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Income Tax Appellate Tribunal, “SMC’’ “A” BENCH: BANGALORE
O R D E R
PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order passed by CIT(A) dated 29.08.2022. The sole issue involved in all the grounds, i.e. ground Nos. 1 to 9 are disallowance of deduction claimed by the assessee u/s. 80P(2)(a)(i) and 80P(2)(a)(iv) and the profits earned during the year.
The brief facts of the case are that the assessee is a Co- operative Society registered under Karnataka Co-operative
M/s. Kutta Prathamika Krishi Pathina Sahakara Sangha Niyamitha Societies Act, 1959. It has filled its return of income for the assessment year (AY) 2017-18 on 13.09.2017 declaring NIL income after claiming deduction of Rs. 30,48,795/- u/s 80P(2)(a)(i) & 80P(2)(a)(iv) of the Income Tax Act, 1961. The case was selected for scrutiny and statutory notices were issued to the assessee. The details were called for, but the assessee did not furnish such details. One more opportunity was given to the assessee and THE case was fixed for hearing on 04.12.2019, but no response was received by the assessing officer (AO). Therefore, the case was decided on the basis of materials available on records. The AO noticed that the category of members were not available, therefore, he presumed that all members are nominal members. In para Nos. 5- 9 of his order, the AO observed that the main business of the assessee is banking and it is also accepting deposits from members and general public, who are termed as nominal members and lends loan. The AO also relied on the judgment of Hon’ble Supreme Court in the case of Citizen Co-operative Society Ltd., Hyderabad. The assessee was treated as an AOP and deduction claimed u/s 80P by the assessee was denied and completed the assessment.
2. Aggrieved by the order of the AO, the assessee filed appeal before the CIT (A) along with written submission through NFAC. After considering the same, the CIT(A) dismissed the appeal of the assessee by observing that the assessee is dealing with the members as well as non members (associate members) and violated the provisions and rules under the Karnata Co-operative
M/s. Kutta Prathamika Krishi Pathina Sahakara Sangha Niyamitha Societies Act and relying on the Hon’ble Supreme Court judgments (supra) relied by the AO.
Aggrieved by the above order, the assessee filed appeal before the Income Tax Appellate Tribunal.
The Authorised Representative (ld. AR) at the outset of hearing submitted that the case is squarely covered by the judgment of the Hon’ble Supreme Court in the case of Mavilayi Service Co- operative Bank Ltd. reported in 431 ITR 1 (SC) and further submitted that the case may be remanded back to the AO for fresh examination and the assessee shall file details of all category of members to prove that the assessee has not violated any provisions of the Karnataka Co-operative Act. The assessee is dealing only with its members. The AR of the assessee has filed paper book containing pages 01 to 93, which is placed on the record.
The ld. DR relied on the order of the lower authorities and submitted that ample opportunity was given to the assessee by the lower authorities. In spite of that the assessee could not furnish the details. He further submitted that if the matter is remanded, the assessee will have to file the complete details and category of members.
After hearing rival submissions, I notice that during the course of assessment proceedings the assessee did not appear and not complied with any notices. Therefore the AO completed the M/s. Kutta Prathamika Krishi Pathina Sahakara Sangha Niyamitha assessment on the basis of materials available on record. Considering the prayer of the assessee and facts as observed by the authorities below and case law relied on by both the parties, I think that it requires fresh examination by the AO. The assessee is directed to produce the necessary documents to substantiate its claim of deduction as claimed in the return of income and further directed not to seek adjournment without genuine reasons for early disposal of the case. The AO is directed to give three effective opportunities to the assessee and decide to the issue as per law. The appeal is allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 10th Jan, 2023.