RAIL COACH ENGINEERS,HYDERABAD vs. INCOME TAX OFFICER, WARD-9(1), HYDERABAD

The brief facts of the case are that, the assessee is a Primary Agricultural Co-operative Credit Society engaged in providing credit facilities to its members and also in sale of fertilizers, sale of seeds and procurement of paddy from its members. The assessee had not filed its return of income for the assessment year under consideration within the due date prescribed under Section 139(1) of the Income-tax Act, 1961. Subsequently, based on the information available on the Insight Portal regarding substantial cash transactions, proceedings under Section 148A of the Act were initiated and notice under Section 148 of the Act was issued. In response to the notice under Section 148 of the Act, the assessee filed its return of income declaring total income at NIL after declaring Gross Total Income of Rs. 1,38,143/- and claiming deduction under Section 80P of the Act of Rs. 1,38,143/-.

The A.O., after considering the relevant submissions of the assessee, observed that the assessee had made cash deposits of Rs. 1,35,82,590/- and cash withdrawals of Rs. 3,88,38,273/- from its bank account maintained with the District Co-operative Central Bank Ltd. The assessee submitted that the cash deposits and withdrawals were made in the regular course of its business of providing credit facilities to its members and also from sale of fertilizers, sale of seeds and procurement of paddy from its members. However, the assessee failed to furnish the details and supporting documents to substantiate its claim of deduction under Section 80P of the Act. The A.O. further observed that, as per Section 80AC of the Act, deduction under Section 80P is allowable only where the return of income is furnished on or before the due date prescribed under Section 139(1) of the Act. Since the assessee filed the return only in response to notice under Section 148 of the Act, the A.O. disallowed the deduction under Section 80P of Rs. 1,38,143/- and determined the total income at Rs. 1,38,143/-.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee submitted that it is a Primary Agricultural Co-operative Credit Society and that the cash deposits and withdrawals represented regular transactions with its members in the course of its business activities. The assessee further submitted that, the A.O. failed to appreciate the nature of its activities and the source of the cash deposits. It was also submitted that, the A.O. did not provide adequate opportunity to present evidence and explanations and that the disallowance of deduction under Section 80P and levy of tax under Section 115BBE were not justified.

The Ld. CIT(A), after considering the submissions of the assessee and perusing the material available on record, observed that, the assessee had filed its return of income only in response to notice under Section 148 of the Act, and had not filed the return within the due date prescribed under Section 139(1) of the Act. In view of the provisions of Section 80AC of the Act, the Ld. CIT(A) held that the deduction under Section 80P was allowable only if the return of income was filed within the prescribed time limit.

Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee, Ms. P. Kusumavalli, C.A. submitted that the assessee is a Primary Agricultural Co- operative Credit Society and is eligible for deduction under Section 80P(2)(a)(i) of the Act. The learned counsel for the assessee further submitted that, the A.O. denied the deduction only for the reason that the return of income was not filed within the due date prescribed under Section 139(1) of the Act. It was further submitted that, the assessee had filed a petition seeking condonation of delay in filing the return of income before the competent authority and the delay has been condoned. The

The learned Senior A.R. for the Revenue, Shri B. Laxmi Kanth, on the other hand, supporting the orders of the lower authorities submitted that, the A.O. had disallowed the deduction claimed under Section 80P(2)(a)(i) of the Act, as the assessee had not filed the return of income within the due date prescribed under Section 139(1) of the Act. He further submitted that ,the claim of deduction may be examined by the A.O. in accordance with law after verifying the relevant facts and conditions.

We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. We find that, the A.O. rejected the deduction claimed under Section 80P(2)(a)(i) of the Income-tax Act, 1961, for not filing return of income on or before the due date provided under Section 139(1) of the Act. The assessee has filed petition for condonation of delay before the competent authority and the delay in filing of

In the result, the appeal filed by the assessee is allowed for statistical purposes.