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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM
This appeal has been preferred by the assessee against the revision order dated 28.03.2022 passed by the Ld. Principal Commissioner of Income-tax Thane-1 (in short ‘the PCIT’) for assessment year 2017-18, raising following grounds:
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The learned Pr. CIT 1. The learned Pr. CIT-1, Thane has aggrieved your appellant 1, Thane has aggrieved your appellant by setting aside the legally an by setting aside the legally and judiciously passed d judiciously passed Assessment order u/s 143(3) by the Ld. Assessing Assessment order u/s 143(3) by the Ld. Assessing Assessment order u/s 143(3) by the Ld. Assessing 2. The learned Pr. CIT 2. The learned Pr. CIT-1, Thane has aggrieved your appellant 1, Thane has aggrieved your appellant by not giving reasonable time ( only 7 days' time given) to by not giving reasonable time ( only 7 days' time given) to by not giving reasonable time ( only 7 days' time given) to reply show cause notice and also notprovided opportunity of reply show cause notice and also notprovided opportunity of reply show cause notice and also notprovided opportunity of personal hearing and hastily passed the order in just 3 days' nal hearing and hastily passed the order in just 3 days' nal hearing and hastily passed the order in just 3 days' time after initial reply cum submission and violated the time after initial reply cum submission and violated the time after initial reply cum submission and violated the principle of natural justice. principle of natural justice. 3. The learned Pr. CIT learned Pr. CIT-1, Thane erroneously passed the order 1, Thane erroneously passed the order with pre-conceived conceived conceived notion notion notion and and and ordered ordered ordered to to to redo redo redo the the the assessment without having any solid reason/groundfor assessment without having any solid reason/groundfor assessment without having any solid reason/groundfor revision. 4. The learned Pr. CIT 4. The learned Pr. CIT-1, Thane has exceeded his authority 1, Thane has exceeded his authority and passed theuniustified ord and passed theuniustified order without any jurisdiction er without any jurisdiction when he himself has failed to form anopinion that the order when he himself has failed to form anopinion that the order when he himself has failed to form anopinion that the order passed by the Ld. AO u/s143(3) was erroneous. passed by the Ld. AO u/s143(3) was erroneous. 5. The learned Pr. CIT 5. The learned Pr. CIT-1, Thane has ignored the facts of the 1, Thane has ignored the facts of the case and various judgments of the Hon'ble High Courts case and various judgments of the Hon'ble High Courts case and various judgments of the Hon'ble High Courts &Hon'ble ITAT Benches where in it was held that power /s e ITAT Benches where in it was held that power /s e ITAT Benches where in it was held that power /s 263 is to be used only when both the conditions specified us 263 is to be used only when both the conditions specified us 263 is to be used only when both the conditions specified us 263 aresatisfied ie 263 aresatisfied ie i. the order passed by the AO to be erroneous and i. the order passed by the AO to be erroneous and i. the order passed by the AO to be erroneous and ii. it should be prejudicial to the interest of the revenue. ii. it should be prejudicial to the interest of the revenue. ii. it should be prejudicial to the interest of the revenue. 6. The learned 6. The learned Pr. CIT-1, Thane ought to have appreciated 1, Thane ought to have appreciated that the appellant being co that the appellant being co-operative credit society was operative credit society was eligible to claim deduction u/s 80(2)(d) of the Act in respect of eligible to claim deduction u/s 80(2)(d) of the Act in respect of eligible to claim deduction u/s 80(2)(d) of the Act in respect of on fixed deposits earned from co on fixed deposits earned from co-operative bank. 7. The learned Pr. CIT 7. The learned Pr. CIT-1, Thane ought to have appreciated have appreciated that the Assessing Officer has allowed deduction u/s that the Assessing Officer has allowed deduction u/s that the Assessing Officer has allowed deduction u/s 80P(2)(d) of the Act after considering the detailed replies filed 80P(2)(d) of the Act after considering the detailed replies filed 80P(2)(d) of the Act after considering the detailed replies filed by the appellant society during the course of assessment by the appellant society during the course of assessment by the appellant society during the course of assessment proceedings. proceedings.
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The learned Pr. CIT 8. The learned Pr. CIT-1, Thane ought to have app 1, Thane ought to have appreciated that the view adopted byAssessing Officer cannot be said to that the view adopted byAssessing Officer cannot be said to that the view adopted byAssessing Officer cannot be said to be unsustainable or impossible view. be unsustainable or impossible view. 9. The learned Pr. CIT 9. The learned Pr. CIT-1, Thane ought to have appreciated 1, Thane ought to have appreciated that the provisions of Section 269SS of the Act are not that the provisions of Section 269SS of the Act are not that the provisions of Section 269SS of the Act are not applicable to the appellant society applicable to the appellant society as it run on theconcept of as it run on theconcept of Mutuality. In any case, applicability of provision u/s 266SS Mutuality. In any case, applicability of provision u/s 266SS Mutuality. In any case, applicability of provision u/s 266SS was not withinthe limited scrutiny jurisdiction and hence was not withinthe limited scrutiny jurisdiction and hence was not withinthe limited scrutiny jurisdiction and hence could not have been made base of revisionus 263 of the Act. could not have been made base of revisionus 263 of the Act. could not have been made base of revisionus 263 of the Act. 10. Your appellant submits that the order of the P 10. Your appellant submits that the order of the P 10. Your appellant submits that the order of the Pr. CIT-1, Thane setting aside the order passed by the Ld AO us 143(3) Thane setting aside the order passed by the Ld AO us 143(3) Thane setting aside the order passed by the Ld AO us 143(3) and ordering to redo the assessment andexamining the and ordering to redo the assessment andexamining the and ordering to redo the assessment andexamining the applicability of section 269SS be set aside or quashed and applicability of section 269SS be set aside or quashed and applicability of section 269SS be set aside or quashed and restore the original order passed by the Ld AO. restore the original order passed by the Ld AO. 11. Your appellant submits 11. Your appellant submits that the re-assessment carried assessment carried out based on the saidorder of the LdPr CIT out based on the saidorder of the LdPr CIT-1, Thane be 1, Thane be adjudged void an initio and being invalid have no effect on adjudged void an initio and being invalid have no effect on adjudged void an initio and being invalid have no effect on the original assessment save your appellant from unjustified the original assessment save your appellant from unjustified the original assessment save your appellant from unjustified demand and undue financial hardship. demand and undue financial hardship. 