AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 212
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....The grounds raised by the assessee in its appeal are reproduced as under: 1. On the facts and circumstances of the case in Law. Ld. CIT (A) erred in confirming reopening of the case on the same facts and circumstances which is change in opinion. 2. On the facts and circumstances of the case in Law, Ld. CIT (A) erred in confirming of the reopening which was open after four years without established failure on the part of the assesse which is bad in Law. 3. On the facts and circumstances of the case in Law, Ld. CIT (A) erred in disallowing 80P deduction on account of interest received from other than cooperative bank. 4. The Appellant keep its right reserve to add/modity/delete the any grounds of appeal. 3. Briefly stated, facts of the case are that the assessee is a 'credit co-operative society' constituted under the Maharashtra Cooperative Society Act, 1960. For the year under consideration, the assessee filed return of income u/s 139(1) of the Income-tax Act, 1961 (in short 'the Act') on 19.09.2013 declaring total income at Rs. Nil. The assessment u/s 143(3) of the Act was completed on 07.03.2016 wherein total income was assessed at Rs.1,18,4....
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....ly all material facts necessary for completion of assessment. In the case, in the regular assessment year completed u/s 143(3) of the Act, the assessee was allowed deduction u/s 80P of the Act in respect of interest income earned from the nationalized as well as co-operative bank. The Assessing Officer has reopened the assessment based on the same material which was available before the Assessing Officer during original assessment proceedings, which is evident from the reasons recorded by the Assessing Officer (i.e. reproduced by the Assessing Officer on page 1 of the assessment order). For ready reference same is reproduced as under: "The assessee, Sai Prerna Co-op. Credit Society Ltd., is assessed to tax in this charge. Assessee e filed its return of income for AY 2013-14 on 08.09.2012 showing income of Rs. Nil. The case was duly concluded vide order us 143(3) dated 07.03.2016 at Rs NIL/-. Assessee is a Co-operative credit society. 2. Subsequently, in this case, it is found that assessee has claimed deduction under section 80P(2) of the Act of RS 97,49,7071- and the same was also allowed in the order. 3. As per the records from Profit & Loss A/C, it was....
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....rit and in the nature of an incorrect allegation only. Relying on the decision of the Hon'ble Jurisdictional High Court in the case of Sun jewels India (P.) Ltd. reported in [2022] 141 taxmann.com 72 (Bombay)reassessments based on appreciating same facts, which were available during original assessment proceedings, is bad in law on the reason of 'change of opinion'. In writ petition no. 3048 of 2022 in the case of Mumbai Postal Employees Co-operative Credit Society Ltd Vs ITO, the Hon'ble Bombay High Court held that satisfaction recorded by the AO in the reasons recorded was not based upon any material other than obtained on amount of 'perusal of the record', and hence it was based on change of opinion. The relevant finding of the Hon'ble High Court is reproduced as under: "8. We have heard learned Counsel for the parties. 9. It is no longer res integra that the action of the A.O. in initiating reassessment proceedings have to be tested on the touch stone of the reasons recorded. On a perusal of the reasons recorded as have been reproduced partially in the preceding paragraphs, it is clear that the A.O. felt that the claim of deduction under Section 80P(2)(d) of t....
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....B. Wadkar, Assistant Commissioner of Income-Tax and others 1, it was held: "......The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. In the aforementioned case the Court set aside the notice under Section 148 of the Act impugned therein, on the ground that the jurisdictional requirement of the proviso to Section 147 of the Act had not been complied w....
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....e material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief." 10. In Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax 3, the Court, in the light of the facts before it and in the background of section 147 of the Act, observed : "...................all that the Income-tax Officer has said is that he was not right in allowing deduction under Section 80I because he had allowed the deductions wrongly and, therefore, he was of the opinion that the income had escaped assessment. Though he has used the phrase "reason to believe" in his order, admittedly, between the date of the orders of assessment sought to be reopened and the date of forming of opinion by the Income-tax Officer nothing new has happened. There is no change of law. No new material has come on record. No information has been received. It is merely a fresh application of mind by the same Assessing Officer to the same set of facts. While passing the original orders of assessment the order dated February 28, 1994, passed by the Commissioner of Income-tax (Appeals) was before the Assessing Officer. That o....
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....deduction under Section 80P was allowed. It is settled law that if a query is raised during the assessment proceedings and the assessee submits a reply thereto, leading to the passing of the order of assessment, a reopening in the absence of any new tangible material would be nothing but a change of opinion, which would not furnish to the A.O. a basis for his 'reasons to believe' that income chargeable to tax had escaped assessment. 13. Be that as it may, we are of the opinion that the impugned notice is unsustainable on account of these jurisdictional errors committed by the A.O.. Consequently, the petition is allowed. The impugned notice dated30th March, 2021 under Section 148 of the Act and the impugned order dated 10th March, 2022 are held to be unsustainable and are accordingly quashed." 6.3 In the case of Surat District Co-op Milk Producers Union Ltd Vs ITO in (2013) 29 taxmann.com 81 (Gujrat), Hon'ble high Court of Gujrat held that when the assessee had given full details of dividend income, interest income, essential requirement to reopen assessment after four years was not satisfied. The relevant finding of the Hon'ble High Court id reproduced asunder: ....
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.... be sustained, firstly, due to the reason that reassessment proceeding are based on mere 'change of opinion', secondly, no disclosure of full and true material facts by the assessee before the assessing officer, has not been substantiated by the Assessing officer, thirdly, there being no internal or external material to trigger the reopening of assessment or for recording the reasons to believe that income escaped assessment, the action is a kind of review of assessment already completed, for which the AO is not permitted. Hence, the reassessment proceeding u/s 147 of the Act is quashed as void ab initio. The ground No. 1 and 2 of the appeal of the assessee are accordingly allowed. 7. In ground No. 3, the assessee is seeking deduction u/s 80P of the Act in respect of interest received from other than co-operative banks. Since we have already quashed the reassessment proceedings, therefore, the issue is rendered merely academic and therefore, we are not adjudicating upon the same in this appeal. 8. Now we take up the appeal of the assessee in ITA No. 220/M/2023 for assessment year 2016-17. The relevant grounds of the assessee are reproduced as under: 1. On the facts a....
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.... the assessee are accordingly dismissed. 12. Now we take up the cross appeals of the assessee and the Revenue against order of the ld CIT(A) dated 30/11/2022 in relation to order u/s 154 of the Act passed by the Assessing Officer for assessment year 2016-17. The grounds raised by the Revenue in ITA No. 192/mum/2023 are reproduced as under: 1. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the amendment made by Finance Act, 2015 in section 194A(3)(v) of the Act which excludes the Cooperative Banks from the definition of "Co- operative Society" and requiring them to deduct income tax at source under Section 194A of the Act that also makes the legislative intent clear that the Cooperative Banks are not that specie of genus co-operative society, which are entitled to claim deduction under the special provisions of Chapter VIA in the form of Section 80P of the Act." 2. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of....
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....any grounds of appeal. 13. Facts in brief of the case are that during the year under consideration, the assessee earned interest of Rs.2,85,18,226/- from deposits with co-operative banks of Rs.39,28,73,877/- and interest of Rs.4,53,592/- from deposits of Rs.46,03,225/- with nationalized banks. The Assessing Officer in the rectification order rejected the claim of the assessee of deduction u/s 80P(2)(d) of the Act in respect of both interest from co-operative bank as well as nationalized bank. On further appeal, the Ld. CIT(A) allowed the claim of the assessee u/s 80P(2)(d) of the Act in respect of interest earned from deposits kept with co-operative banks however did not give any finding in respect of interest from nationalized banks. 14. Before us, the Revenue is aggrieved with respect to deduction allowed by the Ld. CIT(A) in respect of interest from cooperative bank whereas the assessee is aggrieved with deduction not allowed in respect of interest from the nationalized bank. 15. We have heard rival submission of the parties on the issue-in dispute and perused the relevant material on record. As far as ground of appeal of the Revenue are concerned, we find that the Trib....
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.... society is engaged in carrying on business of banking or providing credit facilities to its members and consequently no deduction is allowable u/s 80P(2)(a)(i) of the Act. Whereas in the case before us the issue is whether a co-operative society which has derived income on investment with cooperative banks is entitled to deduction u/s 80P(2)(d). The provisions of Section 80P(2)(d) of the Act provide deduction in respect of income by way of interest or dividend on investments made with other Cooperative society. For the purposes of better proper understanding of these two provisions the relevant extract of the section are reproduced below: 80P: Deduction in respect of income of co-operative Societies. 1. Where, in the case of an assesssee being a co-operative society, the gross total income, includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. 2. The sums referred to in sub-section (1) shall be the following, namely:- (a) In the case of a co-operative society engaged in- (i) Carryin....
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....ividend from its investments with other coop society if such income is included in the gross total income of the such coop society. In view these facts and circumstances we are of the considered view that the assessee is entitled to the deduction of Rs. 14,88,107/- in respect of interest received/derived by it on deposits with coop. banks and therefore the appeal of the assessee is allowed by reversing the order of the CIT(A). The AO is directed accordingly. 5.1 It is clear that the Tribunal in the case of Lands End Cooperative Housing Society Ltd. (supra) has considered a similar situation and allowed the claim of the assessee. We find that the CIT(A) has placed reliance on the decision of the Ahmedabad Bench of the Tribunal in the case of State Bank of India Employees Co-operative Credit Society Ltd 57 taxman.com 367. It is further noted by the CIT(A) that the said decision of the Ahmedabad Bench of the Tribunal has been referred to by the SMC Bench of Mumbai Tribunal in the case of Shri Saidatta Cooperative Credit Society Ltd. (supra). In our view, the reliance placed by the CIT(A) on the judgment of the Ahmedabad Bench of the Tribunal is quite untenable, inasmuch as, i....
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....e given one more opportunity to appear before the Ld CIT(A) so that he can give his finding on the matter. In the interest of the natural justice, we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for deciding after providing adequate opportunity of being heard to the assessee. In the circumstances, the ground of appeal of the assessee is accordingly allowed for statistical purposes. 16. Now we take up the cross-appeals of the assessee and the Revenue for assessment year 2017-18 in ITA No. 219 & 193/M/2023 respectively. The grounds raised by the Revenue are reproduced as under: 1. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the amendment made by Finance Act, 2015 in section 194A(3)(v) of the Act which excludes the Cooperative Banks from the definition of "Co- operative Society" and requiring them to deduct income tax at source under Section 194A of the Act that also makes the legislative intent clear that the Cooperative Banks are not that specie of genus co-operativ....
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.... 1. On the facts and circumstances of the case in law, Ld. CIT(A) erred in disallowing 80P deduction on account of interest received from other than cooperative bank. 17. The grounds raised by the assessee and Revenue in above appeals are identical to grounds raised in cross-appeals for AY 2016-17 and therefore, same are adjudicated mutatis mutandis. 18. Now we take up the appeal of the assessee bearing ITA No.218/Mum/2023 for AY 2017-18 in relation to penalty u/s 272A(1)(d) of the Act. The relevant ground is reproduced as under: 1. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming penalty of Rs.50,000/- u/s 270A of the Act. 19. Briefly stated facts of the case are that during assessment proceedings u/s 143(3) of the Act, the Assessing Officer issued statutory notices u/s 142(1) of the Act dated 09.08.2018; 21.08.2018; 25.09.2018; 28.01.2019 and 30.09.2019. According to the Assessing Officer those notices were not responded/complied by the assessee. It was contended by the assessee that counsel of the assessee was busy on some occasions in complying filing of return/audit and on other occasions, he had undergone eye operation ....
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....nt proceedings and the reasons put forth are not sufficient enough to exempt the assessee from the clutches of the provisions of section 272A(1)(d). 5.2 In the facts and under the circumstances of the case, I do not find any merit in the submissions of the assessee and as such the instant appeal is hereby disposed off as "DISMISSED." 21. We have heard rival submission of the parties on the issue-in dispute and perused the relevant material on record. We find that the Assessing Officer has levied penalty u/s 272A of the Act for non-compliance on the part of the assessee for various notices issued u/s 142(1) of the Act. We find that regarding the notices u/s 142(1) of the Act dated 09.08.2018, 21.08.2018 and 25.09.2018, it was submitted by the assessee that the authorized representative of the assessee was busy in preparation of profit and loss account and balance sheet for tax payers as the due date of filing for income-tax return for assessment year 2018-19 in the case of nontax audit taxes was 31.07.2019 and in the case of tax audit, was on 30.09.2018 ,therefore, due to rush of filing income-tax returns, he could not respond to the Assessing Officer. Regarding the noti....
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....r non-compliance of the notice issued under section 142(1) of the Act merely for the reason that during penalty proceedings under section 272A(1)(d) of the Act, the assessee has not stated the reasonable cause. We are not in agreement with the findings of CIT(A). The assessee has explained that about ongoing assessment proceedings the assessee came to know only on receipt of order u/s. 272A(1)(d) of the Act and demand notice. The explanation furnished by the assessee before the CIT(A) and before the Tribunal is consistent. We are satisfied that nonappearance of the assessee in response to the initial notice under section 142(1) of the Act was not deliberate. The year 2019 being the initial year of shift towards digital and electronic mode, the mistake appears to be bonafide. The assessee has been able to show reasonable cause for the failure to comply with statutory notice u/s. 142(1) of the Act. Thus, in our view penalty levied u/s. 272A(1)(d) of the Act is unsustainable. The Assessing Officer is directed to delete the penalty." 21.1.1 In the case of BU Bhandari Auto P ltd in ITA No. 324/PUN/2022 also the Tribunal deleted the penalty u/s 272A(1)(d) observing as under: ....
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....Ld. CIT(A) on the issue-in-dispute and direct to delete the penalty levied u/s 272A of the Act by the Assessing Officer. 22. Now we take up the cross-appeals of the assessee and the Revenue for AY 2018-19. The grounds raised by the Revenue are reproduced as under: "1. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the amendment made by Finance Act, 2015 in section 194A(3)(v) of the Act which excludes the Cooperative Banks from the definition of "Co- operative Society" and requiring them to deduct income tax at source under Section 194A of the Act that also makes the legislative intent clear that the Cooperative Banks are not that specie of genus co-operative society, which are entitled to claim deduction under the special provisions of Chapter VIA in the form of Section 80P of the Act." 2. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperati....
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....appeal of the assessee and ground No. 1 to 4 of the appeal of the Revenue are concerned same are identical to the cross-appeals of the assessee for assessment year 2016-17 and therefore, same are adjudicated mutatis mutandis. 23.1 As far as ground No. 2 of the appeal of the assessee is concerned, the assessee has raised the issue of addition of Rs.16,53,669/-as other receipts shown under the head "income from other sources". The relevant table reproduced by the Assessing Officer in para 5, is extracted as under: Sr. No. Particulars Amount (in Rs.) 1. Interest from FD in Bank 3,50,60,858/- 2. Interest on bank savings 9,817/- 3. Dividend received from Mumbai Dist. Central Co-op. Bank 5,246/- 4. Other receipts 16,53,669/- 24. However, we find that ultimately in the assessment order, the Assessing Officer has assessed income u/s 56 of the Act in respect of interest earned from deposits with bank amounting to Rs.3,50,60,858/- and after reducing the corresponding expenses of Rs.1,20,70,152/-, he made addition of Rs.2,46,59,438/-. Therefore, no addition has been made by the Assessing Officer in respect of other receipts of Rs.16,53,669/- ....