BALVEER URBAN COOP CREDIT SOCIETY LIMITED, BELGAUM V. ITO WARD 3 BELGAUM, BELGAUM

ITA 8/PAN/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0679 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 10-06-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 09-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SHRIKANTH
• Section: 68; 144; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI [THROUGH VIRTUAL HEARING AT ITAT : PUNE] BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA.No.8/PAN./2024 [E-APPEAL] Assessment Year 2017-2018 Balveer Urban Cooperative Credit Society Limited, Main Road, Belgundi Village, Tal.Belagavi. Dist. Belagavi. PIN - 591108 PAN AAAAB6175G Karnataka. vs. The Income Tax Officer, Ward-3, Firoj Khimajibhai Complex, Opp. Civil Hospital, Dr. Ambedkar Road, BELAGAVI – 590 001. Karnataka. (Appellant) (Respondent) For Assessee : Shri Chetan Chougule For Revenue : Shri N Shrikanth Date of Hearing : 11.06.2024 Date of Pronouncement : 29.07.2024 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal for assessment year 2017-18, arises against the National Faceless Appeal Centre [in short the “NFAC”) Delhi’s Din and Order No.ITBA/NFAC/S/250/ 2023-24/1056767523(1), dated 04.10.2023, in proceedings u/s.144 of the Income Tax Act, 1961 (in short ‘the Act”). Heard both the parties. Case file perused. 2 ITA No.8/PAN./2024 2. The assessee pleads the following substantive grounds in the instant appeal : 1. “The Appellant has filed the return of income in pursuance of section 142(1) of the Income Tax Act, 1961 on 14-09- 2019 but the same was overlooked by the Assessing Officer and made best judgement order u/s 144(l)(b) of the Income Tax Act. 2. Because, The Order of the Assessing officer is bad in law and contradicts its own Assessment. Kindly allow us to reproduce the paragraph at page 6 of the Assessment Order, wherein Assessing Officer states, Further Assessee in support of its claim has furnished a copy of return of income, computation of income, Profit and Loss account, balance sheet for the period under consideration, society registration certificate, copy of Byelaw. As regards, the source of specified bank notes deposited during the demonetization period, the assessee submitted that the deposits received from members from day to day transactions have been deposited in old currency. The Assessee in support of its claim submitted the cash book for the period under consideration. 3 ITA No.8/PAN./2024 As it can be seen from the above the Assessing Officer acknowledges the receipts of various submissions by the Assessee but makes the best judgement assessment under section 144 of the Income Tax Act, for non compliances which itself shows that the Order of the Assessing Officer is erroneous in law and needs to be set side. 3. Because, the Assessing Officer made additions wrongly under section 68 of the Income Tax Act, for cash credits based on deposits in bank, without going through the books of accounts maintained by the Appellant. 4. Because, the Assessing Officer has wrongly disallowed the deduction claimed under section 80P(2)(a)(i) of the Income Tax Act, despite Appellant being Cooperative Credit society. 5. Because, the learned Commissioner of Income Tax (Appeals) denied the deduction claimed under section 80P(2) of the Income Tax Act, despite giving the detailed written submission on eligibility of the claim under chapter VIA of the Income Tax Act. 6. Because, the learned Commissioner of Income Tax (Appeals) upheld the additions under section 68 of the Income Tax Act, despite appellants submissions with details of depositors from whom cash is collected and 4 ITA No.8/PAN./2024 deposited into the bank accounts, thereby deprived the natural justice. 7. The appellant craves leave to add and or alter any of the grounds of appeal before or at the time of hearing.” 3. We advert to the first and foremost issue of sec.80P(2)(a)(i) deduction disallowance made by both the learned lower authorities amounting to Rs.5,29,308/-. The Revenue vehemently supports the same taking cue from the learned lower authorities action invoking sec.80A(5) r.w.s.80C of the Act that the assessee ought to have filed it’s return well within the due date prescribed under the foregoing latter provision. 4. We have given our thoughtful consideration to the Revenue’s instant technical objection and find no merit therein. A perusal of the assessment discussion in page-12 makes it clear that the assessee had indeed filed it’s return dated 14.09.2019 claiming sec.80P relief therein. And this sufficiently indicates that the assessee has complied with the rigor of sec.80A(5) of the Act, in claiming sec.80P deduction by way of “a claim in his return”. Sec.80C of the Act prescribing such a claim to be raised within the due date of filing sec.139(1) return, came to be inserted vide Finance Act, 2018 w.e.f. 01.04.2018 carrying prospective effect whereas we are in assessment year 2017-2018 only. We further quote The 5 ITA No.8/PAN./2024 Chirakkal Service Co-operative Bank Ltd. and Others vs. CIT (2016) 384 ITR 490 (Ker.) that the impugned deduction could not be declined by quoting sec.80A(5) of the Act in case involving a belated return. We thus reject the Revenue’s instant first and foremost technical objection. 5. Next comes the assessee’s grievance on merits regarding allowability of sec.80P deduction on interest income received from cooperative societies/cooperative banks and public sector banks; as the case may be; we note this tribunal’s coordinate bench’s order The Hukkeri Taluk Agri Produce Co-operative Marketing Society Ltd., Dist. Belagavi vs. ITO, Ward-1(1), Belagavi ITA.No.30/PAN./2018 dated 16.11.2021 has dealt with the former head and The Vaveru Co-operative Rural Bank Ltd., vs. CCIT [2017] 396 ITR 371 (AP) has rejected the Revenue’s very contentions in an instance involving the latter category of interest income respectively. We accordingly accept the assessee’s sec.80P deduction on merits as well. The Revenue’s vehement contentions supporting the impugned lower appellate findings stand rejected. Ordered accordingly. 6. Next comes the latter issue of correctness of both the lower authorities action making sec.68 unexplained cash credit addition amounting to Rs.44,11,500/- involving demonetization currency in the relevant previous year. The 6 ITA No.8/PAN./2024 assessee has all along explained source thereof of cash deposits coming from it’s members concerned in the course of regular business activity. It has further placed on record all the relevant KYC details before the lower authorities as well as the paper book filed in the tribunal. Faced with this situation, we note that Shrijeett Finance Private Limited vs. ACIT, Jalna [2024] 162 taxmann.com 243 (Pune.) has rejected the Revenue’s arguments regarding assessee’s entitlement to receive demonetized currency as under : “5. During the assessment proceedings, the AO observed that the assessee has received cash in old currency during the demonetization period between 08.11.2016 to 13.12.2016 of Rs.12,34,000/-. The assessee submitted before the AO that these amounts were deposited by their customers towards the loan installments. Assessee submitted list of customers. Assessee also submitted that all the customers were having proper KYC Documents. However, the AO made addition under section 68 of the Act, on the ground that as per the RBI Guidelines assessee being an NBFC was not permitted to accept the old currencies which were no-more legal tender after 08.11.2016. Ld.CIT(A) confirmed the said addition. The only plea taken by the AO, ld.CIT(A) and ld.DR that as per the notification no.S.O. 3407(E) dated 08/11/2016 & S.O. 7 ITA No.8/PAN./2024 3418(E) of Ministry of Finance (Department of Economic Affairs), New Delhi dated 08/11/2016 (F. No. 10/03/2016-cy.l) only banking company defined under the Banking Regulation Act were allowed to accept demonetized currency after 08.11.2016, and NBFCs were not allowed to accept impugned currencies. 5.1 The AO made addition under section 68 of the Act. To invoke section 68 of the Act, the AO has to prove that assessee failed to file identity of the depositors, genuineness of the transaction and creditworthiness. In this case, the assessee had submitted the names of the persons from whom cash was received during the demonetization period in the form of demonetized currency. Assessee also submitted that assessee maintains all KYC documents of all these persons. The AO had not asked the assessee to produce the said KYC Documents. Rather AO has not challenged the identity of the depositors, genuineness of the transactions and creditworthiness of the depositors. In these facts and circumstances of the case, we are of the opinion that no addition can be made under section 68 of the Act. We find support from the order of ITAT Pune Bench authored by then Hon’ble Vice-President, Shri R.S.Syal in the case of M/s.Bhagur Urban Credit Co-operative Society Ltd., Vs. ITO in ITA No.561/PUN/2022 for A.Y.2017-18 dated 8 ITA No.8/PAN./2024 03.01.2023. Therefore, the AO is directed to delete the addition of Rs.12,34,000/- made under section 68 of the Act. Accordingly, Ground No.2 and 3 are allowed.” 7. We adopt the above detailed reasoning mutatis mutandis to accept the assessee’s instant latter substantive ground as well. Ordered accordingly. 8. This assessee’s appeal is allowed in above terms. Order pronounced in the open Court on 29.07.2024 Sd/- Sd/- [RAMA KANTA PANDA] [SATBEER SINGH GODARA] VICE PRESIDENT JUDICIAL MEMBER Pune, Dated 29 th July, 2024 VBP/- Copy to 1. The applicant 2. The respondent 3. The Pr. CIT, Panaji concerned 4. D.R. ITAT, Panaji-Bench, Panaji. 5. Guard File. //By Order// //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.