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Income Tax Appellate Tribunal, “SMC-A” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K
O R D E R
Per George George K, Judicial Member:
This appeal at the instance of the assessee is directed against order of CIT(A), dated 15.12.2021, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
There is a delay of 332 days in filing this appeal. Assessee has filed the petition for condonation of delay and also an affidavit of the Chief Executive Officer (CEO) of the assessee society stating therein the reasons for belated filing of this appeal. The reasons stated in affidavit of CEO for belated filing of this appeal reads as under:
1) I am working as the Chief Executive Officer of the appellant society and I know the facts of the case.
2) The appellant Society earlier was called as `Vyavasaya Seva Sahakara Bank Ltd.' Banakal. In the said name appellant had obtained PAN card bearing No.: AADFV8209P from the Income Tax Department. 3) As per the recommendation of Prof. Vaidyanathan Committee Report and its consequent implementation by the Govt. of Karnataka re-organising the cooperative sector, the name of the appellant Society was changed as 'Primary Agricultural Credit Co-operative Society Ltd.' and accordingly, thereafter, appellant was required to obtain fresh PAN on two counts, viz: firstly, due to the change of its name and secondly due to the discrepancy in issuing its earlier PAN AADFV8209P wherein its status was erroneously noted as Partnership Firm. Hence, the appellant society had applied for and obtained New PAN bearing No.: AADAP5715H from the Income Tax Department. 4) The appellant society filed Income Tax Return under its old PAN: AADFV8209P upto the F.Y. 2013-14 (A.Y. 2014-15) and thereafter, it filed its returns under New PAN: AADAP5715H commencing from F.Y. 2014-15 (A.Y. 2015-16). 5) The assessment of appellant society for the A.Y. 2017-18 (under PAN: AADAP5715H) stood concluded as per the Assessment Order dated 22-082019 passed u/s. 143(3) of the Income Tax Act, 1961 by I.T.O., Ward — 1, Chikkamagaluru duly accepting the ITR filed by the society and the tax demand was Rs. Nil. 6) The appellant society has entrusted the work of filing of I.T. Returns and assessment related work to a local Tax Practitioner — Mr. Dixit, Tax Practitioner, M. G. Road, Near TAPCMS Building, Mudigere Taluk upto F.Y. 2016-17 (A.Y. 2017-18) as the same is required to be done through online which demands professionalism as well as statutory knowledge and none of staff of appellant society possess the said knowledge. The management of the appellant society felt that the Tax related 7) work be entrusted to a practicing Chartered Accountant in place of the existing Tax Practitioner. Accordingly appellant society entrusted the filing of ITR and income tax related work to Mr. Amith Kumar G. Chitrapur, Chartered Accountant, 1st Cross, 1st Main, Saraswathipuram Main Road, Nandini Layout, Bengaluru — 560096 in the month of September 2018 commencing from A.Y. 2018-19 (F.Y. 2017-18). Appellant Society has received Nil assessment order in respect of 8) A.Y. 201718 (PAN: AADAP57151-1) as per order dated 22-08-2019.
On 21-12-2022 when appellant society received the telephonic 9) call from the Income Tax Dept. about the pending penalty demand of Rs. 2,16,346/- from the appellant society for A.Y. 2017-18, we were shocked. We also failed to understand how come it that such a huge penalty could be levied by the Department when Assessment in respect of A.Y. 2017-18 already stood concluded and tax demanded was Nil as stated in para 8 supra. To verify if the appellant society had received any such notices/demand from Income Tax Department, I immediately summoned the Record Clerk cum Attender — Mr. H. M. Sunil who was entrusted with the work of making inward/ outward entries of Posts/Couriers and safe keeping/filing of records and also placing the records before the undersigned for compliance. I made a thorough enquiry with the said Record clerk about whether appellant society had received any orders/notices from Income Tax Department and instructed him to make a thorough search and report back to me. The aforesaid Record clerk, at about 5.00 p.m. in the evening on 10) 21-12-2022 brought two orders, viz: Penalty Order dated 12- 02-2022 (A.Y. 2017-18) for Rs. 2,16,346/- and Appellate Order dated 15-12-2021 dismissing the appeal of our society in respect of Assessment order dated 27-09-2019 (A.Y. 2017-18) and both the said documents were neither inwarded nor placed before the undersigned for perusal/compliance. Upset over the issue, the undersigned brought the said grave lapse to the notice of President of the society who directed me to place the said Record Clerk cum Attender Mr. H. M. Sunil under Suspension with immediate effect pending Domestic enquiry against him and further advised me to approach the Tax Practitioner Mr. Dixit, Tax Practitioner who handled the income tax work for the A.Y. 2017-18 for taking appropriate steps in respect of the aforesaid two orders of Income Tax Department. Pursuant to the instructions of President of the appellant society, 11) I placed Mr. Mr. H. M. Sunil, Record Clerk cum Attender under Suspension as per Order dated 21-12-2022 pending a detailed enquiry against him as per the Service Rules of the appellant society. Thereafter, on the following day, (that is on 2212-2022) the undersigned visited the office of Tax practitioner Mr. Dixit, Tax Practitioner to discuss about the Penalty Order dated 12-02- 2022 (A.Y. 2017-18) for Rs. 2,16,346/- and C.I.T. (A) Appellate Order dated 15-12-2021 and came to know that the said Tax
Practitioner had closed down his profession after the outbreak of COVID-19 pandemic and left Mudigere somewhere in the month of November 2021 and his whereabouts could not be traced. Thereafter, I approached our present chartered accountant Mr. CA 12) Harish Gowda, Chartered Accountant, RSR Complex, R.C. Road, Near KSFC, Hassan and discussed about the two orders stated in Para 11 above when the said chartered accountant informed that the Appellate order dated 15-12-2021 emanate from the Assessment order dated 27-09-2019 in respect of A.Y. 2017-18 passed under PAN: AADFV8209P (Old PAN) and it was not against the Nil assessment order that was received by the society in respect of the said A.Y. under its New PAN: AADAP5715H. Further, the Penalty Order dated 12-02-2022 also came to be passed in respect of the assessment proceedings under the Old PAN: AADFV8209P for A.Y. 2017-18. Our chartered accountant further advised for the filing of the Appeals or taking such other legal steps for seeking appropriate remedy in respect of the aforesaid two orders suffered by the society as the limitation period for appeal had expired long ago by making a proper delay condonation application to the Appellate Authority narrating the circumstances / causes which led to the delay. Accordingly, the Statutory Appeal under — (a) Sec. 246A of the 13) Income Tax Act, 1961 in respect of the Penalty order dated 12-02- 2022 and (b) Sec. 253 of the Income Tax Act, 1961 in respect of CIT (A) Appellate order dated 15-122021 is being filed along with applications for condonation of delay. The appellant society has good case on merits. I say that the 14) delay caused in filing of the appeal was not intentional but due to the circumstances beyond the control of the appellant society as reasoned above. Therefore, if the accompanying Delay Condonation Application is not allowed by the concerned Appellate Authority, the appellant society will he put to great hardship and injury which cannot be compensated in terms of money.
The learned Standing Counsel was duly heard.
I have heard the rival submission on the question of condonation petition. Assessee has placed on record the suspension order of the concerned record clerk who was responsible for the delay in filing this appeal before the Tribunal. Assessee society cannot be held responsible for the delay. On the facts and circumstances of the case, I am of the view that there is reasonable cause for belated filing of this appeal and no latches can be attributed to the assessee society. Hence, I condone the delay in filing this appeal and proceed to dispose of this appeal on merits.
