SHRI SARASWATI CREDIT SOUHARD SAHAKARI NYT,BEDKIHAL V. THE INCOME TAX OFFICER, WARD - 1, NIPPANI

ITA 194/PAN/2024

AI Insights

The case involves Shri Saraswati Credit Souhard Sahakari Nyt, a cooperative society, which was identified as a non-filer and subsequently faced reassessment under sections 148 and 142(1) of the Income Tax Act, 1961. The reassessment was based on unresponded notices and led to the addition of cash deposits and term deposits to the total income under section 69A. The First Appellate Authority upheld this assessment, which was then challenged before the ITAT. The ITAT found procedural lapses in the notice issuance process, specifically the lack of a reasonable period for compliance, and remanded the case back to the NFAC for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 25918 (ITAT-PANAJI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 28-11-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 29-07-2024
• Other Referred Cases: St. Paul's Anglo Indian Education Society v. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: CAPT. PRADEEP ARYA LD.
• Assessee Lawyers: VEERANNA MURGOD
• Keywords: Reassessment proceedings; Principle of natural justice
• Section: 69A; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE HON’BLE SHRI PAVAN KUMAR GADALE, SHRI G. D. PADMAHSHALI Shri Saraswati Credit SouhardSahakari Nyt. Bedkihal Main Road, Bedkihal, Tal. Chikodi, Dist.Belagavi – 591 239 PAN:AAAAC1967H Income Tax Officer, Ward-1, Nippani, Dist. Belagavi Assesseeby:Mr VeerannaMurgod Revenue by Date of conclusive Hearing: Date of Pronouncement : PER G. D. PADMAHSHALI The present appeal is filed by the assessee No. ITBA/NFAC/S/250/202 passed u/s.250 of the Income the National Faceless Appeal Centre [for short ‘NFAC’] has arisen out of order of assessment passed u/s.14 r.w.s.144B(3) by the Ld.NF 2015-16[for short ‘AY’] IN THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI,ACCOUNTANT MEMBER ITA No. 194/PAN/2024 Assessment Year :2015-16 Shri Saraswati Credit SouhardSahakariNyt. .......Appellant V/s 1, Nippani, Dist. Belagavi ....... Respondent Appearances VeerannaMurgod[‘Ld. AR’] Revenue by :Capt. Pradeep Arya [‘Ld. DR’] Date of conclusive Hearing:28/11/2024 Date of Pronouncement :02/12/2024 ORDER G. D. PADMAHSHALI, AM; is filed by the assessee against the DIN & Order No. ITBA/NFAC/S/250/2024-25/1064688262(1) dt.07/05 of the Income-tax Act, 1961 [for short ‘the Act the National Faceless Appeal Centre [for short ‘NFAC’] which has arisen out of order of assessment passed u/s.147 d.NFe-AC, Delhi anent to assessme PANAJI BENCH, PANAJI JUDICIAL MEMBER ACCOUNTANT MEMBER against the DIN & Order 07/05/2024 the Act’] by which inturn 7 r.w.s.144 anent to assessment year 2. Briefly stated, the facts of the case are that Cooperative Society and was identified as a Non Filer. Based upon the information received from the Department, case of the assessee was reopened u/s.148 vid issued u/s.148 as well as u/s.142(1) during the course of reassessment proceedings remained unresponded. Ld. AO put the assessee to show cause u/s.144 of the Act &intimating that in the event of failure to comply assessment would be completed based upon the material available on record. This notice also remained futile which led to framing of assessment to the best judgment wherein the entire amount of cash deposited by the assessee in its bank form of Term Deposit were added to total income u/s.69A of the Act and framed the assessment accordingly of the Act vide order dated 21/03/2022. 3. Aggrieved assessee agitated the aforestated assessment unsuccessfully before the First Appellate Authority [for short 4. Further aggrieved, the assessee came in the present appeal on following grounds : Shri Saraswati Credit Souhard Sahakari Nyt Vs. ITO Briefly stated, the facts of the case are that; the assessee is a and was identified as a Non Filer. Based upon the information received from the Department, case of the assessee was reopened u/s.148 vide notice dated 30/03/2021. The notices issued u/s.148 as well as u/s.142(1) during the course of reassessment proceedings remained unresponded. In the event, the put the assessee to show cause u/s.144 of the Act in the event of failure to comply there assessment would be completed based upon the material available on record. This notice also remained futile which led to framing of assessment to the best judgment wherein the entire amount of cash ed by the assessee in its banks and the investment in the form of Term Deposit were added to total income u/s.69A of the Act and framed the assessment accordingly u/s.147 r.w.s.144 r.w.s.144B of the Act vide order dated 21/03/2022. Aggrieved assessee agitated the aforestated assessment unsuccessfully before the First Appellate Authority [for short Further aggrieved, the assessee came in the present appeal on Shri Saraswati Credit Souhard Sahakari Nyt Vs. ITO ITA No.107/PAN/2024 the assessee is a and was identified as a Non Filer. Based upon the information received from the Department, case of the assessee e notice dated 30/03/2021. The notices issued u/s.148 as well as u/s.142(1) during the course of In the event, the put the assessee to show cause u/s.144 of the Act therewith, the assessment would be completed based upon the material available on record. This notice also remained futile which led to framing of assessment to the best judgment wherein the entire amount of cash and the investment in the form of Term Deposit were added to total income u/s.69A of the Act u/s.147 r.w.s.144 r.w.s.144B Aggrieved assessee agitated the aforestated assessment unsuccessfully before the First Appellate Authority [for short ‘FAA’]. Further aggrieved, the assessee came in the present appeal on “1. The learned Commissioner of Income Tax ( order is opposed to the Facts of the case and law. 2. Because the learned Commissioner of Income Tax (Appeals) erred in law as well as on facts while deciding the case and have considered the cash deposits, which are out of receipts from the norm co-operative society, under section 69A of the Income Tax Act, 1961 as unexplained, which is bad in law. 3. Because, the learned Commissioner of Income Tax (Appeals) erred in confirming the interest levied by the low authorities u/s.234A and 234B of the Income Tax Act, 1961 for default in furnishing return of income and default in payment of advance tax which is against law and facts of the case.” 5. Without touching the merits and grounds of appeal, w heard the rival parties and perused the material placed on record. course of First Appellate Proceedings notices in a row commencing from 15/11/2022 to 16/04/2024 proceeded to culminate the proceedings material already placed on record. A cursory look at the and time allowed thereby reveals that allowing less than ‘reasonable period of fifteen days’ thus s from natural justice. Shri Saraswati Credit Souhard Sahakari Nyt Vs. ITO The learned Commissioner of Income Tax ( order is opposed to the Facts of the case and law. Because the learned Commissioner of Income Tax (Appeals) erred in law as well as on facts while deciding the case and have considered the cash deposits, which are out of receipts from the normal course of business of the appellant operative society, under section 69A of the Income Tax Act, 1961 as unexplained, which is bad in law. Because, the learned Commissioner of Income Tax (Appeals) erred in confirming the interest levied by the low authorities u/s.234A and 234B of the Income Tax Act, 1961 for default in furnishing return of income and default in payment of advance tax which is against law and facts of the case.” Without touching the merits and grounds of appeal, w e rival parties and subject to rule 18 of ITAT-Rules 1963 material placed on record. We note that during the First Appellate Proceedings, the Ld.NFAC issued notices in a row commencing from 15/11/2022 to 16/04/2024 culminate the proceedingsexparte on the basis of material already placed on record. A cursory look at the and time allowed thereby reveals that, these notices were issued allowing less than ‘reasonable period of fifteen days’ thus s Shri Saraswati Credit Souhard Sahakari Nyt Vs. ITO ITA No.107/PAN/2024 The learned Commissioner of Income Tax (Appeals) Because the learned Commissioner of Income Tax (Appeals) erred in law as well as on facts while deciding the case and have considered the cash deposits, which are out of al course of business of the appellant operative society, under section 69A of the Income Tax Act, Because, the learned Commissioner of Income Tax (Appeals) erred in confirming the interest levied by the lower authorities u/s.234A and 234B of the Income Tax Act, 1961 for default in furnishing return of income and default in payment of advance tax which is against law and facts of the case.” Without touching the merits and grounds of appeal, we have Rules 1963 We note that during the d.NFAC issued seven notices in a row commencing from 15/11/2022 to 16/04/2024 and on the basis of material already placed on record. A cursory look at these notices these notices were issued allowing less than ‘reasonable period of fifteen days’ thus suffered 6. In this context of reasonable period/opportunity, the Hon’ble High court of Patna judgement in Education Society’ [2003, 262 ITR 377 (Pat)]’ has categorically held that, an adjudication is unjustified if an assessee was deprived of reasonable opportunity and reasonable time to produce all relevant documents to substantiate claims made in the return of income. 7. The aforestated circumstances necessitate more reasonable opportunity to the appellant to comply with notices and contest the appeal on merits which can only be possible on remand of this case to Ld. NFAC. In view thereof, without offering any comments on merits, we set remand it to the stage of direction deal therewith in terms of section 250(6) of the Act. 8. In result, the appeal In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this -S/d- PAVAN KUMAR GADALE JUDICIAL MEMBER Satish Shri Saraswati Credit Souhard Sahakari Nyt Vs. ITO In this context of reasonable period/opportunity, the Hon’ble High court of Patna judgement in ‘St. Paul’s Anglo Indian [2003, 262 ITR 377 (Pat)]’ has categorically held that, an adjudication is unjustified if an assessee was deprived of reasonable opportunity and reasonable time to produce all relevant documents to substantiate claims made in the return of income. restated circumstances necessitated us to grant one more reasonable opportunity to the appellant to comply with notices and contest the appeal on merits which can only be possible on to Ld. NFAC. In view thereof, without offering any comments on merits, we set-aside the impugned order and to the stage of its institution before Ld. NFAC with a direction deal therewith de-novo and pass separate speaking order ion 250(6) of the Act. Ordered accordingly. appeal is allowed for statistical purposes. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this 02nd day of December, 2024 -S/d- PAVAN KUMAR GADALE G. D. PADMAHSHALI ACCOUNTANT MEMBER Shri Saraswati Credit Souhard Sahakari Nyt Vs. ITO ITA No.107/PAN/2024 In this context of reasonable period/opportunity, the Hon’ble ‘St. Paul’s Anglo Indian [2003, 262 ITR 377 (Pat)]’ has categorically held that, an adjudication is unjustified if an assessee was deprived of reasonable opportunity and reasonable time to produce all relevant documents to substantiate claims made in the return of income. us to grant one more reasonable opportunity to the appellant to comply with notices and contest the appeal on merits which can only be possible on to Ld. NFAC. In view thereof, without offering aside the impugned order and institution before Ld. NFAC with a and pass separate speaking order Ordered accordingly. allowed for statistical purposes. , 2024. G. D. PADMAHSHALI ACCOUNTANT MEMBER Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 4. PCIT Concerned 5. DR, ITAT, Panaji Bench, Panaji // True Copy // Shri Saraswati Credit Souhard Sahakari Nyt Vs. ITO Copy of the Order forwarded to : 2. The Respondent. 3. The CIT(A)/NFAC Concerned DR, ITAT, Panaji Bench, Panaji 6. Guard File Sr. Private Secretary / AR Shri Saraswati Credit Souhard Sahakari Nyt Vs. ITO ITA No.107/PAN/2024 CIT(A)/NFAC Concerned By Order, / AR ITAT, Panaji. "