12. Your appellant also submits & prays that the appeal be pellant also submits & prays that the appeal be pellant also submits & prays that the appeal be admitted by condoning the delay in filing the appeal caused admitted by condoning the delay in filing the appeal caused admitted by condoning the delay in filing the appeal caused due to prolong illness & subsequent sad demise of the due to prolong illness & subsequent sad demise of the due to prolong illness & subsequent sad demise of the mother of the Chartered Accountant who takes care of the mother of the Chartered Accountant who takes care of the mother of the Chartered Accountant who takes care of the appeal matters ofthe appellant. appeal matters ofthe appellant. 13. Your petitioner also submits & prays for either cancelling our petitioner also submits & prays for either cancelling our petitioner also submits & prays for either cancelling or dropping or grantingstay against all the assessment, or dropping or grantingstay against all the assessment, or dropping or grantingstay against all the assessment, penalty and recovery proceedings initiated or maybe initiated penalty and recovery proceedings initiated or maybe initiated penalty and recovery proceedings initiated or maybe initiated in future against your petitioner in this respect till the in future against your petitioner in this respect till the in future against your petitioner in this respect till the disposal of this appe disposal of this appeal 2. At the outset, the Ld. Counsel of the assessee submitted that At the outset, the Ld. Counsel of the assessee submitted that At the outset, the Ld. Counsel of the assessee submitted that the appeal was due to be filed on 20.05.2022 the appeal was due to be filed on 20.05.2022, whereas filed on whereas filed on 19.01.2023, thus, there was a delay of 244 days in filing the there was a delay of 244 days in filing the there was a delay of 244 days in filing the present appeal. He referred to the application of the assessee for present appeal. He referred to the application of the assessee for present appeal. He referred to the application of the assessee for
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seeking condonation of the delay filed by the assessee along with seeking condonation of the delay filed by the assessee along with seeking condonation of the delay filed by the assessee along with affidavit. He submitted delay occurred due to following reasons: affidavit. He submitted delay occurred due to following affidavit. He submitted delay occurred due to following
(i) Though the (i) Though the order was received through e order was received through e-mail, but not knowing the immediate consequences of the order, the knowing the immediate consequences of the order, the knowing the immediate consequences of the order, the assessee did act immediately, assessee did act immediately,
(ii) The mother of the Chartered Accountant looking after (ii) The mother of the Chartered Accountant looking after (ii) The mother of the Chartered Accountant looking after the Income the Income-tax matter was almost bed ridden and critical tax matter was almost bed ridden and critical during this pe during this period, therefore he could give time for riod, therefore he could give time for presentation and preparation/filing of this appeal. He presentation and preparation/filing of this appeal. He presentation and preparation/filing of this appeal. He also lost his mother on 06.10.2022 and thereafter, he also lost his mother on 06.10.2022 and there also lost his mother on 06.10.2022 and there was being in GST matter till December 2022. was being in GST matter till December 2022. was being in GST matter till December 2022.
2.1 We have heard submission of the rival parties on the issue We have heard submission of the rival parties on the issue We have heard submission of the rival parties on the issue condonation of delay in filing appeal. In our opinion, there is condonation of delay in filing appeal. In our opinion, there is condonation of delay in filing appeal. In our opinion, there is sufficient cause on the part of the assessee in not filing the present sufficient cause on the part of the assessee in not filing the present sufficient cause on the part of the assessee in not filing the present appeal on time. The delay is accordingly condoned and appeal is appeal on time. The delay is accordingly condoned and appeal is appeal on time. The delay is accordingly condoned and appeal is admitted for adjudication. admitted for adjudication.
Briefly stated, facts of t Briefly stated, facts of the case are that for the year under he case are that for the year under consideration no regular return of income was filed by the assessee. consideration no regular return of income was filed by the assessee. consideration no regular return of income was filed by the assessee. On the basis of the information On the basis of the information analyzed from data collected from data collected from various banks and processed by the Directorate Directorate of Income-tax (System),a notice u/s 14 notice u/s 142(1)(i) of the Income-tax Act, 1961 (in short tax Act, 1961 (in short ‘the Act’) was issued to the assessee asking to file return of income return of income for the year under consideration. In response for the year under consideration. In response, the assessee filed the assessee filed
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return of income only on 24.02.2018. In the return of income filed return of income only on 24.02.2018. In the return of income filed return of income only on 24.02.2018. In the return of income filed the assessee declared gross total income of Rs.48,50,102/ essee declared gross total income of Rs.48,50,102/ essee declared gross total income of Rs.48,50,102/- and claimed deduction u/s 80P of the Act at Rs.48,50,102/- and, thus claimed deduction u/s 80P of the Act at Rs.48,50,102/ claimed deduction u/s 80P of the Act at Rs.48,50,102/ offered taxable income at Rs. Nil. The gross total income of offered taxable income at Rs. Nil. The gross total income of offered taxable income at Rs. Nil. The gross total income of Rs.48,50,102/- consist consisted of interest received from loans given to of interest received from loans given to of Rs.16,61,819/-;interest received from fixed deposits interest received from fixed deposits members of Rs.16,61,819/ with other co-operative operative operative banks banks banks of of of Rs.31,41,927/- Rs.31,41,927/ Rs.31,41,927/ and commission commission commission received received received from from from Maharashtra Maharashtra Maharashtra State State State Electricity Electricity Electricity Distribution Company Ltd. (MSEDCL) for electricity bill collection of Distribution Company Ltd. (MSEDCL) for electricity bill Distribution Company Ltd. (MSEDCL) for electricity bill Rs.46,356/-. Against th . Against the gross total income, the assessee claimed e gross total income, the assessee claimed deduction u/s 80P(2)(a)(i) of Rs.16,61,819/ deduction u/s 80P(2)(a)(i) of Rs.16,61,819/-; deduction u/s 80P(2)(c)(i) of Rs.46,356/- and deduction u/s 80P(2)(d) of deduction u/s 80P(2)(d) of 80P(2)(c)(i) of Rs.46,356/ Rs.31,41,927/-. In this manner, total deduction under section 80P In this manner, total deduction under section 80P In this manner, total deduction under section 80P of Rs.48,50,102/- was claime was claimed by the assessee.
