PURANDAR TALUKA NAGARI SAHAKAI PATPEDI MARYADIT,MUMBAI vs. ITO 21(2)(5), MUMBAI

O R D E R

PER PAVAN KUMAR GADALE JM:

1. The assessee has filed the appeal against the order passed by the Pr. Commissioner of Income Tax 21, Mumbai passed u/s 263 of the Act. The assessee has raised the fallowing grounds of appeal:

M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai.

1. BREACH OF THE PRINCIPLES OF NATURAL JUSTICE 1.1 The Learned Principal Commissioner of Income-tax- 21, Mumbai ["Ld. CIT"], erred in framing the revision order u/s. 263 of the Income-tax Act, 1961 ["the Act"] by not giving proper, sufficient and effective opportunity of being heard to the Appellant. 1.1. 1.2 It is submitted that in the facts and the circumstances of the case, and in law, the revision order is required to be held as bad and illegal as the same is passed in breach of the principles of natural justice, as well as with non- application of mind to the facts and the contentions brought on record by the Appellant. WITHOUT PREJUDICE TO THE ABOVE

2. REVISION ILLEGAL 2.1 The Ld. CIT erred in passing the order u/s. 263 of the Act, revising the assessment order passed by the A.O. u/s. 143 (3) of the Act. 2.2 It is submitted that in the facts and the circumstances of the case, and in law, the order is bad, illegal and void as necessary pre - conditions for initiating the revision proceeding as well as the completion thereof were not fulfilled. Without prejudice to the generality of the above, the CIT failed to appreciate that: 2.3 (i) The assessment order framed was "erroneous" within the meaning of section 263 of the Act; and (ii) In any case, the assessment order was not "prejudicial to the interest of the revenue" within the meaning of section 263 of the Act. M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. 2.4 It is submitted that in the facts and the circumstances of the case, and in law, no revision u/s. 263 of the Act was called for. 2.5 On facts and circumstances of the case and in law, Ld AO erred in issuing the notice u/s 148 without having reason to believe of escapement of income, thereby the re- assessment order u/s 147 is bad-in-law; On facts and circumstances of the case and in law, Ld AO erred in making the 2.6 addition n u/s 68 of Rs.84,14,500/- of alleged unexplained cash deposits made by the appellant; 2.7 The Ld. AO, before making the addition of cash credit of Rs.84,14,500/- ought to have considered the understated vital facts, being; a) The entire cash deposits made in the bank account are accounted and disclosed in appellants books of accounts and audited balance sheet; b) The Ld. AO had not rejected the appellants books of accounts u/s 145(3) of the Act; c) The appellant had discharged the Primary onus and the nature and source of the cash credits has adequately been explained; 2.8 On facts and circumstances of the case and in Law, Ld. AO erred in making the disallowance of deduction u/s 80P(2)(a)(i) of Rs.10,63,438/- on erroneously invoking Sec 80P(4) on treating the appellant credit society as a Co- operative bank; 2.9 The Ld. AO, before making the disallowance of Sec 80P(2), failed to consider the understated vital facts, being; M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. a) The appellant is not a cooperative bank within the meaning assigned in Part-V of Banking Regulations Act, 1949, thus Sec 80P(4) shall not apply; b) The appellant had not fulfilled the conditions prescribed u/s 56(ccv) of Banking Regulations Act, 1949; c) The appellant is not engaged in business of banking prescribed u/s 5(b) of Banking Regulations Act, 1949; d) The appellant is not engaged in banking business as it does not accept the deposits from public (non-member s) and does not have the cheque-book and clearing facilities, RBI license, etc; 2.10 The Ld. AO, after making the disallowance u/s 80P of Rs.10,63, 438/-, erred in further making the addition u/s 80P of Rs. 1,19,938 /-, thereby resulting into double taxation 2.11 On facts and circumstances of the case and in law, Ld. AO erred in making the addition of alleged undisclosed interest on fixed deposits of Rs. 1,19,948/-; WITHOUT FURTHER PREJUDICE TO THE ABOVE 3. ON MERITS 3.1 The CIT erred in observing that the Cash deposited in Parshwanath Co-op. Bank as income U/s. 68 of The Income Tax Act, 1961 amounting to Rs. 85,72,500/-. 3.2 The CIT erred in observing that the Provision for expenses of Rs. 4,20,000/- debited in the P&L account as provisions for various funds which is in contingent in nature. LIBERTY 4. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing. M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai.

2. The brief facts of the case are that the assessee is a credit cooperative society and is engaged in the business of providing credit facility to its members. The Asssesssing Officer (AO) has received the information from ADIT (Inv.), Unit-III(1), Kolhapur that there has been cash deposits in the name of the assessee in Parshwanath Co.op Bank Ltd Kolhapur in the F.Y 2008-09.The AO has reason to believe that the income has escaped assessment and issued notice u/s 147 of the Act and the Assessee has not filed the return of income. Further, the AO has issued notice u/s 143(2) and 142(1) of the Act calling for information and provided copy of reasons for reopening of assessment proceedings to the assessee. In compliance to notice, the Ld. AR of the assessee appeared from time to time and submitted the details of business activities, bank account, details of investments and loans and balance sheet and profit and loss account. The assessee has filed the computation of income by letter dated 18.10.2016 disclosing the net profit of Rs. 10,63,438/- and has claimed deduction u/s 80P of the Act. Further the AO M/s. Purandar Taluka Nagari Sahakari Patpedi maryadit, Mumbai. has issued the show cause notice for cash deposits, in compliance the assessee has filed the reply referred at Para 6 and 7 of the AO order. The assessee also filed the various documents and information mentioned in the letter dated 19.12.2016 read as under:

On 19/12/2016 Shri Rajiv Pethkar C.A. attended and furnished a reply along with ash deposts with Parwanth Co-op Bank Ledger copy for the year under consideration & stated as under which is reproduced as under: