M/s. Hubli Saraku Saganikedarara Sahakri Pattina Sangha Niyamit, Hubli V. Income Tax Officer, Ward- 1(3), Hubballi

ITA 635/BANG/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2752 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-10-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 28-07-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHILPA N C
• Assessee Lawyers: C SANDEEP
• Keywords: Principle of natural justice; Period of limitation; Reasonable cause; Condonation of delay
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NOS.635 & 636/BANG/2020 ASSESSMENT YEAR : 2014-15 & 2015-16 M/S HUBLI SARAKU SAGANIKEDARARA SAHAKARI PATTINA SANGHA NIYAMIT, NO.4, 3 RD FLOOR, D BLOCK, SHINDHE COMPLEX, NEELINGIN ROAD, NEW COTTON MKT, HUBLI-580 029. PAN AAAAH 9467 M VS. THE INCOME-TAX OFFICER, WARD-1(3), HUBBALLI. APPELANT RESPONDENT ASSESSEE BY : SHRI C SANDEEP, C.A REVENUE BY : SMT. SHILPA N.C, ADDL.CIT(DR) DATE OF HEARING : 11.10.2021 DATE OF PRONOUNCEMENT : 11.10.2021 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF CIT(A) BOTH DATED 28/11/2018, AND IT RELATES TO ASSESSMENT YEAR 2014-15 AND 2015-16. THE ITA NOS.635 & 636/BANG/2020 PAGE 2 OF 12 ISSUES IN THESE APPEALS ARE COMMON BUT ONLY CHANGES IN THE FIGURES WHICH READS AS FOLLOWS :- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX, (APPEALS) IN SO FAR IT IS PREJUDICIAL TO THE INTERE STS OF THE APPELLANT IS BAD AND ERRONEOUS IN LAW AGAINST THE FACTS AND CIRC UMSTANCES OF THE CASE. 2. VALIDITY OF CIT(A) ORDER 2.1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS LIABLE TO BE QUASHED AND WITHOUT JURIS DICTION ON THE GROUND THAT IT IS PASSED REMANDING THE CASE TO THE ASSESSING OFFICER WITHOUT ADJUDICATING SOME OF THE GROUNDS. 2.2. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS LIABLE TO BE QUASHED IN ADJUDICATING S OME ISSUES WHERE WERE NOT AGGRIEVED AND RAISED BY THE APPELLANT IN T HE APPEAL AND THEREFORE, THE ORDER IS BEYOND THE JURISDICTION. 2.3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN LAW AND ON FACTS IN ENHANCING THE ASSESSMENT WITHOU T PROVIDING OPPORTUNITY TO THE APPELLANT AND THEREFORE, IT IS V IOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THE ORDER IS LIABLE TO BE QU ASHED. 3. DISALLOWANCE OF DEDUCTION U/S. 80P(2)(A)(I) OF T HE ACT - INTEREST INCOME FROM MEMBERS 3.1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE INTEREST EARNE D FROM THE ACTIVITY WITH REGULAR MEMBERS IS ALLOWED AS DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. 3.2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN LAW AND ON FACTS IN MAKING A DISTINCTION BETWEEN TH E REGULAR AND ITA NOS.635 & 636/BANG/2020 PAGE 3 OF 12 OTHER CATEGORIES OF MEMBERS EVEN THOUGH THE SAME WA S NOT PART OF THE ASSESSMENT PROCEEDINGS. 3.3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) OUGHT TO HAVE APPRECIATED THAT THE KARNATAKA CO-OPERATIVE SO CIETIES ACT, 1959 ALLOWS THE CO-OPERATIVE SOCIETY TO ADMIT NOMIN AL AND ASSOCIATE MEMBERS AND THEREFORE, DEDUCTION U/S 80P(2)(A)(1) O F THE ACT BE ALLOWED. 3.4. THAT THE LEARNED ASSESSING OFFICER ERRED IN LA W AND ON FACTS IN NOT ALLOWING THE PROPORTIONATE INCOME EARNED FROM R EGULAR MEMBERS AND ASSOCIATE MEMBERS AS DEDUCTION U/S 80P(2)(A)(1) OF THE ACT. 4. DISALLOWANCE OF DEDUCTION U/S. 80P(2)(A)(I) OF T HE ACT - INTEREST INCOME FROM INVESTMENTS 4.1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) ERRED IN LAW AND ON FACTS IN DISPUTING THE ALLOWABILITY OF I NTEREST FROM INVESTMENTS AS DEDUCTION EVEN THOUGH THE GROUND WAS NOT RAISED BY THE APPELLANT. 4.2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN LAW AND ON FACTS IN ENHANCING THE ASSESSMENT WITHOU T GIVING AN OPPORTUNITY TO THE APPELLANT. 4.3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT NO INFORMATION REG ARDING THE INTEREST FROM INVESTMENTS WERE PROVIDED BY THE APPELLANT EVE N THOUGH THE SAME WAS ALREADY ON MATERIAL ON RECORD AND ALSO DIS CUSSED IN THE ASSESSMENT ORDER 4.4. THAT THE LEARNED COMMISSIONER OF INCOME- TAX ( APPEALS) ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE INTEREST INCOM E OF RS. 15,79,239/- AS DEDUCTION U/S 80P(2)(A)(I) OF THE AC T EVEN THOUGH THE ITA NOS.635 & 636/BANG/2020 PAGE 4 OF 12 INVESTMENTS WERE MADE OUT OF SURPLUS FUND AND ATTRI BUTABLE TO THE BUSINESS ACTIVITY OF THE APPELLANT. 4.5. THAT THE LEARNED COMMISSIONER OF INCOME- TAX ( APPEALS) ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE INTEREST INCOM E EARNED FROM CO- OPERATIVE BANKS AS DEDUCTION U/S 80P(2)(D) OF THE A CT. 4.6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN LAW AND ON FACTS IN NOT ALLOWING EXPENDITURE INCURR ED FOR EARNING THE INTEREST INCOME FROM THE INVESTMENTS. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE TO O NE ANOTHER AND THE APPELLANT CRAVES LEAVE OF THE HON'BLE INCOME TA X APPELLATE TRIBUNAL, BANGALORE TO ADD, DELETE, AMEND OR OTHERW ISE MODIFY ONE OR MORE OF THE ABOVE GROUNDS EITHER BEFORE OR AT THE T IME OF HEARING OF THIS APPEAL. THE FOLLOWING ARE THE DOCUMENTS ANNEXED TO THE APPE AL PAPERS; 2. AT THE OUTSET, IT IS OBSERVED THAT IN BOTH THES E APPEALS, THERE WAS A DELAY OF 534 DAYS IN FILING TH E APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE FILED APPLICATIO N FOR CONDONATION OF DELAY STATING THAT THE CIT(A) HAS REMANDED TWO ISSUES IN THESE CASES TO