASSISTANT COMMISSIONER OF INCOME TA X (CPC) [HEREINAFTER REFERRED TO AS THE ACIT(CPC)]. 2. THE GROUNDS TAKEN BY THE ASSESSEE ARE REPRODUCED AS UNDER : 1. THE LEARNED CIT (A) ERRED IN NOT CONDONING THE DELAY IN FILING THE APPEAL. ITA NO.5273/M/2019 M/S. HIMACHAL CULTURE ASSOCIATION CO-OP. CREDIT SOCIETY LTD. 2 2. THE LEARNED CIT (A) ERRED IN NOT DECIDING THE ISSUE OF DEDUCTION U/S.80-P OF THE I.T. ACT, 1961 TO THE APPELLANT CO-OPERATIVE CREDIT SOCIETY WHICH HAS BEEN ADDED U/S. 143(1) WHEN THE SAME WAS LEGALLY IMPERMISSIBLE . 3. THE LEARNED CIT (A) ERRED IN NOT REVERSING THE O RDER U/S. 154 OF THE I.T. ACT, 1961 AS IT IS PASSED WITHOUT ISSUING NOTICE TO THE ASSES SEE, PARTICULARLY WHEN THE JURISDICTIONAL HIGH COURT HAD DECIDED AND SETTLED T HE ISSUE AND THEREFORE VIOLATED THE PRINCIPLES OF NATURAL JUSTICE. 4. THE ORDER PASSED BY THE CIT (A) MAY KINDLY BE SE T ASIDE. THE APPELLANT CRAVES LEAVE TO ADDUCE, ADD, AMEND, A LTER OR DELETE ANY OF ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING O F THIS APPEAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) UPHOLDING THE ORDER OF ACIT(CPC) WHEREIN THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80P (2)(A)(I) HAS BEEN REJECTED BY THE CPC IN AN ORDER PASSED UNDER S ECTION 143(1) OF THE ACT AND LD. CIT(A) ALSO UPHOLDING THE ACTION OF THE AO IN REJECTING THE RECTIFICATION APPLICATION MOVED BY THE ASSESSEE UNDER SECTION 154 OF THE ACT. 4. THE FACTS IN BRIEF ARE THAT ASSESSEE IS CREDIT C O-OPERATIVE SOCIETY GIVING CREDITS AND FINANCIAL ASSISTANCE TO AND ACCEPTING DEPOSITS FROM ITS MEMBERS ONLY. THE SAID SOCIETY I S REGISTERED UNDER MAHARASHTRA GOVERNMENT SOCIETY ACT AND IS WHO LLY AND EXCLUSIVELY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND NO BUSINESS IS TRANSACTED WITH PERSONS OTHER THAN THE MEMBERS OF THE SOCIETY. THE PRIMARY OBJECTIVE OF T HE ASSESSEE IS TO INCULCATE AND ENGAGE THE MEMBERS TO SAVE MONEY A ND UPLIFT THEIR STANDARD OF LIVING BY MUTUAL FINANCIAL ASSIST ANCE AND IS IN THE NATURE OF SELF HELP GROUP FOR THE MEMBERS. THE SOCIETY CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) FROM I TS INCOME IN THE RETURN OF INCOME FILED ON 14.09.2015. THE GROS S TOTAL INCOME OF THE ASSESSEE WAS RS.11,09,201/- WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 80P(2)(A)(I) OF THE ACT. T HE BOOKS OF ITA NO.5273/M/2019 M/S. HIMACHAL CULTURE ASSOCIATION CO-OP. CREDIT SOCIETY LTD. 3 ACCOUNTS OF THE ASSESSEE WERE AUDITED BY THE AUDITO RS OF THE SOCIETY. THE RETURN OF THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) VIDE ORDER DATED 12.11.2015 WHEREIN THE DEDU CTION CLAIMED BY THE ASSESSEE UNDER CHAPTER VIA UNDER SECT ION 80P(2)(A)(I) WAS REJECTED AND A TAX DEMAND OF RS.3, 29,760/- WAS RAISED. THEREAFTER, THE ASSESSEE MOVED A RECTIFICA TION APPLICATION BEFORE THE CPC, BANGALORE. HOWEVER, TH E SAME WAS ALSO REJECTED IN A STANDARD MANNER WITHOUT APPLICAT ION OF ANY MIND BY PASSING THE SAME ORDER AS WAS PASSED UNDER SECTION 143(1) OF THE ACT DATED 17.02.2016 WHICH WAS PASSED IN CONSEQUENCE TO THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE. THEREAFTER, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A) WHICH WAS LATE BY 440 DAYS AND WE N OTE THAT ASSESSEE HAS EXPLAINED THE DELAY IN FILING THE APPE AL BEFORE THE LD. CIT(A) WHICH HAS BEEN DISCUSSED BY THE APPELLAT E AUTHORITY IN THE APPELLATE ORDER. THE LD. CIT(A) ALSO DISCUS SED THE MERITS OF THE CASE AND AFTER TAKING INTO CONSIDERATION THE REPLY OF THE ASSESSEE REJECTED THE APPEAL OF THE ASSESSEE BY OBS ERVING AND HOLDING THAT THE APPEAL IS FILED LATE BY 440 DAYS AND THE DELAY IS NOT EXPLAINED WITHOUT GIVING ITS DECISION ON MERIT. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE IS A CO-OPERAT IVE CREDIT SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING FINANC IAL ASSISTANCE TO ITS MEMBERS WHICH IS MET OUT FROM DEPOSITS WHIC H IT ACCEPTS FROM ITS MEMBERS AND THUS ,THE SOCIETY IS NOT DOING BUSINESS WITH PUBLIC AT LARGE. THE OBJECT OF THE SOCIETY IS TO PROMOTE SAVING HABITS IN THE MEMBERS AND IS IN THE NATURE O F SELF HELP GROUP. THE SOCIETY HAS BEEN EARNING SIMILAR INCOME IN THE PAST ITA NO.5273/M/2019 M/S. HIMACHAL CULTURE ASSOCIATION CO-OP. CREDIT SOCIETY LTD. 4 ALSO AND IN THE ASSESSMENT YEAR 2014-15 A SIMILAR C LAIM OF THE ASSESSEE SOCIETY WAS REJECTED BY THE AO. HOWEVER, IN APPELLATE PROCEEDINGS THE LD. CIT(A) VIDE ORDER NO.CIT(A)-38/ ITO- 26(1)(5)/IT-400/2016-17 ALLOWED THE APPEAL OF THE A SSESSEE. 6. THE FACTS IN THE CURRENT YEAR ARE IDENTICAL TO O NE AS WERE INVOLVED IN THE A.Y. 2014-15. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS DERIVING INCOME BY WAY OF INTEREST FROM ITS MEMBERS AND IS ALSO PAYING INTEREST TO THOSE MEMBER S FROM WHOM IT ACCEPTS DEPOSITS AND NET SURPLUS IS CLAIME D AS EXEMPT UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE LD. CIT (A) HAS MERELY REJECTED THE CLAIM OF THE ASSESSEE ON THE TECHNICAL GROUNDS AFTER DISCUSSING THE MERIT OF THE CASE THAT THE APPEAL OF THE ASSESSEE IS BARRED BY LIMITATION. IN OUR OPINION, THE APPEA L SHOULD NOT BE DENIED ON THE BASIS OF TECHNICALITIES SPECIALLY IN THOSE CASES WHERE THE PEOPLE INVOLVED ARE NOT EDUCATED AND THE MERE REJECTION OF CONDONATION OF DELAY SHOULD NOT RESULT IN UNNECESSARY HARASSMENT AND NON CONSIDERATION OF MER ITORIOUS MATTERS BEING REJECTED AT THE THRESHOLD. THE CASE OF THE ASSESSEE FINDS SUPPORT FROM THE DECISION OF HONBLE APEX COURT DECISION IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS. 167 ITR 471 WHEREIN THE HONBLE SUPREME COUR T HAS, WHILE CONSIDERING THE DELAY IN FILING THE APPEAL HA S HELD AS UNDER: 2.2 IN VIEW OF THE REASONS STATED HEREINABOVE, IT IS PR AYED THAT THE DELAY IN FILING THE ABOVE APPEAL BE CONDONED. IN THIS CONNECTION, R ELIANCE IS PLACED ON THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION V. MST. KATIJI & ORS. (167 ITR 471), WHEREIN WHILE CONSIDERING THE DELAY IN FILING AN APPEAL BY THE STATE, THE HON'BLE SUPREME COURT OBSE RVED AS UNDER. 'IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MA KING A JUSTIFIABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT T HE MESSAGE DOES NOT ITA NO.5273/M/2019 M/S. HIMACHAL CULTURE ASSOCIATION CO-OP. CREDIT SOCIETY LTD. 5 APPEAR TO HAVE PERCOLATED DOWN TO ALL OTHER COURTS IN THE HIERARCHY. AND SUCH A LIBERAL APPROACH IS ADOPTED ON PRINCIPLE AS IT IS REALIZED THAT: 1. ORDINARILY A LITIGANT DOES NOT BENEFIT BY LODGI NG AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDONED, THE HIGHEST TH AT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY , EVERY SECOND'S DELAY/ THE DOCTRINE MUST BE APPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES T O BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJ USTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MA LAFIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT , HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT THE JUDICIARY IS RESPECT ED NOT ON ACCOUNT OF ITS POWER TO LEGALISE INJUSTICE ON TECHNICAL GROUNDS BU T BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IT IS EXPECTED TO DO SO. EVEN ON MERITS THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE FOLLOWING DECISIONS: 1. QUEPEM URBAN CO-OPERATIVE CREDIT SOCIETY LTD. VS. A CIT [2015] 377 ITR 272 (BOMBAY) [2015] 58 TAXMANN.COM 113 2. PR. CIT VS. GOA PWD STAFF CO-OP. CREDIT SOCIETY LTD . [2016] 73 TAXMANN.COM 381 [BOMBAY] 3. BELGAUM MERCHANTS CO-OP. CREDIT SOCIETY LTD. VS. CI T(A) [2015] 64 TAXMANN.COM 274 (KARNATAKA) 4. CIT VS. JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY LT D. [2014] 362 ITR331(GUJARAT) 5. CIT VS. KALPADI CO-OPERATIVE TOWNSHIP LTD. [2016] 74 TAXMANN.COM 226 (MADRAS) 7. SINCE IN THIS CASE THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY THE REVENUE IN THE YEAR 2014-15, THEREF ORE THERE IS NO GROUND OR JUSTIFICATION FOR REJECTING THE CLAIM IN THE CURRENT YEAR. MOREOVER, THE CPC HAS NO AUTHORITY TO REJECT THE CLAIM UNDER SECTION 80P(2)(A)(I) OF THE ACT IN AN ORDER P ASSED UNDER SECTION 143(1) OF THE ACT WHICH IS A SUMMARY ASSESS MENT AND THUS EVEN THE ORDER PASSED BY CPC AND SUBSEQUENT RE JECTION OF THE RECTIFICATION APPLICATION MOVED BY THE ASSESSE E IS ALSO ITA NO.5273/M/2019 M/S. HIMACHAL CULTURE ASSOCIATION CO-OP. CREDIT SOCIETY LTD. 6 WRONG AND THUS CAN NOT BE SUSTAINED. IN VIEW OF TH ESE FACTS, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) A ND DIRECT THE AO TO ALLOW THIS CLAIM OF THE ASSESSEE UNDER SECTION 8 0P(2A)(I). 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.02.2021. SD/- SD/- ( PAVAN KUMAR GADALE) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 03.02.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.