The Assessing Officer during the course of scrutiny examined The Assessing Officer during the course of scrutiny examined The Assessing Officer during the course of scrutiny examined the issue of cash deposits the issue of cash deposits of Rs.3,15,000/- in bank account in bank account maintained by the assessee with Vasai Vikas Sahakari Bank Ltd. maintained by the assessee with Vasai Vikas Sahakari Bank Ltd. maintained by the assessee with Vasai Vikas Sahakari Bank Ltd. during the demonetization period the demonetization period (09.11.2016 to 30 (09.11.2016 to 30.12.2016) for deposit. The assessee justified that said deposits were collected The assessee justified that said deposits were collected The assessee justified that said deposits were collected from the customers for deposits of their electricity bills with from the customers for deposits of their electricity bills from the customers for deposits of their electricity bills MSEDCL, which was one of the permitted which was one of the permitted activities activities during the period of demonetization. The Assessing Officer after verifying, period of demonetization. The Assessing Officer aft period of demonetization. The Assessing Officer aft denied the deduction accepted the claim of the assessee, accepted the claim of the assessee, but denied the
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relevant to commission income received from MSEDCL electricity commission income received from MSEDCL electricity commission income received from MSEDCL electricity bill and accordingly made addition at made addition at Rs.46,356/-.
4.1 Subsequently, in the case of the assessee an internal audit Subsequently, in the case of the assessee an internal audit Subsequently, in the case of the assessee an internal audit objection was raised by the internal audit objection was raised by the internal audit team of Income team of Income-tax Department, to the effect that deduction allowed to the assessee for to the effect that deduction allowed to the assessee for to the effect that deduction allowed to the assessee for interest income earned on deposits/investment with co-operative interest income earned on deposits/investment with co interest income earned on deposits/investment with co bank amounting to Rs.31,41,927/ ank amounting to Rs.31,41,927/- and on which which deduction was claimed u/s 80P(2)(d) of the Act claimed u/s 80P(2)(d) of the Act, was not allowable as same was not as same was not income attributable to the activities of the assessee society. The income attributable to the activities of the assessee society income attributable to the activities of the assessee society internal audit party also relied on the decision of Hon’ble Supreme internal audit party also relied on the decision of Hon’ble Su internal audit party also relied on the decision of Hon’ble Su Court in the case of Totgar Co Court in the case of Totgar Co-operative Society vs ITO 322 ITR operative Society vs ITO 322 ITR 283(SC) and Karnataka Karnataka High Court, Dharwad Bench Bench in ITA No. 100069/2016 dated 5/01/2017. 100069/2016 dated 5/01/2017. This audit objection was not This audit objection was not accepted by the Assessing Officer and it was submitted that accepted by the Assessing Officer and it was submitted that accepted by the Assessing Officer and it was submitted that in the case of KaliandasUdhyog Bhavan Premises KaliandasUdhyog Bhavan Premises Co- Tribunal in the case of operative operative Society Society vs. vs. Income-tax Income tax Officer, Officer, Mumbai Mumbai 94 94 taxmann.com15 (Mumbai taxmann.com15 (Mumbai-Trib.),the interest received from Co he interest received from Co- operative Banks has been held has been held in the character of interest received character of interest received from credit co-operative so operative society. However, on the direction of the Ld. ciety. However, on the direction of the Ld. CCIT, Pune, the Ld. PCIT was of the view that action of the the Ld. PCIT was of the view that action of the the Ld. PCIT was of the view that action of the Assessing Officer in allowing the deduction of Assessing Officer in allowing the deduction of Rs.31,41,927/ 31,41,927/- u/s 80P(2)(d) in respect of interest received on fixed deposits with other 80P(2)(d) in respect of interest received on fixed deposits with other 80P(2)(d) in respect of interest received on fixed deposits with other under the head ‘income from co-operative bank was liable for tax nk was liable for tax under the head ‘ other sources’ in terms of section 56 of the Act. The Ld. PCIT in terms of section 56 of the Act. The Ld. PCIT in terms of section 56 of the Act. The Ld. PCIT
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accordingly issued show cause notice to the assessee u/s 263 of the accordingly issued show cause notice to the assessee u/s 263 of the accordingly issued show cause notice to the assessee u/s 263 of the Act and after taking into consideration submission of the assessee after taking into consideration submission of the assessee after taking into consideration submission of the assessee, held the assessment order passed by the Assessing Officer as e assessment order passed by the Assessing Officer as e assessment order passed by the Assessing Officer as erroneous in so far as prejudicial to the interest of the Revenue erroneous in so far as prejudicial to the interest of the Revenue erroneous in so far as prejudicial to the interest of the Revenue observing as under:
“5. I have carefully considered the detalls submitted by the I have carefully considered the detalls submitted by the I have carefully considered the detalls submitted by the assessee. Since, the interest received of Rs. 31,41,927 assessee. Since, the interest received of Rs. 31,41,927 assessee. Since, the interest received of Rs. 31,41,927/- by the assessee are from Investments made with Co the assessee are from Investments made with Co the assessee are from Investments made with Co-operative Banks and not from any other Co Banks and not from any other Co-Operative Socletles, clalm Operative Socletles, clalm of deduction u/s.BOP(2)(d) of the Act cannot be allowed by of deduction u/s.BOP(2)(d) of the Act cannot be allowed by of deduction u/s.BOP(2)(d) of the Act cannot be allowed by treating the same as the income attributable to the scivitas of treating the same as the income attributable to the scivitas of treating the same as the income attributable to the scivitas of the assesse Society. Therefore amount of RS. 31,41,927/- being Interest recelved from Investment with being Interest recelved from Investment with varlous Co-op Banks Is not allowable to the assessee within op Banks Is not allowable to the assessee within op Banks Is not allowable to the assessee within the provisions of section BOP(2)d) of the I.T. Act, 1961 which the provisions of section BOP(2)d) of the I.T. Act, 1961 which the provisions of section BOP(2)d) of the I.T. Act, 1961 which reads as under reads as under "(d) in respect of any income by way of interest or dividends "(d) in respect of any income by way of interest or dividends "(d) in respect of any income by way of interest or dividends derived by the co derived by the co-operative soclety from Its investments with operative soclety from Its investments with any other cooperative Society, the whole of such income" any other cooperative Society, the whole of such income" any other cooperative Society, the whole of such income" 5.1The purpose of granting deduction us. 80P was to 5.1The purpose of granting deduction us. 80P was to 5.1The purpose of granting deduction us. 80P was to encourage the creditfac encourage the creditfacilities in rural areas where the banks ilities in rural areas where the banks were not willing or were not able to function.The obiect of the were not willing or were not able to function.The obiect of the were not willing or were not able to function.The obiect of the society to serve its members by offering the credit facilities is society to serve its members by offering the credit facilities is society to serve its members by offering the credit facilities is the purpose for which the deduction is available. It is for this the purpose for which the deduction is available. It is for this the purpose for which the deduction is available. It is for this purpose 80P(2)(d) has purpose 80P(2)(d) has been inserted in the Act to ensure that been inserted in the Act to ensure that any surplus of one society may be utilized by other Society to any surplus of one society may be utilized by other Society to any surplus of one society may be utilized by other Society to serve their Members. The interest on deposits made with the serve their Members. The interest on deposits made with the serve their Members. The interest on deposits made with the banks has not been made eligible for deduction us. 80P banks has not been made eligible for deduction us. 80P banks has not been made eligible for deduction us. 80P because of lack of mutuality criteria. because of lack of mutuality criteria. Also, vide Finance Act 2006, deduction from income of Co Also, vide Finance Act 2006, deduction from income of Co Also, vide Finance Act 2006, deduction from income of Co- operativeBanks as per the provisions of Section 80P of the operativeBanks as per the provisions of Section 80P of the operativeBanks as per the provisions of Section 80P of the Act, has been withdrawn by way of insertion of Section Act, has been withdrawn by way of insertion of Section Act, has been withdrawn by way of insertion of Section 80P(4) w.e.f. 1/4/2007 which differentiates a co 80P(4) w.e.f. 1/4/2007 which differentiates a co 80P(4) w.e.f. 1/4/2007 which differentiates a co-operative bank in comparison to co bank in comparison to co-operative society. It is thus clear operative society. It is thus clear that a co-operative bank is a commercial bank and does not operative bank is a commercial bank and does not operative bank is a commercial bank and does not
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fall under the purview of a Co fall under the purview of a Co-operative Society and interest operative Society and interest income is not eligible for deduction u/s. 80P(2)(d) of the income is not eligible for deduction u/s. 80P(2)(d) of the income is not eligible for deduction u/s. 80P(2)(d) of the Income-tax Act,1961. Hence in view of th tax Act,1961. Hence in view of the above, the said e above, the said deduction is required to be disallowed and added back to deduction is required to be disallowed and added back to deduction is required to be disallowed and added back to income. The Karnataka High Court in the case of PCIT, Hubli Vs. The Karnataka High Court in the case of PCIT, Hubli Vs. The Karnataka High Court in the case of PCIT, Hubli Vs. Totgar Co-op. Sale Society 395 IT 611 dated 16.06.2017 (ITA op. Sale Society 395 IT 611 dated 16.06.2017 (ITA op. Sale Society 395 IT 611 dated 16.06.2017 (ITA No. 100066/2016) has decided the issue in favour of the No. 100066/2016) has decided the issue in favour of the No. 100066/2016) has decided the issue in favour of the department by holding that the interest income earned by epartment by holding that the interest income earned by epartment by holding that the interest income earned by way of deposits of surplus funds In co way of deposits of surplus funds In co-operative bank does operative bank does not change its character and thus clause (d of section 80P(2) not change its character and thus clause (d of section 80P(2) not change its character and thus clause (d of section 80P(2) of the Act, would not apply in these circumstances Aggrieved of the Act, would not apply in these circumstances Aggrieved of the Act, would not apply in these circumstances Aggrieved with the decision with the decision of the Karnataka High Court (PCIT, Hubli of the Karnataka High Court (PCIT, Hubli Vs. TotgarCo op. Sale Society 395 IT 611 dated 16.06,2017 Vs. TotgarCo op. Sale Society 395 IT 611 dated 16.06,2017 Vs. TotgarCo op. Sale Society 395 IT 611 dated 16.06,2017 (IT°A No. 100066/2016)) the assessee has filed SLP which Is (IT°A No. 100066/2016)) the assessee has filed SLP which Is (IT°A No. 100066/2016)) the assessee has filed SLP which Is pending and as the Issue Is still sub pending and as the Issue Is still sub-Judice. 6.Considering the above mentioned facts, I am of th 6.Considering the above mentioned facts, I am of th 6.Considering the above mentioned facts, I am of the opinion that theassessment u/s 143(3) made by the A.0. dated that theassessment u/s 143(3) made by the A.0. dated that theassessment u/s 143(3) made by the A.0. dated 21.11.2019 Is prejudic 21.11.2019 Is prejudicial & erroneous to the interests of the al & erroneous to the interests of the revenue. I therefore, set isle the order of the AO passed u/s revenue. I therefore, set isle the order of the AO passed u/s revenue. I therefore, set isle the order of the AO passed u/s 143(3) with the direction to examine the appllcablity of 143(3) with the direction to examine the appllcablity of 143(3) with the direction to examine the appllcablity of provisions of section SOP(2)(4) and 269ss of f section SOP(2)(4) and 269ss ofvhe Income Tax he Income Tax Act, 1961 and to redo the assessment af 61 and to redo the assessment after, affording ter, affording adequate opportunity to the assessee. adequate opportunity to the assessee.” 5. We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record dispute and perused the relevant material on record issue in dispute is whether the assessment order passed by the issue in dispute is whether the assessment order passed by the issue in dispute is whether the assessment order passed by the Assessing Officer is erroneous in so far as prejudicial to the interest Assessing Officer is erroneous in so far as prejudicial to the interest Assessing Officer is erroneous in so far as prejudicial to the interest of the revenue on two accounts, firstly, allowing deduction u/s of the revenue on two accounts, , allowing deduction u/s 80P(2)(d) od the Act wrongly, secondly, non-initiation of penalty 80P(2)(d) od the Act wrongly, initiation of penalty u/s 269SS of the Act. As far as first reason of 263 proceedings is u/s 269SS of the Act. As far as first reason of 263 proceedings is u/s 269SS of the Act. As far as first reason of 263 proceedings is concerned, the Ld. Counsel of the assessee contended that similar he Ld. Counsel of the assessee contended that similar he Ld. Counsel of the assessee contended that similar action u/s 263 in the case the cases of other co-operative societies has been operative societies has been
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vacated by the Pune Bench of vacated by the Pune Bench of the Tribunal in ITA No. the Tribunal in ITA No. Pragati Pragati Gramin Gramin 303/Pun/2022 in in the the case case of of BigarshetiSahakariPatsansthaMaryadit& Others v. PCIT.The Ld. BigarshetiSahakariPatsansthaMaryadit& Others v. PCIT BigarshetiSahakariPatsansthaMaryadit& Others v. PCIT Counsel submitted that the co Counsel submitted that the co-operative banks are primarily co operative banks are primarily co- operative societies and therefore, the interest received from deposits operative societies and therefore, the interest received from de operative societies and therefore, the interest received from de with co-operative banks has been correctly claimed as deduction operative banks has been correctly claimed as deduction operative banks has been correctly claimed as deduction u/s 80P(2)(d) of the Act. The Ld. DR on the other hand, relied on u/s 80P(2)(d) of the Act. The Ld. DR on the other hand, relied on u/s 80P(2)(d) of the Act. The Ld. DR on the other hand, relied on the decision of the Karnataka High Court in the case of PCIT v. the decision of the Karnataka High Court in the case of the decision of the Karnataka High Court in the case of Totgar Co-op Sales Society 393 ITR 611 op Sales Society 393 ITR 611 (supra) cited by (supra) cited by the Ld. PCIT in the impugned order. We find that PCIT in the impugned order. We find that the issue the issue of claim of deduction u/s 80P(d) of the Act has been dealt by the Tribunal in deduction u/s 80P(d) of the Act has been dealt by the Tribunal in deduction u/s 80P(d) of the Act has been dealt by the Tribunal in the case of Pragati Gramin BigarshetiSahakariPatsansthaMaryadit& the case of Pragati Gramin BigarshetiSahakariPatsansthaMaryadit& the case of Pragati Gramin BigarshetiSahakariPatsansthaMaryadit& Others (supra) and action of the PCIT u/s 263 has been Others (supra) and action of the PCIT u/s 263 has bee Others (supra) and action of the PCIT u/s 263 has bee overturned.The relevant finding of the Tribunal is reproduced as he relevant finding of the Tribunal is reproduced as he relevant finding of the Tribunal is reproduced as under:
“6. Coming to the cases of eligibility of deduction 6. Coming to 6. Coming to the cases of eligibility of deduction the cases of eligibility of deduction u/s.80P(2)(d), the respective assessees u/s.80P(2)(d), the respective assessees are Cooperative are Cooperative credit societies engaged in providing credit facilities to its credit societies engaged in providing credit facilities to its credit societies engaged in providing credit facilities to its members. The ld. PCIT has held the assessment order to be members. The ld. PCIT has held the assessment order to be members. The ld. PCIT has held the assessment order to be erroneous and prejudicial to the interest of the Revenue only erroneous and prejudicial to the interest of the Revenue only erroneous and prejudicial to the interest of the Revenue only on the ground that the claim of deduction u/s.80P on int on the ground that the claim of deduction u/s.80P on int on the ground that the claim of deduction u/s.80P on interest income was not in order. In this regard, it is observed that income was not in order. In this regard, it is observed that income was not in order. In this regard, it is observed that though co-operative banks, other than primary agricultural operative banks, other than primary agricultural operative banks, other than primary agricultural credit society or a primary co credit society or a primary co-operative agricultural and rural operative agricultural and rural development bank, are not eligible for deduction pursuant to development bank, are not eligible for deduction pursuant to development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision tion of section 80P(4) w.e.f. 1.4.2007, but this provision tion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act does not dent the otherwise eligibility u/s 80P(2)(d) of the Act does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of of of a a a cooperative cooperative cooperative society society society on on on interest interest interest income income income on on on investments/deposits parked with a co investments/deposits parked with a co-operative bank, operative bank, which is a registered co which is a registered co-operative society as per section 2(19) ive society as per section 2(19) of the Act, defining co of the Act, defining co-operative society to mean a co operative society to mean a co-
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operative society registered under the Co operative society registered under the Co-operative Societies operative Societies Act, 1912 or under any law for the time being in force. The Act, 1912 or under any law for the time being in force. The Act, 1912 or under any law for the time being in force. The assessees are also Co assessees are also Co-operative society registered. ered. 7. Similar view has been taken by the Pune Benches of the 7. Similar view has been taken by the Pune Benches of the 7. Similar view has been taken by the Pune Benches of the Tribunal in several cases including The Sesa Goa Employees Tribunal in several cases including The Sesa Goa Employees Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. Vs. ACIT (ITA No.203/PUN/2019, Coop. Credit Society Ltd. Vs. ACIT (ITA No.203/PUN/2019, Coop. Credit Society Ltd. Vs. ACIT (ITA No.203/PUN/2019, order dated 16 order dated 16-11-2022). 8. In view of the fact that the Pune Benches of t 8. In view of the fact that the Pune Benches of the Tribunal in he Tribunal in series of decisions have held that the assessees are entitled series of decisions have held that the assessees are entitled series of decisions have held that the assessees are entitled to deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest to deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest to deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, we hold that the impugned orders cannot be income, we hold that the impugned orders cannot be income, we hold that the impugned orders cannot be sustained. All the orders are, therefore, overturned. sustained. All the orders are, therefore, overturned. sustained. All the orders are, therefore, overturned.” 5.1 We find that in view of various decisions discussed by the d that in view of various decisions discussed by the d that in view of various decisions discussed by the Tribunal (supra), the action of the Assessing Officer in allowing the action of the Assessing Officer in allowing the action of the Assessing Officer in allowing deduction u/s 80P(2)(d) is not being erroneous deduction u/s 80P(2)(d) is not being erroneous, the order of the Ld. the order of the Ld. PCIT to the extent is set aside. As far as th PCIT to the extent is set aside. As far as the direction of the Ld. e direction of the Ld. PCIT for examining for examining the applicability of section 269SS is the applicability of section 269SS is concerned,we find that the Ld. PCIT has nowhere issued any show e find that the Ld. PCIT has nowhere issued any show e find that the Ld. PCIT has nowhere issued any show cause to the assessee for invoking provision of section 269SS and cause to the assessee for invoking provision of section 269SS and cause to the assessee for invoking provision of section 269SS and therefore any such action by the Ld. PCIT is not justified being in therefore any such action by the Ld. PCIT is not justified being in therefore any such action by the Ld. PCIT is not justified being in We find the Hon’ble violation of the principles of natural justice. iolation of the principles of natural justice. We find the Bombay High Court in the case of PCIT Vs Universal Music Bombay High Court in the case of PCIT Vs Universal Music Bombay High Court in the case of PCIT Vs Universal Music India P Ltd in ITA 238 of 2018 in judgment dated 19/04/22 has India P Ltd in ITA 238 of 2018 in judgment dated 19/04/22 India P Ltd in ITA 238 of 2018 in judgment dated 19/04/22 held that if particular issue has not been raised in show cause notice if particular issue has not been raised in show cause notice if particular issue has not been raised in show cause notice issued u/s 263, then assessment order can’t be revised to that issued u/s 263, then assessment order can’t be revised to that issued u/s 263, then assessment order can’t be revised to that extent. The relevant finding of the Hon’ble high court is reproduced . The relevant finding of the Hon’ble high court is reproduced . The relevant finding of the Hon’ble high court is reproduced as under:
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“7. It is true that the Apex Court in Amitabh Bacchan (supra) 7. It is true that the Apex Court in Amitabh Bacchan (supra) 7. It is true that the Apex Court in Amitabh Bacchan (supra) has held, all that CIT is required to do before r has held, all that CIT is required to do before reaching his has held, all that CIT is required to do before reaching his decision and not before commencing the enquiry, CIT must decision and not before commencing the enquiry, CIT must decision and not before commencing the enquiry, CIT must give the assessee an opportunity of being heard. It is true give the assessee an opportunity of being heard. It is true give the assessee an opportunity of being heard. It is true that the Judgment also says no notice is required to be that the Judgment also says no notice is required to be that the Judgment also says no notice is required to be issued. But in the case at hand, there is a finding of fact by issued. But in the case at hand, there is a finding of fact by issued. But in the case at hand, there is a finding of fact by the ITAT that no show cause notice was issued and no issue that no show cause notice was issued and no issue that no show cause notice was issued and no issue was ever raised by the CIT regarding payments made to was ever raised by the CIT regarding payments made to was ever raised by the CIT regarding payments made to persons specified under Section 40A(2)(b) of the Act before persons specified under Section 40A(2)(b) of the Act before persons specified under Section 40A(2)(b) of the Act before reaching his decision in the Order dated 20th March, 2013. If reaching his decision in the Order dated 20th March, 2013. If reaching his decision in the Order dated 20th March, 2013. If that was not correct certainl that was not correct certainly the order of the CIT would have y the order of the CIT would have mentioned that an opportunity was given and in any case, if mentioned that an opportunity was given and in any case, if mentioned that an opportunity was given and in any case, if there were any minutes or notings in the file, revenue would there were any minutes or notings in the file, revenue would there were any minutes or notings in the file, revenue would have produced those details before the ITAT. 8. In Amitabh have produced those details before the ITAT. 8. In Amitabh have produced those details before the ITAT. 8. In Amitabh Bachchan (supra), the Apex Court came to a Bachchan (supra), the Apex Court came to a finding that ITAT finding that ITAT had not even recorded any findings that in the course of the had not even recorded any findings that in the course of the had not even recorded any findings that in the course of the suo motu revisional proceedings opportunity of hearing was suo motu revisional proceedings opportunity of hearing was suo motu revisional proceedings opportunity of hearing was not offered to the assessee and that the assessee was not offered to the assessee and that the assessee was not offered to the assessee and that the assessee was denied an opportunity to contest the facts on the basis of denied an opportunity to contest the facts on the basis of denied an opportunity to contest the facts on the basis of which the CIT had come to its conclusions as recorded in his h the CIT had come to its conclusions as recorded in his h the CIT had come to its conclusions as recorded in his order under Section 263 of the Act. It will be useful to order under Section 263 of the Act. It will be useful to order under Section 263 of the Act. It will be useful to reproduce paragraphs 10, 11 and 13 of Amitabh Bachchan reproduce paragraphs 10, 11 and 13 of Amitabh Bachchan reproduce paragraphs 10, 11 and 13 of Amitabh Bachchan (supra) and the same read as under : “10. Reverting to the (supra) and the same read as under : “10. Reverting to the (supra) and the same read as under : “10. Reverting to the specific provisions of Secti specific provisions of Section 263 of the Act what has to be on 263 of the Act what has to be seen is that a satisfaction that an order passed by the seen is that a satisfaction that an order passed by the seen is that a satisfaction that an order passed by the Authority under the Act is erroneous and prejudicial to the Authority under the Act is erroneous and prejudicial to the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic pre interest of the Revenue is the basic precondition for exercise condition for exercise of jurisdiction under Section 263 of the Ac of jurisdiction under Section 263 of the Act. Both are twin t. Both are twin conditions that have to be conjointly present. Once such conditions that have to be conjointly present. Once such conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power satisfaction is reached, jurisdiction to exercise the power satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of would be available subject to observance of the principles of would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by natural justice which is implicit in the requirement cast by natural justice which is implicit in the requirement cast by the Section to give the assessee an opportunity of being the Section to give the assessee an opportunity of being the Section to give the assessee an opportunity of being heard. It is in the context of the above position that this Court heard. It is in the context of the above position that this Court heard. It is in the context of the above position that this Court has repeatedly held that unlike the power of reopening an has repeatedly held that unlike the power of reopening an has repeatedly held that unlike the power of reopening an assessment under Section 147 of the Act, the power of assessment under Section 147 of the Act, the power of assessment under Section 147 of the Act, the power of revision under Secti revision under Section 263 is not contingent on the giving of a on 263 is not contingent on the giving of a notice to show cause. In fact, Section 263 has been notice to show cause. In fact, Section 263 has been notice to show cause. In fact, Section 263 has been understood not to require any specific show cause notice to understood not to require any specific show cause notice to understood not to require any specific show cause notice to be served on the assessee. Rather, what is required under be served on the assessee. Rather, what is required under be served on the assessee. Rather, what is required under the said provision is an opportunity of he the said provision is an opportunity of hearing to the aring to the assessee. The two requirements are different; the first would assessee. The two requirements are different; the first would assessee. The two requirements are different; the first would comprehend a prior notice detailing the specific grounds on comprehend a prior notice detailing the specific grounds on comprehend a prior notice detailing the specific grounds on
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which revision of the assessment order is tentatively being which revision of the assessment order is tentatively being which revision of the assessment order is tentatively being proposed. proposed. proposed. Such Such Such a a a notice notice notice is is is not not not required. required. required. What What What is is is contemplated contemplated by Section 263, is an opportunity of hearing to by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an be afforded to the assessee. Failure to give such an be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile opportunity would render the revisional order legally fragile opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of not on the ground of lack of jurisdiction but on the ground of not on the ground of lack of jurisdiction but on the ground of violation of principles of na violation of principles of natural justice. Reference in this tural justice. Reference in this regard may be illustratively made to the decisions of this regard may be illustratively made to the decisions of this regard may be illustratively made to the decisions of this Court in Gita Devi Aggarwal vs. CIT [1970] 76 ITR 496 and in Court in Gita Devi Aggarwal vs. CIT [1970] 76 ITR 496 and in Court in Gita Devi Aggarwal vs. CIT [1970] 76 ITR 496 and in CIT v. Electro House [1971] 82 ITR 824 (SC). Paragraph 4 of CIT v. Electro House [1971] 82 ITR 824 (SC). Paragraph 4 of CIT v. Electro House [1971] 82 ITR 824 (SC). Paragraph 4 of the decision in Electro House (supra) being the decision in Electro House (supra) being illumination of the illumination of the issue issue issue indicated indicated indicated above above above may may may be be be usefully usefully usefully reproduced reproduced reproduced hereunder: “This section unlike Section 34 does not prescribe hereunder: “This section unlike Section 34 does not prescribe hereunder: “This section unlike Section 34 does not prescribe any notice to be given. It only requires the Commissioner to any notice to be given. It only requires the Commissioner to