THE FILES O F THE AO WHILE ADJUDICATING THE GROUNDS OF APPEALS RAISED BY THE ASSESSEE. THE LD.AR VIZ. C.A SHRI SR ONKARI ADVI SED THE ITA NOS.635 & 636/BANG/2020 PAGE 5 OF 12 ASSESSEE THAT SINCE THE ISSUES HAVE BEEN REMITTED BACK TO THE FILES OF AO, THE ASSESSEE WILL HAVE ANOTHER OPP ORTUNITY TO PRESENT THE CASE. HOWEVER, THEY FAILED TO NOTIC E THAT THE OBSERVATIONS AND FINDINGS RENDERED IN THE ORDER WHILE GIVING THE DIRECTION TO THE AO WILL HAVE AN ADVERSE IMPACT, AND HENCE THE CIT(A)S ORDER WAS NOT CHALLENGED. BUT, THE ORDER GIVING EFFECT TO THE CIT(A) ORDER WAS PA SSED ON 2/3/2020 BY THE AO. DUE TO THE ENHANCEMENT OF THE ASSESSMENT, THE DEMAND EXCEEDED THE ORIGINAL DEMAN D IN ASSESSMENT ORDER. BASED ON THESE EVENTS, THE ASSE SSEE AND THE AR DECIDED TO TAKE ANOTHER OPINION ON THE F URTHER COURSE OF ACTION AND THEY APPROACHED M/S MSSV AND COMPANY, CAS WHO ADVISED THE ASSESSEE TO FILE APPE AL BEFORE THE ITAT AGAINST THE ORDER OF CIT(A) AND ALS O AN APPEAL BEFORE THE CIT(A) AGAINST THE CONSEQUENTIAL ORDER DATED 2/3/2020 PASSED BY THE AO. DUE TO THE ABOVE REASONS AND COVID -19 PANDEMIC SITUATION FROM MARC H 2020, THE APPEALS BEING FILED BELATEDLY AND THERE W AS A DELAY OF 534 DAYS DELAY IN FILING THE APPEALS BEFOR E THIS TRIBUNAL. FURTHER, THE ASSESSEE SUPPORTED THE ARGUM ENT BY EXPLAINING THE SAME REASON THROUGH ASSEESSEES AUTHORIZED REPRESENTATIVES BY WAY OF AN AFFIDAVIT D ATED 24/6/2020. THE LD.AR FURTHER SUBMITTED THAT THE I SSUE ON MERIT IS IN FAVOUR OF THE ASSESSEE, BUT THERE I S A ITA NOS.635 & 636/BANG/2020 PAGE 6 OF 12 TECHNICAL DEFECT IN THE APPEALS SINCE THE APPEALS ARE NOT FILED WITHIN THE PERIOD OF LIMITATION. HE SUBMITTED THAT WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIO N ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED AND OTHER SIDE CANNOT CLA IM TO HAVE VESTED RIGHT FOR INJUSTICE BEING DONE BECAUS E OF UNDELIBERATE DELAY. THUS, HE HAS PRAYED TO CONDONE THE DELAY OF 534 DAYS IN FILING THE APPEALS BEFORE THIS TRIBUNAL IN BOTH THESE ASSESSMENT YEARS. 3. THE LD.DR STRONGLY OPPOSED CONDONING THE DELAY A ND SHE SUBMITTED THAT ACTUALLY THERE WAS NO ENHANCEMEN T OF ASSESSMENT AS COMPARED TO THE DEMAND IN ORIGINAL ASSESSMENT ORDER AND ORDER GIVING EFFECT TO THE CIT (A) ORDER. SHE SUBMITTED THAT THERE WERE CERTAIN CLERIC AL MISTAKES WHILE TAKING UP THE OPENING FIGURE IN COMPUTATION OF TAXABLE INCOME OF THE ASSESSEE THAT COULD BE CORRECTED BY THE ASSESSEE BY FILING NECESSARY APPLICATION BEFORE THE AO AND IF THAT IS RECTIFIED THERE IS NO ENHANCEMENT. THE ARGUMENT OF THE ASSESSEE IS TOT ALLY MISLEADING AND THE DELAY SHALL NOT BE CONDONED SINC E THERE IS NO REASONABLE CAUSE IN