SHREE BHANVAD SEVA SAHKARI MANDLI LTD.,BHAVNAGAR V. THE ITO, WARD-1(9), BHAVNAGAR

ITA 2117/AHD/2024

AI Insights

The case involves Shree Bhanvad Seva Sahkari Mandli Ltd., a cooperative society, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2018-19. The NFAC had dismissed the assessee's appeal due to non-payment of an amount equal to the advance tax, which was a prerequisite for filing an appeal under Section 249(4) of the Income Tax Act. The primary contention of the assessee was that their income was non-taxable under the old statute and Section 80P(2)(a)(i) of the Act, which exempts certain cooperative societies from income tax. The Assessing Officer had made an addition of Rs. 4,51,568 to the assessee's income, estimating interest income at 6% of advances, which the assessee contested. The Tribunal's decision emphasized the necessity of filing a return of income to claim any exemptions or deductions, which the assessee failed to do.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314238 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Other Referred Cases: Annamma Joseph vs. ITO, Vishnusaran Chaudhary vs. ITO, Darpan Kanubhai Shah vs. ITO, Dared Seva Co-operative Society vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N. J. VYAS
• Assessee Lawyers: S.N. DIVETIA; SAMIR VORA
• Keywords: Revised return; Principle of natural justice; Earning of tax free income
• Section: 148; 142(1); 139

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before Ms. Suchitra Kamble, Judicial Member Shree Bhanvad Seva Sahkari Mandli Ltd., 01, Bhanvad, Tal. Mahuva, Dist. Bhavnagar PAN: AASAS6674F (Appellant) Vs The Income Tax Officer, Ward-1(9), Bhavnagar (Respondent) Assessee by: Shri S.N. Divetia, A.R. & Shri Samir Vora, A.R. Revenue by: Shri N.J. Vyas, Sr. D.R. Date of hearing : 19-03-2025 Date of pronouncement : 06-05-2025 आदेश/ORDER This is an appeal filed against the order dated 23-10- 2024 passed by National Faceless Appeal Centre, Delhi for assessment year 2018-19 2. The grounds of appeal are as under:- “1.1 The order passed by Order U/s.250 on 23-10-2024 by NFAC[CIT(A)], Delhi. (for short CIT(A)\" dismissing the appeal on the ground of non-payment of amount equal to advance tax and thereby upholding the addition of Rs.4,51,568/- made by A.O. is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in not appreciating that there was no liability to pay amount equal to the advance tax u/s 249(4) the income being non-taxable under the old State and Sec. 80P(2)(a)(i) of the Act. 2.2 That the in the facts and circumstances of the ld. CIT(A), ought to have appreciated that there was no liability to pay amount equal to the advance tax u/s 249(4) the income being non ITA No. 2117/Ahd/2024 Assessment Year 2018-19 I.T.A No. 2117/Ahd/2024 Shree Bhanvad Seva Sahkari Mandali Ltd., A.Y. 2018-19 2 taxable under the old State and Sec 80P(2)(a)(i) of the Act and thereby ought not to have upheld the addition of Rs.4,51,568/-. 3.1 The ld. CIT(A), has grievously erred in law and or on facts in estimating the interest income at 6% of the advance though books of accounts were not rejected by him and the same were subject to audit by the Registrar of Societies. 3.2 That the in the facts and circumstances of the ld. CIT(A), ought not to have estimated the interest income at 6% of the advance though books of accounts were not rejected by him and the same were subject to audit by the Registrar of Societies. It is, therefore, prayed that the dismissal of appeal by the CIT(A) may kindly be quashed and it may be decided on merits.” 3. The assessee has not filed the return of income and based on the information, the assessee had taxable income for assessment year 2018-19. Notice u/s. 148 of the Act along with the order u/s. 148A(d) of the Income Tax Act was issued to the assessee society for assessment year 2018-19 on 29-03-2022. The information available with the Assessing Officer was as under:- Information Description Source Amount Description Amount (rs.) Time Deposits Bhavnagar District Co- operative bank Ltd. 10,21,082/- Cash Deposits 3,46,01,828/- Total 3,56,22,910 As per the order u/s. 148A(d) of the Income Tax Act issued by the Assessing Officer on 29-03-2022, the assessee made cash deposits during the financial year 2017-18, and had not filed return of income. A value of transaction as per the information came to Rs. 3,56,22,910/-. The notice u/s. 148 along with order u/s. 148A(d) was issued on 29-03-2022 but the assessee failed to offer the income therefrom for taxation by way of filing the I.T.A No. 2117/Ahd/2024 Shree Bhanvad Seva Sahkari Mandali Ltd., A.Y. 2018-19 3 return of income. Prior to the notice u/s. 148A(b) of the Act was issued on 10-03-2023 and served upon the assessee which is prior to the order u/s. 148A(d) of the Act. Notice u/s. 142(1) of the Act was issued to the assessee society on 05-01-2023 seeking the nature of activities and source of cash deposit as well as copies of the bank statement. The assessee submitted its reply on 13-01-2023 along with final statement. No other documents have been submitted by the assessee, hence assessment was completed ex-parte based on the financial year statements submitted by the assessee. The Assessing Officer held that assessee has not signed the financial statement either by the assessee or by authorized person of the society and hence the same lacks authenticity. The Assessing Officer further observed that in assessee society’s profit and loss account, it has shown income of Rs. 4,53,489/- being interest on loan and advances against which it has claimed expenses of Rs. 2,54,094/- and has arrived profit of Rs. 2,00,345/-. The Assessing Officer held that the asset side of the balance sheet shows loans and advances of Rs. 98,99,383/- and even if minimum interest at 6% is charged from the price, the income of the assessee would be shown Rs. 5,93,963/-. The Assessing Officer made addition of Rs. 4,51,568/- towards income from loans and advances estimated at 6% of Rs. 98,99,383/-. As regards, other income which is dividend income, the addition of Rs. 950/- has been made. The Assessing Officer also disallowed expenses claimed as provisions to the extent of Rs. 57,000/- for overdue interest. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. I.T.A No. 2117/Ahd/2024 Shree Bhanvad Seva Sahkari Mandali Ltd., A.Y. 2018-19 4 5. The Ld. A.R. submitted that the CIT(A) dismissed the appeal on the ground of non-payment of cash equal to advance tax and thereby holding the addition to Rs. 4,51,568/- made by the Assessing Officer is wholly illegal, unlawful and against the principles of natural justice. The Ld. A.R. submitted that the CIT(A) in para 4 and para 3.3 of the order held that as mentioned in Section 234B(i) and Section 208 which will not be applicable in assessee’s case as the assessee does not have any taxable income. Thus, the Ld. A.R. submitted that the assessment itself is void ab-initio. The Ld. A.R. submitted that the assessee is a co-operative society and it has an exempt income u/s. 80P(2)(a)(i) of the Act and therefore question of advance tax and estimation of tax is not at all relevant in assessee’s case. Section 209 of the Act is related to suo moto advance tax and Section 208 to Section 210 of the Act are related to suo moto payment on the estimation basis of the advance tax. The Ld. A.R. relied upon the decision of the Tribunal in case of Annamma Joseph vs. ITO (ITA No. 233/Ind/2024 order dated 31-07-2024 and the decision of Vishnusaran Chaudhary vs. ITO (ITA No. 73/RPR/2024 order dated 10-04-2024). The Ld. AR submitted that since there is an exempt income of the assessee society, the question of return of filing of return does not arise. The Ld. A.R. also relied upon the decision of Ahmedabad Tribunal in case of Darpan Kanubhai Shah vs. ITO (ITA 123/Ahd/2024 order dated 05-07-2024). The Ld. A.R., therefore, submitted that the question of advance tax payable and estimation of income tax on that basis is not justifiable. The Ld. A.R. also relied upon the circular/notification no. 998 dated 02-12-1950 wherein the mandatory payment of cash equal to the advance tax before filing the appeal before the CIT(A) is exempted. I.T.A No. 2117/Ahd/2024 Shree Bhanvad Seva Sahkari Mandali Ltd., A.Y. 2018-19 5 6. The Ld. D.R. submitted that the assessee has not claimed exemption u/s. 80P of the Act as the assessee has not filed the income tax return as well as revised income tax return and the estimation of 6% is on the basis of lending price. The Ld. D.R. relied upon the decision of Dared Seva Co-operative Society vs. ITO ITA No. 884/Ahd/2024 order dated 20-08-2024. The Ld. D.R. relied upon the order of the CIT(A). 7. The Ld. A.R. submitted that Section 139 of the Act and its proviso has categorically mentioned that Income is not justified as the income is not liable to tax in assessee’s case. The Ld. A.R. further submitted that there was no liability to pay amount equal to the advance tax u/s. 249(4) of the Income being non- taxable under the old statute and Section 80P(2)(a)(ia) of the Act. The assessee had already declared interest income of Rs. 4,53,489/- in its annual accounts and the Assessing Officer has allowed the expenses at Rs. 1,43,345/- as per profit and loss account and balance of Rs. 4,54,568/- was determined as assessed income. The Assessing Officer did not allow the deduction u/s. 80P(2)(a)(i) of the Act. 8. Heard both the parties and perused all the relevant materials available on record. It is a matter of record that the assessee has not filed the return of income as well as revised income tax return and when the assessee has not filed the return of income as well as revised income tax return, the question of claiming deduction/exemption u/s. 80P(2)(a)(i) of the Income Tax Act, 1961 does not arise. The deductions under Income Tax Act will not be operational unless and until the income has been notified to the tax authorities by way of filing I.T.A No. 2117/Ahd/2024 Shree Bhanvad Seva Sahkari Mandali Ltd., A.Y. 2018-19 6 the return of income or revised return of income. Merely keeping the audited annual accounts is not a threshold for claiming deduction u/s. 80P of the Act or any claim of deduction/exemption under the provisions/Sections of Income Tax Act, 1961. The assessee at this juncture is showing that the question of advance tax has to be taken into account related to the filing of the appeal as per Section 249(4)(b) of the Act, it is a mandate when the assessee has not filed the return of income. If the assessee wanted any exemption for payment of the prescribed mandate for filing Form 35 in respect of filing appeal before the CIT(A), the assessee should have opted for exemption obligation before the appropriate authority as envisaged in the proviso of Section 139 of the Act. But the assessee has not opted the same as well. Thus, the CIT(A) has rightly dismissed the appeal being infructuous. The decisions filed by the assessee will not be applicable in the present case as the Tribunal has not taken the cognizance of the proviso to Section 139 of the Act where the assessee has no taxable income/no obligation would be cast upon to compute and pay any advance tax u/s. 208 and 209 of the Act even in the scenario where the assessee had not filed his return of income / revised return of income as he had no taxable income. The decision of Ahmedabad Tribunal has not considered the proviso of Section 139 wherein the assessee has to make a proper application before the authorities for taking the exemptions for filing the appeal before the CIT(A) without paying the amount equal to the advance tax. Here, the word “advance tax” should not be taken into account in toto but is merely an indicator as if the assessee has to pay “particular/certain amount” of tax. The assessee is claiming that the assessee has an exempt income u/s. 80P of the Act but the exemptions can only be operational when the I.T.A No. 2117/Ahd/2024 Shree Bhanvad Seva Sahkari Mandali Ltd., A.Y. 2018-19 7 assessee files return of income/revised return of income and not otherwise. To get the benefit of any provisions/Sections of the Income Tax Act, the assessee has to fulfill the conditions of the Income Tax Act in totality and not to interpret the provisions/Sections in isolation where it is only a matter of convenience to the assessee to ask for immunity without discharging its obligations of filing the application before the appropriate authorities for calling upon the exemptions of not paying the amount equal to advance tax before filing the appeal before the CIT(A). Hence, the appeal of the assessee is rightly dismissed and the decisions quoted by the assessee will not support the case of the assessee. 9. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 06-05-2025 Sd/- (Suchitra Kamble) Judicial Member Ahmedabad : Dated 06/05/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "