JAMBO CREDIT AND THRIFT CO-OPERATIVE SOCIETY LIMITED,JAIPUR V. ITO-6(1), JAIPUR

ITA 1109/JPR/2025

AI Insights

The case involves Jambo Credit and Thrift Co-operative Society Limited, which appealed against the order of the Learned CIT(A), NFAC, Delhi, concerning the assessment year 2018-19. The primary contention was the re-computation of the total income of the assessee at Rs. 1,07,77,113/-, confirmed by the impugned order. The tribunal had to decide on the condonation of delay in filing the appeal and the merits of the case, particularly the deductions claimed under section 80P of the Income Tax Act, 1961. The tribunal found that the assessee was not given a reasonable opportunity to be heard regarding the non-compliance with the notices issued by the CIT(A), leading to the decision to restore the appeal for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785059 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 05-08-2025
• Other Referred Cases: Mis Citizen Co-operative Society Ltd Vs ACIT, Totgars, Co-operative Sale Society Ltd. vs. Income-tax Officer, Karnataka
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAURAV AWASTHI
• Assessee Lawyers: APKSHA KALRA
• Keywords: Condonation of delay; Opportunity of being heard; Business expenditure; Onus to prove; Period of limitation; TDS; Non compliance
• Section: 142(1); 56; 40(a)(ia)

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B-Bench” JAIPUR Jh xxu xks;y] ys[kk lnL; ,oa Jh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihyla-@ITA No.1109/JPR/2025 fu/kZkj.k o\"kZ@AssessmentYear : 2018-19 Jambo Credit and Thrift Co-operative Society Limited, S-4, Opp. LBS College Shopping Centre, Kanchan Apartment, Tilak Nagar, Jaipur. cuke Vs. The ITO, Ward-6(1), Jaipur. LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No. AABAJ2405L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by :Ms. Apksha Kalra, Adv. jktLo dh vksjls@Revenue by: Shri Gaurav Awasthi, JCIT. lquokbZ dh rkjh[k@Date of Hearing :12/11/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 12/11/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER . Assessee-appellant is before this Appellate Tribunal feeling aggrieved by order dated 12.06.2024, passed by Learned CIT(A), NFAC, Delhi, relating to the assessment year 2018-19, as thereby the appeal filed by the appellant has been dismissed. Printed from counselvise.com 2 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. 2. Vide impugned order, the assessment order dated 22.04.2021 re- computing total income of the assessee at Rs. 1,07,77,113/- has been confirmed. Issue of Condonation of delay 3. Appellant presented appeal before the Registry on 05.08.2025. The impugned order is dated 12.06.2024. As per deficiency note raised by the Registry, the appeal came to be filed 339 days after the prescribed period of limitation. 4. Regarding condonation of delay, appellant has subsequently filed an application. Firstly, said application has been argued by both the sides. 5. In the application, applicant has alleged that no communication or indication was received by the applicant from the office of Learned CIT(A), NFAC, and as such, the appellant was unaware of the impugned order dated 12.06.2024. Applicant further alleges that it came to know about passing of the impugned order on 18.07.2025, when outstanding demand was brought to the notice of the appellant. Ld. AR for the applicant has submitted that having learnt about the impugned order on 18.07.2025, steps were taken and appeal was filed on Printed from counselvise.com 3 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. 05.08.2025. Accordingly, Ld. AR for the applicant has urged that the delay in filing of the appeal may be condoned. 6. On the other hand, Ld. DR for the department has submitted that as is available from the impugned order, four notices were issued by the office of Learned CIT(A), NFAC to the assessee, but the assessee remained non compliant , and that there is no merit in the submissions put forth by Ld. AR for the applicant on the point of condonation of delay, specifically when the impugned order was also communicated to the assessee-appellant. 7. A perusal of Form 35 would reveal that in the first mentioned column, the assessee-appellant furnished an e-mail address ‘[e-mail]’ for communication of notices to the assessee, but, in the last column i.e. column No. 17, which pertains to the address, which the appellant furnished for communication of notices. In this column, the email address ‘. ‘[e-mail] .’ was furnished. So, from the contents of Form No. 35, it appears that the applicant furnished two email addresses. Initial burden to prove non service of notices or the impugned order was on the applicant. Printed from counselvise.com 4 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. In this regard, applicant should have supported the application by placing on record supporting material by down loading from the portal of the department as regards dispatch of notices to the appellant by the office of Learned CIT(A), even if, there is no mention in the impugned order or any material on behalf of the department to show communication of the notices and the copy of the impugned order to the assessee-appellant, by the office of Learned CIT(A). Applicant could support the application by filing duly sworn in affidavit. Even no such affidavit has been filed in support of the application. 8. Be that as it may, the fact remains that the appellant remained non compliant to four notices dated 12.06.2023, 17.10.2023, 29.11.2023 and 16.04.2024. In the given situation, even though, initially not inclined to condone delay in filing of the appeal, having regard to the issues involved, not adjudicated by Learned CIT(A) on merits and in detail, we deem it a fit case to condone the delay in filing of the appeal. We order accordingly. However, the applicant is burdened with costs of Rs. 3,000/- to be deposited in “Prime Minister’s National Relief Fund”. Printed from counselvise.com 5 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. Arguments have also been advanced in the appeal, on merits, today itself by both the sides. We proceed to dispose of the appeal. On merits 9. Ld. AR for the appellant has made only one submission and that is for restoration of the appeal to the files of Learned CIT(A), NFAC so as to enable the appellant to provide reasonable opportunity of being heard, due to non compliance with the notices issued by the said office. 10. On going through the assessment order, we find that following variations were made by the Assessing Officer while re-computing the income of the assessee:- “subject to the above remarks, total income of the assessee is re-computed as under:- Net profit as per part B-TI of ITR Rs. 13,96,148/- Less income to be treated separately Rs. 11,04,20,104/- (-) 10,90,23,956/- Less deduction u/s 80P Nil (-) 10,90,23,956/- Add income from other sources Rs. 11,04,20,104/- Rs. 13,96,148/- Add. Addition/disallowance 1.Rs. 7,25,878/- Rs. 93,80,956/- Printed from counselvise.com 6 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. 2. Rs. 85,93,728/- 3. Rs. 61,359/- Total income Rs. 1,07,77,113/- 11. The case of the assessee was selected for scrutiny of investments/advances/loans, business expenses, refund claim and deduction u/s 80P of the Act. In the return of income, the assessee had claimed refund of Rs. 1,39,15,530/-, against TDS. The case was selected for complete scrutiny through CASS. Accordingly, notices u/s 143(2) and 142(1) of the Act were issued to the assessee. The Assessing Officer observed in para 2.2 of the assessment order that the details/documents furnished by the assessee were not sufficient for verification of genuineness on high expenses regarding commission and incentive claimed by the assessee. Details were called vide notice u/s 142(1) of the Act. Thereupon, the assessee furnished details of payment of Rs. 8,83,56,880/- only. For the following reasons, the Assessing Officer made four additions:- “2.3 Perusal of Commission and Incentive expenses summary provided by the assessee reveals that no TDS, as required u/s 194 H, has been made on the following two items of expenditure: Printed from counselvise.com 7 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. 1. All staff incentive of Rs.10,76,120/- 2. Expenses that TDS has not been deducted as its not applicable. (13,43,475). Thus, as provision of section 40(a)(ia) of the Income Tax Act, 30% of above two items Le. 30% of Rs.24.19.595/- which comes to Rs.7.25,878/- is disallowed and added to total income of the assessee. Penalty proceedings u/s 270A for underreporting of income initiated separately. (Addition of Rs.7,25,878/-) 2.4 In respect of expenditure of Rs.8,83,56,880/, assessee has failed to explain/justify and substantiate the admissibility of the expenditure, accordingly, 10% of the amount ie. Rs.8.59,37,285 (Rs.8,83,56,880- Rs. 24,19,595), is disallowed for want of verification and added back to the total income of the assessee. (Addition of Rs.85,93,728/-) 2.5 Perusal of the Tax Audit Report reveals that, during the year under consideration assessee has paid Penal Interest u's 201(1A)/206C(7) of Rs.61,359/- which is required to be disallowed, as same is not admissible expenditure. Accordingly, Rs.61359/- is disallowed. Penalty proceedings u/s 270A for under reporting of income initiated separately. (Addition of Rs.61,359/-) 2.6 Further, assessee has claimed deduction of Rs. 13,96,148/-under section 80P of income Tax Act, 1961. As per the TDS statement it is seen that all TDS deducted is only from the deposit in the Nationalized bank on which deduction u/s 80P is not allowable. 2.7 Further, the Hon'ble Supreme Court in the case of Mis Citizen Co-operative Society Ltd Vs ACIT, 84 taxmann. 114 (SC), 2017 held that deduction u/s 80P(2)(a)(i) would be admissible to those co-operative societies which carry on business of banking or providing credit facilities to its members and not admissible to a society carrying on the banking business which for all practical purposes is acting like a co-operative bank and its operation was not confined to its members but outsiders well. 2.8. There is no nexus seen between the surplus fund invested in Co-op. bank/Nationalised banks and expenses claimed. Therefore, no separate Printed from counselvise.com 8 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. expenses on interest income received from Co-op, banks/nationalized banks needs to be allowed as deduction. Further, assessee did not provide nexus between Misc, income and expenses claimed and, therefore, no separate expenses on Misc income needs to be allowed as deduction. Penalty proceedings u/s. 270A of the I. T. Act are initiated for under reporting of income. (addition of Rs.13,96,148/-)” 12. So far as deductions claimed u/s 80P(2)(a)(i) of the Act, in para 3 of the assessment order, the Assessing Officer did not find any merit in the claim of the assessee for said deduction, for the reasons recorded in para 3 to 3.5, which read as under:- “3. In response to the notices/letters issued from time to time, the assessee has furnished the information online. After carefully considering the information and the written submissions filed by the assessee, the assessment is completed as under 1. It is noticed from the information submitted by the assessee that during the previous year under consideration, the assessee has an earned an interest from from Nationalized & private Bank and persons other than members (Rs.11,04,20,104/-1, as deduction uls 80P(2)(a)(i) of the Income-tax Act, 1961. The details of the interest income earned is as under: S. No. Particular Interest income earned 1. Interest received from Nationalized and private Bank and persons other than members. Rs. 11,04,20,104/- Rs. 11,04,20,104/- The above contentions of the assessee are carefully considered. They do not stand any merit because of the following reasons: 3.1 Interest income earned by the assessee-society is not eligible for deduction u/s 80P(2)(a)(i) because of the following reasons: Printed from counselvise.com 9 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. 3.2 Section 80P(2)(a)(i) allows deduction to a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members in respect of whole of the amount of profits and gains attributable to such activity. 3.3 In the instant case, the interest income' under question was not the interest received from the members of the assessee-society for providing credit facilities to them. What was sought to be taxed u/s. 56 is the interest income arising on the surplus invested in co-operative banks and financial institutions other than the' co-operative societies. 3.4 The head note to section 80P indicates that the said section deals with deductions in respect of income of co-operative societies. Section 80P(1), inter alia, states that where the gross total income of a co-operative society includes any income from one or more specified activities, then such income shall be deducted from the gross total income in computing the total taxable income of the assessee-society. An income, which is attributable to any of the specified activities mentioned in section 80P(2) would be eligible for deduction. The word 'income' has been defined under section 2(24)(i) of the Act to include profits and gains of business. This sub-section is an inclusive provision. The Parliament has included specifically business profits' into the definition of the word 'income'. Therefore, one is required to give a precise meaning to the words' profits and gains of business' mentioned in section 80P(2). In the instant case, the assessee-society regularly invested funds not immediately required for business purposes. Interest on such investments, therefore, could not fall within the meaning of the expression' profits and gains of business as held by Hon'ble Supreme Court in the case of Totgars, Co-operative Sale Society Ltd. vs. Income-tax Officer, Karnataka [2010] 188 Taxman 282 (SC). Such interest income could not be said to be attributable to the activities of the society, viz., carrying on the business of providing credit facilities to its members. Hon'ble Supreme Court in the case of Totgars, Co-operative Sale Society Ltd. vs. Income-tax Officer, Karnataka (supra) held in para 11 as under: \"To say that the source of income is not relevant for deciding the applicability of section 80P would not be correct because one needs to give weightage to the words the whole of the amount of profits and gains of business' attributable to one of the activities specified in section 80P(2)(a) The words 'the whole of the amount of profits and gains of business emphasize that the income, in respect of which deduction is sought, must constitute the operational income and not the other income which accrues to the society. In the instant case, the evidence showed that the assessee-society earned interest on funds which were not Printed from counselvise.com 10 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. required for business purposes at the given point of time. Therefore, on the facts and circumstances of the instant case, such interest income fell in the category of other income which had rightly been taxed by the department under section 56. (emphasis supplied) 3.5 As can be seen from the above decision of Hon'ble Supreme Court, it is clear that the deduction u/s 80P(2)(a) is available to only the 'operational income from business, but not the 'other income' which accrues to the assesses-society. On the recommendation of Review Report a show cause notice dtd.20.04.2021 was sent to the assessee, requiring assessee to explain why the amount of Rs.1,07,77,113/-should not be disallowance. The assessee was required to submit details by 21.04.2021 which he had failed to. Accordingly, the above addition of Rs.1,07,77,113/- is made to the total income of the assessee. Penalty u/s 270A for underreporting is separately initiated.” 13. Having regard to the gravity of the issues involved, we deem it a fit case to restore the appeal to the files of Learned CIT(A) for decision afresh, after providing reasonable opportunity of being heard to the assessee, especially when the grounds raised by the appellant there, were not dealt with in detail on merits. Result 14. In view of the above discussion, this appeal is disposed of, for statistical purposes and the matter is restored to the files of Learned CIT(A) for decision afresh, after providing reasonable opportunity of being heard to the assessee. Printed from counselvise.com 11 ITA No. 1109/JPR/2025 Jambo Credit and Thrift Co-operative Society Ltd. Jaipur. Receipt in proof of deposit of costs to be produced by the appellant before Learned CIT(A) before commencement of proceedings on remand. File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 12/11/2025. Sd/- Sd/- ¼xxu xks;y½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 12/11/2025 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Jamo Credit and Thrift Co-operative Society Ltd., Jaipur. 2. izR;FkhZ@ The Respondent- ITO, Ward- 6(1), Jaipur. 3. vk;djvk;qDr@ Theld CIT 4. vk;djvk;qDr@CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File ITA No. 1109/JPR/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar Printed from counselvise.com "