FILING THE APPEALS BY INORDINATE DELAY OF 534 DAYS. ITA NOS.635 & 636/BANG/2020 PAGE 7 OF 12 4. WE HAVE HEARD BOTH PARTIES AND PERUSED THE RECORDS. IN THESE CASES, THERE WAS A DELAY OF 534 D AYS IN FILING THESE TWO APPEALS BEFORE THIS TRIBUNAL. THE EXPLANATION OF THE ASSESSEE IS THAT THE DELAY WAS CAUSED ON ACCOUNT OF MISUNDERSTANDING THE DIRECTION OF THE CIT(A) BY ASSESSEES ERSTWHILE CA SHRI SR ONKARI. TO THIS EFFECT, ASSESSEE FILED AN AFFIDAVIT FROM THE SAME CA EXPLAINING THIS. WE HAVE CAREFULLY GONE THROUGH T HE ORDER GIVING EFFECT TO THE CIT(A) ORDER DATED 2/3 /2020, WHEREIN, IN THESE TWO ASSESSMENT ORDERS WHILE TAKI NG THE OPENING TOTAL INCOME VIDE ORIGINAL ASSESSMENT ORD ER IT WAS WRONGLY TAKEN. 5. ACTUALLY, WHILE GIVING EFFECT TO THE ORDER OF THE CIT(A), THE ASSESSEE WAS GRANTED WITH THE DEDUCTION U/S 80P AND THERE WAS NO ENHANCEMENT OF INCOME CONSEQUE NT TO THE ORDER OF CIT(A). THE ARGUMENT OF THE LD.AR IS TOTALLY NOT BORNE OUT OF THE RECORD WHICH IS TO BE REJECTED. FURTHER, WHILE EXERCISING DISCRETION U/S 5 OF THE LIMITATION ACT, THE TRIBUNAL SHOULD ADOPT A PRAGMAT IC APPROACH. THERE SHOULD BE DISTINCTION BETWEEN CASE WHERE THE DELAY IS INORDINATE AND CASE WHERE THE DE LAY IS OF FEW DAYS. WHEREAS IN THE FORMER CASE, THE CONSID ERATION OF PREJUDICE TO THE OTHER SIDE WILL BE A RELEVANT FACTOR, SO ITA NOS.635 & 636/BANG/2020 PAGE 8 OF 12 THE CASE CALLS FOR A MORE CONSCIOUS APPROACH BUT IN THE LATER CASE, NO SUCH CONSIDERATION MAY ARISE AND SUC H A CASE DESERVES A LIBERAL APPROACH. HENCE, NO HARD AND PAST RULE CAN BE LAID DOWN IN THIS REGARD. THE COU RT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CAS E KEEPING IN MIND THAT IN CONSIDERING THE EXPRESSION SUFFICI ENT CAUSE AND THE PRINCIPLE OF ADVANCING SUBSTANTIAL JUSTICE IS OF PRIME IMPORTANCE. THE LAW ASSISTS TH OSE WHO ARE VIGILANT, NOT THOSE WHO SLEEP OVER THEIR RIGHTS . THE DELAY CANNOT BE CONDONED SIMPLY BECAUSE THE ASSESSE ES CASE CALLS FOR SYMPATHY OR MERELY OUT OF BENEVOLE NCE TO THE PARTY SEEKING RELIEF. IN GRANTING THE INDULGEN CE AND CONDONING THE DELAY, IT MUST BE PROVED THAT THE ASS ESSEE WAS DILIGENT AND WAS NOT NEGLIGENT WHATSOEVER THE SUFFICIENT CAUSE WITHIN THE CONTEMPLATION OF THE LIMITATION PROVISION MUST BE A CAUSE WHICH IS BEY OND THE CONTROL OF THE PARTY INVOKING THE AID OF THE PROV ISIONS. THE CAUSE FOR THE DELAY IN FILING THE APPEAL, WHI CH BY DUE CARE AND ATTENTION COULD HAVE AVOIDED, CANNOT BE A SUFFICIENT CAUSE WITHIN THE MEANING OF LIMITATION PROVISIONS. WHERE NO NEGLIGENCE NOR IN ACTION OR WA NT OF BONAFIDE CAN BE IMPUTED TO THE ASSESSEE A LIBERAL CONSTRUCTION OF THE PROVISIONS HAS TO BE MADE IN OR DER TO ADVANCE SUBSTANTIAL JUSTICE. SEEKERS OF JUSTICE MU ST ITA NOS.635 & 636/BANG/2020 PAGE 9 OF 12 COME WITH CLEAN HANDS. IN THE PRESENT CASE, THE AS SESSEE AS WELL AS HIS AUTHORIZED REPRESENTATIVE SHRI S.R O NKARI IN THE AFFIDAVIT STATED THAT THE ORDER OF LD.CIT(A ) WAS MISUNDERSTOOD BY THEM. AS SUCH, THEY HAVE NOT FILE D APPEAL BEFORE THIS TRIBUNAL. CONSEQUENTLY, THERE WA S A DELAY IN FILING THE APPEALS BEFORE THIS TRIBUNAL. T HIS CLEARLY SHOWS THAT THE DELAY WAS DUE TO THE NEGLIGE NCE AND INACTION ON THE PART OF THE ASSESSEE, WHICH CAN NOT BE CONSIDERED AS GOOD AND SUFFICIENT REASON TO CONDONE THE DELAY. THE ASSESSEE COULD HAVE VERY WELL AVOIDED T HE DELAY BY EXERCISING DUE CARE AND ATTENTION. IN OUR OPINION, THE ASSESSEE FAILED TO EXPLAIN THE INORDI NATE DELAY OF 534 DAYS IN FILING THE APPEAL BEFORE THIS TRIBUNAL BY EXPLAINING ANY REASONABLE CAUSE. THE DELAY BEFOR E THIS TRIBUNAL IS NOT SUFFICIENTLY EXPLAINED AND THE REAS ON EXPLAINED BY THE ASSESSEE CANNOT BE CONSIDERED AS BONAFIDE ONE. THE ASSESSEE SHOULD HAVE PROPERLY UNDERSTOOD THE ORDER OF THE CIT(A) AND PURSUED THE REMEDIES DILIGENTLY. THE ARGUMENT OF THE LD.AR IS T HAT THERE WAS ENHANCEMENT OF DEMAND IN THE CONSEQUENT ORDER PASSED BY THE AO WHICH IS NOT CORRECT. THE AS SESSEE IS WELL AWARE THAT OPENING FIGURE TAKEN BY AO WHILE PASSING ORDER GIVING EFFECT TO CIT(A) ORDER IS ONLY CLERICAL ERROR, WHICH COULD BE RECTIFIED BY PROCEEDINGS U/ S 154. ITA NOS.635 & 636/BANG/2020 PAGE 10 OF 12 THE ASSESSEE WANTS TO AVAIL BENEFIT OF THAT MISTA KE TO CONDONE THE DELAY AND THE SAME CANNOT BE CONDONED, AS THERE WAS NO REASONABLE CAUSE IN FILING THESE APPE ALS BEFORE THIS TRIBUNAL. ACCORDINGLY, WE DECLINE TO CO NDONE THE INORDINATE DELAY OF 534 DAYS IN FILING APPEALS BEFORE THIS TRIBUNAL. FURTHER, THE ASSESSEE ATTRIBUTE THE DELAY ON ACCOUNT OF COVID 19. ACTUALLY, THE CIT(A) P ASSED THE ORDER ON 28-11-2018 AND SERVED TO THE ASSESSEE ON 12-12-2018, WHICH IS MUCH EARLIER TO THE MARCH 2020 , WHERE THE PANDEMIC COVID-19 STARTED. THIS REASON IS ALSO INVALID WHICH CANNOT BE APPRECIATED. WITH THESE OBSERVATIONS, WE REJECT THE PLEA OF THE ASSESSEE AN D DISMISS THESE TWO APPEALS AS UNADMITTED. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN COURT ON 11 TH OCT, 2021 . SD/- SD/- ( N.A VASUDEVAN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEM BER BANGALORE, DATED, 11 TH OCT , 2021 / VMS / ITA NOS.635 & 636/BANG/2020 PAGE 11 OF 12 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTR AR, ITAT, BANGALORE. ITA NOS.635 & 636/BANG/2020 PAGE 12 OF 12 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SECTION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..