5. The grounds raised
read as follows:
1. In the facts and circumstances of the case, whether the appellate authority was justified in holding that the cash deposits of Rs. 28,00,600/- made by the appellant to CDCC Bank, Chikkamagaluru during F.Y. 2016-17 was liable to be treated and taxed as Unexplained Investments u/s. 69 of the Act by rejecting the contention of the appellant that it had filed its ITR for the relevant A.Y. under its New PAN: AADAP5715H and all the transactions in question were duly included in the ITR filed ;
2. Whether or not the impugned order passed by the appellate authority is bad in law as it was passed without giving a mandatory personal hearing to the appellant as required under Sec. 250 (1) of the Act ;
3. Does the order passed by the appellate authority is sustainable when the ITR filed by the appellant under its New PAN: AADAP5715H for the very same A.Y. 2017-18 was accepted by the Respondent and a Nil Assessment Order dated 22-08-2019 passed u/s. 143(3) of the Act ;
4. Is the dismissal of appeal on the grounds of delay in filing of appeal is justified when it was not explained as to how the appellant would stand to gain if appeal is admitted ;
When the sources of deposits made to CDCC Bank, Chikkamagaluru stood explained under Ground No. 3 of the Appeal and when all the cash deposits made to the Bank Accounts stood duly recorded in the books of account of the appellant and its audited financial results also disclosed the same, both the below authorities were not justified in holding that the monies deposited during the period of demonetisation was liable to be treated as Unexplained Investments under Sec. 69 of the Act. The said findings run contrary to the decision of this Hon. Tribunal in ITA: 593/Bang/2021 dated 01-06-2022 in Prathamika Krishi Pattina Sahakari Sangha Ltd. Itagi vs. ITO, Ward-5, Davangere.
6. The Additions made as Unexplained investments is not sustainable as it is opposed to the order of Hon. Madhya Pradesh High Court in Dr. Prakash Tiwari vs. CIT [1984] 148 ITR 474 (MP) as the appellant being a PACS has been maintaining its books of account ever since its inception ; and 7. The appellant craves leave to add, delete, to amend, modify and / or to alter any of the foregoing grounds and also urge such other grounds at the time of hearing
Brief facts of the case are as follows:
Assessee is a society registered under the Karnataka Co-operative Societies Act, 1959. It was noticed that the assessee had made cash deposits aggregating to Rs.28,00,600/- in CDCC Bank, Chikkamagaluru during the demonetization period. The AO further was of the view that the assessee has not filed return for the Assessment Year 2017-18. Therefore, notice under section 142(1) of the Act was issued. Since there was no compliance to the notice issued, assessment was completed under section 144 of the Act vide order dated 27.09.2019 by bringing to tax entire cash deposit of Rs.28,00,600/- under section 69 r.w.s. 115BBE of the Act.
Aggrieved, assessee filed appeal before the First Appellate Authority (FAA). Before the FAA, three notices were issued for furnishing the written submissions. The asseessee society did not furnish any submission but filed statement of facts. Based on the statement of facts, the CIT(A) dismissed the appeal of the assessee and confirmed the addition of Rs.28,00,600/-.
Aggrieved, the assessee has filed the present appeal before the Tribunal. The learned Counsel for the assessee submitted that for the relevant Assessment Year, assessee with a new PAN had filed return of income and same was accepted vide Assessment Order dated 28.08.2019. The learned AR has placed on record various additional evidence such as copy of the Assessment Order dated 28.08.2019, copy of the bank statement, bank reconciliation statement, ledger extract of the assessee society, income and expenditure statement, cash ledger, etc. The assessee society has filed a petition under Rule 29 r.w.r. 18(4) of the Income Tax (Appellate Tribunal) Rule, 1963, for admission of additional evidence.
The learned Standing Counsel supported the orders of the AO and the CIT(A).
I have heard the rival submissions and perused the material on record. Assessee society has filed an application for admission of additional evidence. The application filed by the assessee society reads as follows:
The above appeal is filed against the Order dt: 15-12-2021 1. passed by the Commissioner of Income Tax (appeals), National Faceless Appeal Centre, in dismissing the appeal and confirming the Assessment order dt: 27-9-2019 passed by the Income Tax Officer, Ward-1, Chikmagalur for the A.Y. : 2017- 18 imposing a Tax of Rs. 33,74,968/- on the appellant/assessee. The appellant/assessee Co-operative Society was established 2. and registered in the name & style of "Vyavasaya Seva Sahakara Bank Niyamitha, Banakal." under the provisions of Karnataka Co-operative Societies Act, 1959. PAN number of the appellant/assessee was: AADFV8209P. The appellant was regularly filing Return of Income in the name & style of "Vyavasaya Seva Sahakara Bank Niyamitha, Banakal." Thereafter, as per the recommendations of Prof. Vaidyanathan Committee Report and its consequent implementation by the Govt. of Karnataka re-organising the co-operative sector, the name of the assessee/appellant was changed as 'Primary Agricultural Credit Cooperative Society Ltd.' and the Deputy Registrar of Co-operative Societies, Chikkamagalur by an order dt: 31-7-2015 accordingly amended the name. Hence, the appellant/assessee was compelled to obtain new PAN number because of the fact that its name was changed and further there was a mistake in old PAN number (status in Old PAN was shown as a Firm). The New PAN Number is AADAP5715H. From the Assessment Year 2015-16, the Return of Income was filed by the Assessee in its new name PACS under its New PAN. On 27-10- 2017, Appellant/assessee filed Return of Income for the Assessment Year 2017-18 in its new name under new PAN. During the Assessment proceedings the Assessee's representative appeared and produced records. Assessment order dt: 22-08-2019 was passed accepting the Returns filed by the appellant/assessee in toto in the new name of the assessee and the new PAN Number. There was Zero demand pursuant to the said assessment Order. During the pendency of the above said assessment proceedings, the 3. Assessing officer issued notice dt: 30-11-2017, u/s. 142(1) in the old name of the appellant/assessee i.e., Vyavasaya Seva Sahakara Bank Niyamitha, Banakal with its old PAN No. AADFV8209P alleging that it has not filed its Return for the Assessment Year 2017-18. In ignorance of the earlier Assessment order, the very same Assessing officer passed another Assessment Order dt: 27-9-2019 in the old name of the assessee i.e., "Vyavasaya Seva Sahakara Bank Niyamitha, Banakal" under its old PAN No. AADFV8209P alleging that the assessee has not filed any Return of Income. Against the said Order of Assessment, Appeal was filed. In the appeal it was specifically contended that the appellant/assessee filed its Return on 27-10-2017. In the said Return all the transactions were included and there was no suppression of any one of the transactions. The assessment proceedings leading to passing of two Assessment 4. orders for the same A.Y. 2017-18, viz: Order dt: 22-8-2019 and 27-9-2019 were held online. The appellant/assessee produced documents as and when called for by the Dept. The appellant/assessee was under a bonafide impression that there was only one assessment proceedings which lead to passing of the Assessment order dt: 22-8-2019. Both the orders were passed by one and same person. The assessing officer erred in not considering the documents submitted by the appellant/assessee from time to time in the assessment proceedings leading to passing of another order dt: 27-9-2019. Under the said circumstances the Assessing officer erred in holding that the appellant/assessee has not produced any documents. Before the appellate authority sufficient opportunity was not given. Because of the said bonafide reasons the appellant/assessee though produced all the records, the assessing officer erred in confining the said documents to the proceeding leading to passing of the Order dt: 22-8-2019 and not considering the said documents to the proceedings leading to passing of the order dt: 27-9-2019. Under the above circumstances the appellant/assessee is 5. seeking permission of this Hon'ble Tribunal to produce the records viz., the copy of the assessment order dt: 22-8-2019, the copy of the Bank statement, Bank reconciliation statement, ledger extract of the assessee society, Income and Expenditure statement, cash register extract, S.B. account statement, ledger extract of society book, order dt: 31-7-2015 passed by Deputy Registrar of Cooperative Societies as additional paper book. The said documents are just and necessary in order to substantiate the case of the appellant. If the appellant is not allowed to produce the said documents, then appellant would be put to great hardship.”
The additional evidence sought to be admitted goes to the root of the issue. For proper adjudication of the matter and for substantial justice, the same is taken on record. Since the additional evidence is admitted and taken on record, in the interest of justice and equity, the matter is referred to the AO for denovo consideration of the issue. The assessee is directed to cooperate with the Revenue and shall not seek unnecessary adjournment. The AO shall afford reasonable opportunity of being heard before a decision is taken in the matter.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the open court on the date mentioned on the caption page.