any notice to be given. It only requires the Commissioner to give an opportunity to the assessee of being heard. The give an opportunity to the assessee of being heard. The give an opportunity to the assessee of being heard. The section does not speak of any notice. It is unfortunate that does not speak of any notice. It is unfortunate that does not speak of any notice. It is unfortunate that the High Court failed to notice the difference in language the High Court failed to notice the difference in language the High Court failed to notice the difference in language between Sections 33 between Sections 33-B and 34. For the assumption of B and 34. For the assumption of jurisdiction to proceed under Section 34, the notice as jurisdiction to proceed under Section 34, the notice as jurisdiction to proceed under Section 34, the notice as prescribed in that section is a con prescribed in that section is a condition precedent. But no dition precedent. But no such notice is contemplated by Section 33 such notice is contemplated by Section 33-B. The jurisdiction B. The jurisdiction of the Commissioner to proceed under Section 33 of the Commissioner to proceed under Section 33 of the Commissioner to proceed under Section 33-B is not dependent on the fulfilment of any condition precedent. All dependent on the fulfilment of any condition precedent. All dependent on the fulfilment of any condition precedent. All that he is required to do before reaching his decisi that he is required to do before reaching his decisi that he is required to do before reaching his decision and not before commencing the enquiry, he must give the assessee before commencing the enquiry, he must give the assessee before commencing the enquiry, he must give the assessee an opportunity of being heard and make or cause to make an opportunity of being heard and make or cause to make an opportunity of being heard and make or cause to make such enquiry as he deems necessary. Those requirements such enquiry as he deems necessary. Those requirements such enquiry as he deems necessary. Those requirements have nothing to do with the jurisdiction of the Commissioner. have nothing to do with the jurisdiction of the Commissioner. have nothing to do with the jurisdiction of the Commissioner. They pertain to They pertain to the region of natural justice. Breach of the the region of natural justice. Breach of the principles of natural justice may affect the legality of the principles of natural justice may affect the legality of the principles of natural justice may affect the legality of the order made but that does not affect the jurisdiction of the order made but that does not affect the jurisdiction of the order made but that does not affect the jurisdiction of the Commissioner. At present we are not called upon to consider Commissioner. At present we are not called upon to consider Commissioner. At present we are not called upon to consider whether the order made by the whether the order made by the Commissioner is vitiated Commissioner is vitiated because of the contravention of any of the principles of because of the contravention of any of the principles of because of the contravention of any of the principles of natural justice. The scope of these appeals is very narrow. natural justice. The scope of these appeals is very narrow. natural justice. The scope of these appeals is very narrow. All that we have to see is whether before assuming All that we have to see is whether before assuming All that we have to see is whether before assuming jurisdiction the Commissioner was required to issue a notice jurisdiction the Commissioner was required to issue a notice jurisdiction the Commissioner was required to issue a notice and if he was so required what that notice should have nd if he was so required what that notice should have nd if he was so required what that notice should have contained? Our answer to that question has already been contained? Our answer to that question has already been contained? Our answer to that question has already been made clear. In our judgment no notice was required to be made clear. In our judgment no notice was required to be made clear. In our judgment no notice was required to be issued by the Commissioner before assuming jurisdiction to issued by the Commissioner before assuming jurisdiction to issued by the Commissioner before assuming jurisdiction to proceed under Section 33 proceed under Section 33-B. Therefore the question what that erefore the question what that notice should contain does not arise for consideration. It is notice should contain does not arise for consideration. It is notice should contain does not arise for consideration. It is
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not necessary nor proper for us in this case to consider as to not necessary nor proper for us in this case to consider as to not necessary nor proper for us in this case to consider as to the nature of the enquiry to be held under Section 33 the nature of the enquiry to be held under Section 33 the nature of the enquiry to be held under Section 33-B. Therefore, we refrain from spelling out wha Therefore, we refrain from spelling out what principles of t principles of natural justice should be observed in an enquiry under natural justice should be observed in an enquiry under natural justice should be observed in an enquiry under Section 33B. This Court in Gita Devi v. CIT, West Bengal B. This Court in Gita Devi v. CIT, West Bengal B. This Court in Gita Devi v. CIT, West Bengal ruled that Section 33 ruled that Section 33-B does not in express terms require a B does not in express terms require a notice to be served on the assessee as in the case of Section notice to be served on the assessee as in the case of Section notice to be served on the assessee as in the case of Section 34. Section 33 ection 33-B merely requires that an opportunity of being B merely requires that an opportunity of being heard should be given to the assessee and the stringent heard should be given to the assessee and the stringent heard should be given to the assessee and the stringent requirement of service of notice under Section 34 cannot, requirement of service of notice under Section 34 cannot, requirement of service of notice under Section 34 cannot, therefore, be applied to a proceeding under Section 33 therefore, be applied to a proceeding under Section 33 therefore, be applied to a proceeding under Section 33-B.” (Page 827828). [Note: Sec 828). [Note: Section 33-B and Section 34 of the B and Section 34 of the Income Tax Act, 1922 corresponds to Section 263 and Income Tax Act, 1922 corresponds to Section 263 and Income Tax Act, 1922 corresponds to Section 263 and Section 147 of the Income Tax Act, 1961] 11. It may be that Section 147 of the Income Tax Act, 1961] 11. It may be that Section 147 of the Income Tax Act, 1961] 11. It may be that in a given case and in most cases it is so done a notice in a given case and in most cases it is so done a notice in a given case and in most cases it is so done a notice proposing the revisional exercise is given to the asses proposing the revisional exercise is given to the asses proposing the revisional exercise is given to the assessee indicating therein broadly or even specifically the grounds on indicating therein broadly or even specifically the grounds on indicating therein broadly or even specifically the grounds on which the exercise is felt necessary. But there is nothing in which the exercise is felt necessary. But there is nothing in which the exercise is felt necessary. But there is nothing in the section (Section 263) to raise the said notice to the status the section (Section 263) to raise the said notice to the status the section (Section 263) to raise the said notice to the status of a mandatory show cause notice affecting the initiation of of a mandatory show cause notice affecting the initiation of of a mandatory show cause notice affecting the initiation of the exercise in the absence thereof or to require the C.I.T. to he exercise in the absence thereof or to require the C.I.T. to he exercise in the absence thereof or to require the C.I.T. to confine himself to the terms of the notice and foreclosing confine himself to the terms of the notice and foreclosing confine himself to the terms of the notice and foreclosing consideration of any other issue or question of fact. This is consideration of any other issue or question of fact. This is consideration of any other issue or question of fact. This is not the purport of Section 263. Of course, there can be no not the purport of Section 263. Of course, there can be no not the purport of Section 263. Of course, there can be no dispute that dispute that while the C.I.T. is free to exercise his jurisdiction while the C.I.T. is free to exercise his jurisdiction on consideration of all relevant facts, a full opportunity to on consideration of all relevant facts, a full opportunity to on consideration of all relevant facts, a full opportunity to controvert the same and to explain the circumstances controvert the same and to explain the circumstances controvert the same and to explain the circumstances surrounding such facts, as may be considered relevant by surrounding such facts, as may be considered relevant by surrounding such facts, as may be considered relevant by the assessee, must be afforded the assessee, must be afforded to him by the C.I.T. prior to to him by the C.I.T. prior to the finalization of the decision. 13. The above ground which the finalization of the decision. 13. The above ground which the finalization of the decision. 13. The above ground which had led the learned Tribunal to interfere with the order of the had led the learned Tribunal to interfere with the order of the had led the learned Tribunal to interfere with the order of the learned C.I.T. seems to be contrary to the settled position in learned C.I.T. seems to be contrary to the settled position in learned C.I.T. seems to be contrary to the settled position in law, as indicated above and the two d law, as indicated above and the two decisions of this Court ecisions of this Court in Gita Devi Aggarwal (supra) and M/s Electro House in Gita Devi Aggarwal (supra) and M/s Electro House in Gita Devi Aggarwal (supra) and M/s Electro House (supra). The learned Tribunal in its order dated 28th August, (supra). The learned Tribunal in its order dated 28th August, (supra). The learned Tribunal in its order dated 28th August, 2007 had not recorded any finding that in course of the suo 2007 had not recorded any finding that in course of the suo 2007 had not recorded any finding that in course of the suo motu revisional proceedings, hearing of which was spread motu revisional proceedings, hearing of which was spread motu revisional proceedings, hearing of which was spread over many days and attended to by the authorized er many days and attended to by the authorized er many days and attended to by the authorized representative of the assessee, opportunity of hearing was representative of the assessee, opportunity of hearing was representative of the assessee, opportunity of hearing was not afforded to the assessee and that the assessee was not afforded to the assessee and that the assessee was not afforded to the assessee and that the assessee was denied an opportunity to contest the facts on the basis of denied an opportunity to contest the facts on the basis of denied an opportunity to contest the facts on the basis of which the learned C.I.T. had come to which the learned C.I.T. had come to his conclusions as his conclusions as recorded in the order dated 20th March, 2006. Despite the recorded in the order dated 20th March, 2006. Despite the recorded in the order dated 20th March, 2006. Despite the
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absence of any such finding in the order of the learned absence of any such finding in the order of the learned absence of any such finding in the order of the learned Tribunal, before holding the same to be legally unsustainable Tribunal, before holding the same to be legally unsustainable Tribunal, before holding the same to be legally unsustainable the Court will have to be satisfied that in the course of th the Court will have to be satisfied that in the course of th the Court will have to be satisfied that in the course of the revisional proceeding the assessee, actually and really, did revisional proceeding the assessee, actually and really, did revisional proceeding the assessee, actually and really, did not have the opportunity to contest the facts on the basis of not have the opportunity to contest the facts on the basis of not have the opportunity to contest the facts on the basis of which the learned C.I.T. had concluded that the order of the which the learned C.I.T. had concluded that the order of the which the learned C.I.T. had concluded that the order of the Assessing Officer is erroneous and prejudicial to the interests Assessing Officer is erroneous and prejudicial to the interests Assessing Officer is erroneous and prejudicial to the interests of the Revenue. The above is the question to which the Court, Revenue. The above is the question to which the Court, Revenue. The above is the question to which the Court, therefore, will have to turn to.” 9. In the case at hand, there therefore, will have to turn to.” 9. In the case at hand, there therefore, will have to turn to.” 9. In the case at hand, there is a finding by the Tribunal, as noted earlier, that no issue is a finding by the Tribunal, as noted earlier, that no issue is a finding by the Tribunal, as noted earlier, that no issue was raised by the CIT in respect of particulars of payment was raised by the CIT in respect of particulars of payment was raised by the CIT in respect of particulars of payment made to persons made to persons specified under Section 40A(2)(b) of the Act specified under Section 40A(2)(b) of the Act and even the show cause notice is silent about that. 10. In and even the show cause notice is silent about that. 10. In and even the show cause notice is silent about that. 10. In our view, the Tribunal has not committed any perversity or our view, the Tribunal has not committed any perversity or our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the applied incorrect principles to the given facts and when the applied incorrect principles to the given facts and when the facts and circumstances are pr facts and circumstances are properly analysed and correct operly analysed and correct test is applied to decide the issue at hand, then, we do not test is applied to decide the issue at hand, then, we do not test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial think that question as pressed raises any substantial think that question as pressed raises any substantial question of law. question of law.” 5.2 Respectfully following the finding of Hon’ble High Court Respectfully following the finding of Hon’ble High Court Respectfully following the finding of Hon’ble High Court (Supra), the PCIT can’t revise the (Supra), the PCIT can’t revise the assessment order on the issue of assessment order on the issue of penalty for violation of 269SS of the Act. penalty for violation of 269SS of the Act.
5.3 Accordingly, the ord Accordingly, the order of the Ld. PCIT is set aside, er of the Ld. PCIT is set aside, both on the ground of applicability of section 80P(2)(d) and 269SS of the Act. ility of section 80P(2)(d) and 269SS of the Act. ility of section 80P(2)(d) and 269SS of the Act. The grounds of appeal of the assessee are accordingly allowed. The grounds of appeal of the assessee are accordingly allowed. The grounds of appeal of the assessee are accordingly allowed.
In the result, the appeal filed by the assessee is allowed. In the result, the appeal filed by the assessee is allowed. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on Order pronounced in the open Court on 31/03/2023. 03/2023. Sd/- Sd/ Sd/- (KULDIP SINGH KULDIP SINGH) (OM PRAKASH OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai;
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Dated: 31/03/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai