HHARSIDDHI CO-OP. CREDIT SOCIETY ,BHARUCH vs. ITO, WD. 1(1), BHARUCH

The registry has informed that the present appeals are filed after expiry of statutory period and hence time-barred. The assessee has filed applications/affidavits for condonation of delays in all appeals; one of the same is scanned and re-produced for an immediate reference:

The averments made by assessee in above affidavit, which are self- explanatory and which do not require repetition, were discussed and the Ld. DR for revenue does not have any objection if the bench condones delay and accordingly left it to the discretion and wisdom of bench. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause” for delay in filing present appeals. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a “sufficient cause” for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. Thus, taking into account the facts of case, the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delays, admit these appeals and proceed with hearing.

Precisely stated the facts culled out from orders of lower authorities and as per submissions made by Ld. AR for assessee during hearing, which are identical in all matters except for the figures, are as under:

During hearing before us, Ld. AR filed a Written-Submission, the relevant pages of same are scanned and re-produced below:

The Ld. AR pleaded the above Written-Submission by way of oral arguments and attempted to corroborate the same with the documents filed in Paper-Book. The crux of Ld. AR’s submission is that the assessee-society always had a tax compliant attitude and filed returns regularly uptill AY 2013-14 in physical mode without any problem. But for AYs 2014-15 to 2016-17 under consideration, the assessee was unable to file returns in digital form as required because it was found that the PAN: AABCH7037C, originally allotted to assessee, contained the fourth character “C” which is prescribed for a “company” whereas the assessee is a “co-operative society” and not a “company”. Ld. AR submitted that subsequently, after representation to authorities, a new/correct PAN: AACAH4059D containing fourth character “A” was allotted to assessee in the year 2018 but by the time of allotment of new/correct PAN, the time to file returns for AYs 2014- 15 to 2016-17 was over rendering the assessee unable to file those pending returns. It is further submission of Ld. AR that the assessee is a co- operative society and its accounts have been regularly audited by the auditors appointed by Govt. of Gujrat, hence the assessee did not have any reason to avoid filing of returns except for the technical problem in PAN. It is further submission that the Ld. AO issued notices u/s 148 and required assessee to submit returns in old/incorrect PAN: AABCH7037C but the assessee was not able to file the same due to PAN issue. However, the assessee was able to file reply to the notices issued by AO u/s 142(1) which assessee did. It is further submitted that the AO completed assessments u/s 144 precisely for the reason of non-filing of returns.

Having narrated above facts, Ld. AR submitted that the assessee was not able to file returns due to technical issue of PAN only. But the assessee is very much ready to file pending returns and also make effective representation before AO. He submitted that the assessee, after allotment of new/correct PAN, also filed an application to the Ld. PCIT, Vadodara-3, mentioning all facts and requesting to enable filing of pending returns but the Ld. PCIT has rejected assessee’s application, copy of assessee’s application and the order passed by Ld. PCIT are placed in Paper-Book at Pages 12 -15. He submitted that the additions made by AO are very high and the assessee wants a proper computation of taxable income and tax liability in accordance with the provisions of Income-tax Act, 1961. He submitted that the assessee has filed “Computation of Total Income” for AYs under consideration at Pages 5 to 7 of Paper-Book, according to which the total income comes to Rs. Nil [due to assessee’s entitlement of deduction u/s 80P] and consequently the tax liability also comes to Rs. Nil.

With above submissions, Ld. AR requested that present cases may be remanded to the file of Ld. AO with a direction to accept physical returns of assessee and make a fresh adjudication of correct taxable income and tax liability. He assured that the assessee shall file physical returns to AO and also make an effective representation before AO.

Per contra, Ld. DR for revenue supported the orders passed by the lower authorities. He submitted that notices issued u/s 148 by AO were not complied with by filing returns of income and even the final show-cause notice issued by AO remained unanswered. Further, the assessee also failed to prosecute appeals before Ld. CIT(A). He contended that the assessee cannot take advantage of its own defaults and negligence. However, upon a query from the bench, the Ld. DR fairly submitted that if the bench is inclined to restore the matters to the file of the AO in the interest of justice, suitable directions may be issued to ensure effective compliance by assessee before AO.

We have carefully considered the rival submissions and perused the material placed on record including the orders of lower authorities and the Paper-Book filed by the assessee. We find that there is no dispute that the assessee did not file returns of income for AYs 2014-15 to 2016-17. It is also evident from the assessment-orders that notices issued by the AO u/s 142(1) were responded to by the assessee and an explanation regarding the nature and source of cash deposits was furnished. However, admittedly, the assessee neither filed returns in response to notices issued u/s 148 nor furnished any reply to the final show-cause notice issued by AO. Consequently, the AO proceeded to complete assessments u/s 144 r.w.s. 147 and made additions on account of unexplained deposits in bank accounts, undisclosed interest income and unexplained investments. It is further observed that during first-appellate proceedings also, the assessee did not effectively participate and the appeals came to be dismissed by the Ld. CIT(A).

The principal claim of assessee before us is that it was prevented from filing returns owing to a technical difficulty arising from an incorrect PAN originally allotted to it wherein the fourth character denoted a company whereas the assessee is a co-operative society. According to assessee, after representations before the competent authorities, a fresh/correct PAN was allotted in the year 2018 and because of such difficulty, the assessee could not file returns for the years under consideration. The assessee has also expressed its readiness to file the pending returns physically and to substantiate its claim regarding computation of income, deduction u/s 80P and other issues before AO. We also note that the additions made by AO are substantial and have been made without the benefit of returns of income and complete supporting material. Hence, there is a strong necessity of determination of correct taxable income and tax liability of assessee in accordance with law. Considering the totality of facts and circumstances, and in the interest of substantial justice, we are of the considered view that one final opportunity deserves to be granted to the assessee. Accordingly, we set aside the impugned orders of the Ld. CIT(A) as well as the assessment- orders passed by the AO and restore all matters to the file of the Ld. AO for fresh adjudication. The assessee is directed to file the returns of income in physical mode (or in online mode if the AO grants necessary facility of filing online) and all supporting details, evidences and explanations as may be required by the AO. The AO shall examine the same in accordance with law and determine the correct taxable income and tax liability after granting adequate opportunity of being heard to assessee. We make it clear that the assessee shall extend full co-operation in the remand proceedings and shall not seek unnecessary adjournments. In the event of failure on the part of the assessee to comply with notices or directions issued by the AO, the Ld. AO shall be at liberty to proceed in accordance with law on the basis of material available on record. Ordered accordingly.

Resultantly, all these appeals are allowed for statistical purposes.