2024 (2) TMI 1659

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....-12 3. The appellant has challenged the reopening of assessment under Section 148 of the Act on the ground that the same is beyond the period of 4 years on already completed assessment. Neither there was any allegation of failure on the part of the appellant to disclose fully and truly all the material facts for its assessment while recording reasons for reopening of assessment as of the basic conditions or that there is any new or fresh materials available for reopening of an already concluded assessment to be observed. In that view of the matter, the entire proceeding is invalid and void-ab-initio and liable to be quashed as the crux of the case made out by the appellant before us on the maintainability of the assessment. 4. The brief facts leading to the case is this that the appellant, a Co-operative Society filed its return of income for the year under consideration declaring total income at Nil and also claimed deduction under Section 80P(2)(d) of the Act to the tune of Rs. 6,97,671/-. The Ld. AO completed the assessment on 17.02.2014 upon making addition of Rs. 97,862/- being interest received from SBI and order of tax demand of Rs. 41,510/- was issued to the appellant....

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....he provisions of section 80P(2)(d) of the I.T. Act the society is not entitled for deduction and relevant clause to section 80P(2)(d) is reproduced as under; "in respect of any income by way of Interest or dividends derived from the Co-operative Society from the investments with any other Cooperative Society, the whole of such income" Further, the decision of the Hon'ble Supreme Court in the case of Totagar's Co-operative Sales Society Ltd. Vs ITO (322 ITR 283 (SC)) is also applicable to the facts of the case. In view of the above facts and circumstances there is an escapement of income within the meaning and purview of section 147 of the I.T. Act, 1961. Therefore, I have reasons to believe that the income of Rs. 30,74,320/- is chargeable to tax has escaped assessment within the meaning of section 147 of the income Tax Act, 1961 for the A.Y. 2011-12". However, bare perusal of the reason recorded for reopening of assessment under Section 148 of the Act by the ITO, Ward6(3)(2), Bangalore does not suggest of recording any such allegation of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessm....

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....that subsequently the Jurisdictional High Court in the case of PCIT vs. Totagars Cooperative Sales Society Ltd., reported in (2017) 392 ITR 74 was pleased to hold that interest income earned by a Co-operative Society on its investments held with a Co-operative Bank would be eligible for claim of deduction under Section 80P(2)(d) of the Act, a copy whereof has also been filed before us. Moreso, compilation consisting of several orders passed by the Jurisdictional High Court, Gujarat High Court and different Benches of the Tribunal have also been filed by the appellant consideration whereof, establishes the case made out by the assessee claiming deduction under Section 80P(2)(d) of the Act, on the interest earned from the deposit/investment made with the Karnataka State Co-operative Apex Bank Ltd. to be allowable. On this point, we would like to reproduce the judgment passed by the ITAT, Bangalore Bench in case of The Totagars Co-operative Sales Society Ltd. vs. ACIT in ITA Nos. 376 to 379/Bang/2023 wherein the ratio laid down by the Jurisdictional High Court has been considered as under: "9. We have perused the submissions advanced by both the sides in the light of the reco....

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.... ITO (supra) was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a cooperative society towards deduction under Sec.80P(2)(d) on the interest income on the investments/deposits parked with a cooperative bank. 9.3 At this juncture, we refer to subsequent decision of Hon'ble Karnataka High Court in the case of PCIT Vs. Totagars cooperative Sale Society reported in (2017) 395 ITR 611, wherein Hon'ble Court held that, a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that the Hon'ble Karnataka High Court in the case of PCIT & Anr. vs. Totagars Cooperative Sale Society reported in (2017) 392 ITR 74 and Hon'ble Gujarat High Court in the case of State Bank Of India Vs. CIT reported in (2016) 389 ITR 578, held, that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9.3 At this juncture, we respectfully following the view taken by the Hon'ble Karnataka High Court in the case of PCIT & Anr. Vs. Totagars Cooperative Sale Society reported in (2017) 392 ITR 74 and ....