VALSAD JILLA SAHAKARI BANK LTD EMPLOYEES PROVIDENT FUND TRUST,VALSAD V. INCOME TAX OFFICER, ASSESSMENT UNIT(NFAC), NEW DELHI

ITA 534/SRT/2024

AI Insights

The case involves the Valsad Jilla Sahakari Bank Ltd. Employees Provident Fund Trust, which appealed against the orders of the CIT(A) and the AO regarding the assessment of income and penalties for the assessment year 2018-19. The AO had made additions to the assessee's income for unexplained cash credits and interest income, which the CIT(A) upheld. The Tribunal found that the CIT(A) erred in not admitting the appeal due to non-payment of advance tax, as the assessee claimed exemption under section 10(25)(ii) of the Income-tax Act. The Tribunal also noted that the penalty under section 271AAC was improperly levied, leading to the quashing of the penalty order.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 40257 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Other Referred Cases: Ranajitbhai B. Patel vs. ITO, Hotel Sai Siddi (P.) Ltd. vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: AKSHAY M. MODI
• Keywords: Set aside; Unexplained cash credit; Benefit of exemption
• Section: 147; 148; 144; 143(3); 250; 13; 69A; 139

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.533 & 534/SRT/2024 Assessment Years: (2018-19) (Physical Hearing) Valsad Jilla Sahakari Bank Ltd. Employees Provident Fund Trust, Azad Chowk, Halar Road, Valsad, Gujarat - 396001 Vs. The ITO, Assessing Unit, NAFC, New Delhi èथायीलेखासं./जीआइआरसं./PAN/GIR No: AAATV1775H (Appellant) (Respondent) Appellant by Shri Akshay M. Modi, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 30/12/2024 Date of Pronouncement 30/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: These appeals by the assessee emanate from the separate orders passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 28.02.2024 and 21.02.2024 by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the same assessment year (AY) 2018-19. Both appeals pertain to same AY.2018-19. With consent of both parties, the appeals were heard together and are decided by this common order for the sake of convenience and brevity. 2. The grounds of appeal raised by the assessee in ITA No.533/SRT/2024 are as under: 2 ITA Nos.533 & 534/SRT/2024/AYs.2018-19 Valsad Jilla Sahakari Bank Ltd. Employees PF Trust “1. On the fact and in circumstances of the case as well as law, the CIT(Appeals) erred in upholding the order passed by ITO, Assessment Unit, NFAC, Delhi (for the sake of brevity “The AO”) u/s 143(3) of the Act for the income assessed at Rs.2,40,49,741/- denying the exemption under section 10(25)(ii) of the Act, purely on misinterpretation and misconstruction of the provisions of law, misleading, mis-conceptual, arbitrary and perverse observations and hence, is liable to be quashed or annulled in toto. 2. The learned CIT(Appeals) has erred in confirming the order passed by the AO making addition to the extent of Rs.2,25,00,000- for the alleged unexplained cash credits u/s 69A r.w.s. 115BBE of the Act, on misconceived, misconstrued, misleading, baseless, arbitrary and perverse observations, is contrary to law and facts of the case and hence, liable to be quashed. 3. The learned CIT(Appeals) has erred in confirming the order passed by the AO adding Interest Income of Rs.5,77,796/- denying the benefit of exemption u/s 10(25)(ii) of the Act is purely on misinterpretation and misconstruction of the provisions of law, misleading, mis-conceptual, arbitrary and perverse observations and hence, is liable to be quashed or annulled in toto. 4. The CIT(Appeals) has erred in confirming the order passed by the AO adding Interest on Securities of Rs.9,71,945/- denying the benefit of exemption u/s 10(25)(ii) of the Act is purely on misinterpretation and misconstruction of the provisions of law, misleading, mis-conceptual, arbitrary and perverse observations and hence, is liable to be quashed or annulled in toto. 5. Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.” 3. Brief facts of the case are that assessee did not file return of income for AY.2018-19. As per the information received by the Assessing Officer (in short, ‘AO’), the assessee had made time deposit of Rs.2,25,00,000/- with Axis Bank Ltd., received interest on securities of Rs.9,71,945/- from Jaipur Vidyut Vitaran Nigam Limited and also received interest of Rs.5,77,796/- from Bank of Baroda during the year under consideration. Despite these huge transactions, assessee had not filed return of income. As per Non-filler Monitoring System (NMS), Insight Portal flagged the case of the assessee as “Non-filler” in accordance with the Risk Management Strategy formulated by the CBDT as no return of income 3 ITA Nos.533 & 534/SRT/2024/AYs.2018-19 Valsad Jilla Sahakari Bank Ltd. Employees PF Trust was filed by the assessee for AY.2018-19. Hence, the case was re-opened u/s 147 of the Act by issuing of notice u/s 148 on 27.03.2022. The assessee did not file any return in response to the notice u/s 148 of the Act. The assessee was issued various statutory and show cause notices on seven occasions as detailed at para 2 of the assessment order. The assessee did not respond to the above notices. Hence, the AO made best judgement assessment u/s 144 of the Act. He added unexplained money, being time deposit of Rs.2,25,00,000/- and interest income of Rs.5,77,796/- and interest on securities of Rs.9,71,945/- to the total income of the assessee. The total income was assessed at Rs.2,40,49,741/- u/s 147 r.w.s. 144 r.w.s. 144B of the Act. Penalty u/s 271A for under reporting of income and penalty u/s 271AAA of the Act were initiated separately. 4. Aggrieved by the order of AO, the assessee filed this appeal before CIT(A). The CIT(A) has observed that assessee failed to file return of income and AO passed order u/s 147 r.w.s. 144 of the Act, creating demand of Rs.3,83,84,316/- and assessee was asked vide notice u/s 156 of the Act to deposit the demand. However, appellant has not deposited demand before filing the appeal. Since appellant has not filed the return of income, provisions of Section 249(4)(b) are applicable. The appellant had not furnished any documentary evidence that he had paid an amount equal to the amount of advance tax, which was payable by him as required u/s 249(4)(b) of the Act. The appellant has also not made any application as per proviso to Section 249(4)(b) of the Act to exempt him from operation of the above provisions. In view of the facts, the Ld.CIT(A) has not 4 ITA Nos.533 & 534/SRT/2024/AYs.2018-19 Valsad Jilla Sahakari Bank Ltd. Employees PF Trust admitted the appeal of the assessee and dismissed the appeal. Aggrieved, the assessee has filed present appeal before the Tribunal. 5. Before us, learned Authorized Representative (ld. AR) of the assessee submitted that since the income of the assessee was exempt u/s 10(25)(ii) of the Act, the assessee was not required to file income tax return. Hence, question of payment of advance tax does not arise. He further stated that AO has passed ex parte order because of non-compliance by the assessee. He submitted that there was no Counsel of the appellant and hence there was non-compliance before AO and CIT(A). In view of the above, the ld. AR of the assessee submits that the order of CIT(A) may be set aside and matter may be sent back to AO for fresh assessment. He promised that assessee would co-operate with AO for early disposal of the assessment order. 6. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue has strongly relied on the orders of authorities below. He submitted that appropriate cost may be imposed if the matter is set aside to AO. 7. We have heard both the parties and perused the materials available on record. Since the assessee has not filed ROI as well as not paid an amount equal to the advance tax which was payable by it, the appeal was not admitted by the CIT(A). It may be stated that if tax is being paid for same financial year based on estimated income, it would be advance tax. If tax is being paid after end of financial year, it would be self-assessment tax. When Department finds that there has been under-assessment of income and resultant tax is due, it computes the actual amount that ought to have been paid. This demand raised 5 ITA Nos.533 & 534/SRT/2024/AYs.2018-19 Valsad Jilla Sahakari Bank Ltd. Employees PF Trust on the person is called tax on “regular assessment”. Tax on “regular assessment” is the tax which the taxpayer is required to pay against of notice of demand from the Income-tax Department, normally u/s 156 of the Act. The CIT(A) dismissed appeal of assessee as non-maintainable because the assessee had not paid an amount equal to the advance tax, which was payable by it. The ld. AR has contended that the assessee did not pay any advance tax as its income did not form part of total income u/s 10(25)(ii) of the Act. When total income is below taxable income during the year, question of payment of advance tax does not arise and provisions of Section 249(4)(b) of the Act are not applicable. 7.1 We have considered the arguments of the ld. AR and the ld. Sr. DR. We find that similar issue had come up for consideration before this Bench in ITA No.646/SRT/2023 in the case of Ranajitbhai B. Patel vs. ITO, dated 28.11.2023, where following the decision of co-ordinate Bench of Pune in the case of Hotel Sai Siddi (P.) Ltd. vs. DCIT (2011) 13 taxmann.com 155 (Pune), it was held that when the assessee had incurred loss while filing ROI and was not liable to pay tax an amount equal to amount of advance tax as required u/s 249(4)(b), the assessee’s appeal was liable to be admitted. Following the ratio of the decision cited above and keeping in view that assessee was claiming that it had no taxable income, the Tribunal restored the case back to the file of CIT(A) with a direction to admit the appeal of the assessee and pass an order on merit. Facts of the present case of the assessee are similar to the fact of the case cited above. In this case, the ld. AR contended that the income of the assessee does not form part of total income u/s 10(25)(ii) under Chapter III of the Act. 6 ITA Nos.533 & 534/SRT/2024/AYs.2018-19 Valsad Jilla Sahakari Bank Ltd. Employees PF Trust Therefore, it was not liable to pay any advance tax. The demand u/s 156 of the Act was for regular assessment tax of the assessee. Therefore, following the above decision, we hold that the CIT(A) should have decided the issue on merits of the case. However, we find that the AO has also completed the assessment u/s 144 of the Act by making various additions due to repeated non-compliance by the assessee to various statutory and show cause notices. He has not considered as to whether assessee was liable to file return of income u/s 139 of the Act and whether the impugned additions were exempt u/s 10(25)(ii) of the Act. Hence, considering the facts of the case and the decisions cited supra, in the interest of justice, we restore the matter back to the file of AO for making fresh assessment order subject to the payment of cost of Rs.25,000/- (Rupees twenty-five thousand only) by the assessee to the credit of the “Gujarat High Court Legal Aid Authority” within 2 weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass fresh assessment order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanation as needed by the AO by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes. 8. Since, we have set aside the order of the CIT(A) and restored the matter to the file of AO, the other grounds become academic in nature and do not require adjudication. 7 ITA Nos.533 & 534/SRT/2024/AYs.2018-19 Valsad Jilla Sahakari Bank Ltd. Employees PF Trust 9. In the result, appeal of the assessee is allowed for statistical purposes. ITA No.534/SRT/2024 (AY: 2018-19) 10. The grounds of appeal raised by the assessee in ITA No.534/SRT/2024 are as under: “1. On the facts and in the circumstances of the case as well as in law, the CIT(Appeals) erred in upholding the order passed by ITO, Assessment Unit, NFAC, Delhi (for the sake of brevity “The AO”) u/s 271AAC of the Act for levying penalty of Rs.17,38,125/-, purely on misinterpretation and misconstruction of the provisions of law, misleading, mis-conceptual, arbitrary and perverse observations and hence, is liable to be quashed or annulled in toto. 2. Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.” 11. The facts of the case have already been discussed at para 3 of this order. After completion of the assessment order u/s 147 r.w.s. 144 r.w.s. 144B, dated 09.03.2023, the AO has issued various notices for the penalty proceedings u/s 271AAC of the Act, which has been initiated during the assessment proceedings. Since the assessee did not respond to the notices, the AO has levied penalty u/s 271AAC of the Act amounting to Rs.17,38,125/-. Aggrieved, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal because assessee had not complied with the provisions of section 249(4)(b) of the Act. The reasons given by the CIT(A) are similar to the reasons given in appellate order for the quantum assessment for AY.2018-19 in ITA No.533/SRT/2024 (supra). 12. We have set aside the order of CIT(A) and restored the matter to the file of the AO for fresh assessment after hearing the assessee in ITA No.533/SRT/2024 (supra). Since the matter has been restored to the AO for fresh adjudication, there is no basis at all for levy of penalty u/s 271AAC of the 8 ITA Nos.533 & 534/SRT/2024/AYs.2018-19 Valsad Jilla Sahakari Bank Ltd. Employees PF Trust Act. Hence, the penalty order does not survive and the resultant order of CIT(A) is quashed. We make it clear that the AO may initiate proceedings u/s 271AAC of the Act during the fresh assessment proceedings before him if required conditions are fulfilled. Accordingly, the ground is allowed for statistical purpose. 13. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 30/12/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 30/12/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "