Dindayal Paraspar Sahakari Sanstha, Ujjain V. The PCIT-1, Indore

ITA 81/Ind/2022

AI Insights

The case involves Dindayal Paraspar Sahakari Sanstha Maryadit, a cooperative society, which appealed against the revision-order passed by the PCIT, Indore. The revision-order was based on the grounds that the ITO had erred in allowing a deduction under section 80P(2)(a)(i) for interest income earned from nationalized banks, which the PCIT deemed not eligible under section 80P(2)(d). The Tribunal examined the original assessment proceedings and found that the ITO had indeed made specific inquiries regarding the deduction claimed under section 80P(2)(a)(i) and that the PCIT's revision was based on an incorrect application of the law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130928 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 17-04-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Set aside
• Section: 263; 143(3); 80P

Judgement Text

Page 1 of 7 आयकर अपीलीय अिधकरण, इंदौर ायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER (Conducted through Virtual Court) ITA No.81/Ind/2022 Assessment Year: 2017-18 Dindayal Paraspar Sahakari Sanstha Maryadit, 26, Betal Marg, Freeganj, Ujjain बनाम/ Vs. Pr. CIT-1, Indore (Appellant / Assessee) (Respondent / Revenue) PAN: AAAAD 4995 L Assessee by Ms. Nisha Lahoti, AR Revenue by Shri P.K. Mishra, CIT-DR Date of Hearing 02.02.2023 Date of Pronouncement 22.03.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by revision-order dated 18.02.2022 passed by learned Pr. Commissioner of Income-Tax, Indore-1 [“Ld. PCIT”] u/s 263 of Income-tax Act, 1961 [“the Act”], which in turn arises out of assessment-order dated 22.12.2019 passed by learned ITO-2(1), Ujjain [“Ld. AO”] u/s 143(3) for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on the grounds raised in Appeal-Memo. 2. Heard the learned Representatives of both sides at length and case- records perused. Dindayal Paraspar Sahakari Sanstha Maryadit ITA No.81/Ind/2022 Assessment year 2017-18 Page 2 of 7 3. Briefly stated the facts are such that the return of relevant AY 2017- 18 filed by assessee was subjected to scrutiny-assessment and the Ld. AO completed assessment u/s 143(3) at the returned income after allowing deduction u/s 80P(2)(a)(i) as claimed by assessee. Subsequently, the Ld. PCIT examined the record of assessment-proceeding and viewed that the assessment-order passed by Ld. AO is erroneous in so far it is prejudicial to the interest of revenue, which attracts revisionary-jurisdiction u/s 263. The reason of framing such a view, as mentioned by Ld. PCIT in the show-cause notice dated 01.02.2022, is such that the assessee has made FDRs with nationalized banks, namely the Bank of India and UCO Bank and earned interest income of Rs. 1,93,207/- and Rs. 19,81,242/- respectively thereon, which is not eligible for deduction u/s 80P(2)(d) in as much as the said provision allows deduction only to the interest income derived from co- operative banks and societies and not from nationalized banks. 4. By the aforesaid show-cause notice, the assessee was asked to explain as to why the assessment-order may not be revised. In response thereto, the assessee made a detailed submission to Ld. PCIT, which is re-produced in Para No. 3 of the revision-order. 5. However, none of those submissions impressed the Ld. PCIT. The Ld. PCIT further observed that since the section 263 has been amended and Explanation 2, as reproduced below, had been introduced therein, the assessment-order is deemed to be erroneous-cum-prejudicial to the interest of revenue if the same had been passed without inquiries or verification which should have been made: “Explanation 2 – “For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if in the opinion of the Principal Commissioner or Commissioner - (a) The order is passed without making inquiries or verification which should have been made; (b) The order is passed allowing any relief without inquiring into the claim; Dindayal Paraspar Sahakari Sanstha Maryadit ITA No.81/Ind/2022 Assessment year 2017-18 Page 3 of 7 (c) .... (d) ...” 6. Finally, the Ld. PCIT concluded that the Ld. AO has not carried out the inquiry/verification which he should have done in the matter of aforesaid issue i.e. deduction u/s 80P(2)(d) and hence the assessment-order is erroneous in so far as it is prejudicial to the interest of revenue. Accordingly, the Ld. PCIT passed revision-order u/s 263 whereby the assessment-order was set aside to the file of Ld. AO with a direction to re- examine the issue. 7. Aggrieved by such revision-order, the assessee has filed this appeal. 8. By means of various grounds raised in the Appeal Memo which are not being reproduced for the sake of brevity, the appellant-assessee requires us to adjudicate whether or not the revision-order passed by Ld. PCIT u/s 263 is valid in the eyes of law? Submission of Ld. AR: 9. Ld. AR straightaway carried us to a Paper-Book filed by him and submitted that during the course of assessment-proceeding, the Ld. AO has made specific queries to assessee qua the issue raised by Ld. PCIT in the show-cause notice u/s 263 and the assessee has also filed enough details/documents in response thereto, which is very much evident from the following details/documents forming part of assessment-record available with the department: (i) Paper Book Page No. 35 to 36 – Vide Point No. 4 of the notice dated 15.11.2019 u/s 142(1), the Ld. AO asked the assessee: “4. Please furnish detail noteon the deduction claimed by you under Chapter VI-A Rs. 24,14,454/-in your ITR for the year under consideration.” (ii) Paper Book Page No. 37 to 38 – Vide Point No. 1 of the reply-letter Dindayal Paraspar Sahakari Sanstha Maryadit ITA No.81/Ind/2022 Assessment year 2017-18 Page 4 of 7 dated 01.12.2019, the assessee submitted: “1) Relating to deduction claimed Chapter VI-A: Assessee being a co-operative society running banking business is applicable for claiming deduction u/s 80P(2)(a)(i) for whole of income of Rs. 24,25,017/-. XXX (irrelevant portion not reproduced) Assessee society deposited surplus capital of society in Nationalised Bank and Co-operative Bank for maintaining liquidity.” 10. Ld. AR carried us to Page No. 2 of the assessment-order where the Ld.AO has categorically stated: “The assessee has shown income from business amounting to Rs. 24,14,454/- and claimed deduction under Chapter VI-A amounting to Rs. 24,14,454/- and filed return of income at income of Rs. Nil. The society has claimed deduction u/s 80P(2)(a)(i) for the year under consideration being credit co-operative society and engaged in the business of providing credit facilities to its members. The assessee submitted reply related to the query raised regarding claim of deduction under Chapter VIA and regarding investments/advances/loans. Submission of the assessee has been duly considered and placed on record.” 11. With aforesaid submissions, Ld. AR argued that during the course of assessment-proceeding, the Ld. AR has raised adequate query qua the deduction u/s 80P through notice u/s 142(1); the assessee has filed reply; and the Ld. AO has stated his careful consideration in the assessment-order as well. Therefore, there is no lack of enquiry as stated by Ld. PCIT. 12. Having demonstrated so, Ld. AR also argued one important aspect in the matter i.e. the assessee has claimed deduction u/s 80P(2)(a)(i) which provides deduction “to a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members” whereas the Ld. PCIT has conducted revision on the premise that the deduction had been claimed u/s 80P(2)(d) which provides deduction “in respect of any income by way of interest of dividends derived by the co-operative society from its Dindayal Paraspar Sahakari Sanstha Maryadit ITA No.81/Ind/2022 Assessment year 2017-18 Page 5 of 7 investments with any other co-operative society”. Thus, Ld. AR submits, the PCIT has proceeded and conducted revision-proceeding on a patently wrong premise. Therefore also, the revision-proceeding u/s 263 is not sustainable. 13. Lastly, Ld. AR also invited our attention to Page No. 46 of the Paper- Book where a copy of assessment-order dated 30.08.2016 for the preceding AY 2014-15 completed u/s 143(3) is filed. Ld. AR submitted that in that assessment-year also, the scrutiny was done to examine identical issue and the deduction claimed by assessee u/s 80P(2)(a)(i) was allowed. Ld. AR submitted that the said assessment has attained finality and no revision or other action had been taken by revenue-authorities. Submission of Ld. AR: 14. Per contra, Ld. DR strongly supported the revision-order. Our analysis: 15. We have heard the rival contentions and perused the material on record. On a careful consideration of various documents placed in the Paper-Book, as noted in the foregoing discussion, we find that during the course of assessment-proceeding, a specific query was raised by Ld. AO with regard to the issue contemplated by Ld. PCIT and the assessee too made submission. This fact is also borne out of the noting made by Ld. AO in the assessment-order reproduced earlier. We further find merit in the submission of Ld. AR that the assessee/AO had claimed/allowed deduction u/s 80P(2)(a)(i) whereas the Ld. PCIT had conducted revision on a wrong premise that the deduction was claimed/allowed u/s 80P(2)(d). We also observe that identical deduction u/s 80P(2)(a)(i) was also allowed to assessee in scrutiny assessment completed by revenue-authorities u/s 143(3) for AY 2014-15 and that assessment, as informed by Ld. AR, has attained finality. Therefore, considering all these factors, we agree with the Ld. AR that the situation did not warrant conduct of revision-action u/s 263 in present Dindayal Paraspar Sahakari Sanstha Maryadit ITA No.81/Ind/2022 Assessment year 2017-18 Page 6 of 7 case. Hence, we are of the considered view that the revision-order passed by Ld. PCIT is not a valid order. We, thus, quash the revision-order and restore the original assessment-order passed by Ld. AO. The assessee succeeds in this appeal. 16. Resultantly, this appeal of assessee is allowed. Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 22/03/2023 Order pronounced in the open court on ....../....../2023 Sd/- Sd/- (SUCHITRA KAMBLE) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 22.03.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Dindayal Paraspar Sahakari Sanstha Maryadit ITA No.81/Ind/2022 Assessment year 2017-18 Page 7 of 7 1. Date of taking dictation 2. Date of typing & draft order placed before the Dictating Member 3. Date on which the approved draft comes to the Sr. P.S./P.S. 4. Date on which the approved draft is placed before other Member 5. Date on which the fair order is placed before the Dictating Member for pronouncement 6. Date on which the file goes to the Bench Clerk 7. Date on which the file goes to the Head Clerk 8. Date on which the file goes to the Assistant Registrar for signature on the order 9. Date of dispatch of the Order