SAINI CO-OPERATIVE THARIFT AND CREDIT SOCIETY LTD.,NEW DELHI V. ITO,WARD-48(1), DELHI

ITA 4687/DEL/2024

AI Insights

The case involves the Saini Cooperative Thrift & Credit Society Ltd, which appealed against the penalties imposed by the Income Tax Officer under section 271A of the Income Tax Act for the assessment years 2012-13 and 2013-14. The penalties were based on the alleged failure to maintain books of account as prescribed under section 44AA of the Act. The Tribunal examined the records and found that the society had maintained proper books of account, as evidenced by the acceptance of their return and the deductions claimed under section 80P. The Tribunal concluded that the penalties were unwarranted and set them aside.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314407 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Other Referred Cases: Citizen Coop society v/s ACIT Hyderabad
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: K. SAMPATH
• Section: 147; 148; 144

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA Nos. 4686 & 4687/Del/2024 (Assessment Years: 2012-13& 2013-14 respectively) Saini Co-operative Thrift and Credit Society Ltd, 2429-21, Bazar Kamra Bangash, Darya Ganj, New Delhi Vs. Income Tax Officer, Ward-48(1), New Delhi (Appellant) (Respondent) PAN: AABAS8396K Assessee by : Shri K. Sampath, Adv Shri V. Rajkumar, Adv Revenue by: Shri Sahil Kumar Bansal, Sr. DR Date of Hearing 09/04/2025 Date of pronouncement 07/05/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeals in ITA Nos. 4686 & 4687/Del/2024 for AYs 2012-13 and 2013- 14, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] dated 09.08.2024 against the order of assessment passed u/s 271D of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 04.01.2022 by the Assessing Officer, NFAC, Delhi (hereinafter referred to as „ld. AO‟). ITA No. 4686/Del/2024 for AY 2012-13 2. The assessee has raised the following grounds of appeal:- “That on the facts and in the circumstances of the case and in law the Ld. CIT (A) at NFAC erred in confirming the order imposing penalty under section 271A of the Act 1961 holdings the assessee guilty of concealment of income. ITA No. 4686 & 4687/Del/2024 Saini Co-operative Thrift and Credit Society Ltd Page | 2 The above action being arbitrary, fallacious, unwarranted and illegal must be quashed with directions for appropriate relief.” 3. We have heard the rival submissions and perused the material available on record. The statement of facts as mentioned by the assessee along with Form 36 are as under:- The assessee Saini Cooperative Thrift & Credit Society Ltd is registered with registrar of societies NCT Delhi as a no profit entity to financially help its 16000 approximate Members. It maintain proper books of account as prescribed by the Act and rules. During covid period the office of society was shifted from 2420, Kamra Bangash, a congested area to 43, Lekh Ram Road, Daryaganj, New Delhi provide easy access to its members. The audit of the society is conducted by firm of Chartered Accounts appointed by the registrar of Cooperative Societies NCT Delhi from the panel maintained by the office of registrar under rules of the Cooperative Societies Act. The Auditor conducts audit and files its report with the registrar where he specifically mentions that proper books of account as required by the coop. Society Act are maintained and produced before us. The Ld AO in his order dated 20/12/19 at para - 5 affirms The return of income of assessee is accepted. On the contrary of para -7 simply says that books of account as prescribed in section 44AA of Income Tax Act Rule 6F of Income Tax Rules were not maintained. Before initiating penalty he has not mentioned that books of account were called but prescribed rather passed a vague order initiating penalty u/s 271A. 4. The return of income in response to notice u/s 148 of the Act was filed by the assessee declaring total income of Rs. 90,30,400/-. In the return of income, the assessee has also claimed deduction u/s 80P of the Act which was duly granted by the ld AO in the assessment. While this is so, without mentioning any reason, the ld AO simply initiated penalty proceedings u/s 271A of the Act on the ground the assessee had not maintained books of account u/s 44AA of the Act. This notice culminated in the levy of penalty u/s 271A of the Act for Rs. 25,000/- which was also upheld by the ld NFAC. ITA No. 4686 & 4687/Del/2024 Saini Co-operative Thrift and Credit Society Ltd Page | 3 5. We are unable to comprehend ourselves to accept to the aforesaid levy of penalty u/s 271A of the Act for the simple reason that when books of account are not maintained by the assessee according to the lower authorities, then how the deduction claimed by the assessee u/s 80P of the Act was granted? This itself becomes a clinching evidence that books of account were indeed maintained by the assessee and hence, there is no question of violation of provisions of Section 44AA of the Act. Consequentially there could be no levy of penalty u/s 271A of the Act. 6. In the result, appeal of the assessee for AY 2012-13 in ITA No. 4686/Del/2024 is allowed. ITA No. 4687/Del/2024 for AY 2013-14 7. The assessee has raised the following grounds of appeal:- “That on the facts and in the circumstances of the case and in law the ld CIT(A) at NFAC erred in confirming the order having demand raised under Section 147 rws 144 of the Act, 1961 holdings the assessee guilty of concealment of income. The above action being arbitrary, fallacious, unwarranted and illegal must be quashed with directions of appropriate relief. 8. We have heard the rival submissions and perused the material available on record. The Society is registered under Cooperative Societies Act, as no profit no loss entity to financially help its members on the concept of mutuality. The society is earning income from interest on loan to its members and surplus funds are being kept in bank FDRs. Interest income is bound to accrue on surplus funds and it is used for the objects for which the society is established. The Ld ITO has completed the assessment citing Hon‟ble Supreme Court‟s decision dated 08-08- 2017 in the matter of the Citizen Coop society v/s ACIT Hyderabad. 9. It was submitted that the assessee had filed its return of income in response to notice u/s 148 of the Act on 12.03.2020 declaring total income of Rs. 1,01,85,390/- being the interest earned by the assessee society from banks on its ITA No. 4686 & 4687/Del/2024 Saini Co-operative Thrift and Credit Society Ltd Page | 4 fixed deposits. The ld AO had affirmed this fact in his order dated 27.09.2021. The assessee has claimed deduction u/s 80P(2)(a)(i) of the Act only for Rs. 50,18,472/-. No deduction or exemption whatsoever was claimed by the assessee in respect of interest earned by it on fixed deposits from banks. The deduction claimed u/s 80P(2)(a)(i) of the Act is with regard to the business of providing loans to its members out of deposit accepted from the members. The surplus derived from this activity would be eligible for deduction u/s 80P of the Act as well as exemption from tax on the principles of mutuality as the transactions are only with the members. Hence, there is absolutely no question of denying the deduction claimed by the assessee u/s 80P(2)(a)(i) of the Act in the sum of Rs. 50,18,472/- in the instant case. 10. To sum up, both the appeals of the assessee are allowed. Order pronounced in the open court on 07/05/2025. -Sd/- -Sd/- (SATBEER SINGH GODARA) (M BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07/05/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "