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Facts
The assessee, a Primary Agricultural Cooperative Society, filed an appeal against the CIT(A)'s order. The case involves an addition of Rs. 47,00,000/- on account of cash deposits and denial of deduction u/s 80P of the Income Tax Act, 1961.
Held
The Tribunal condoned the delay of 213 days in filing the appeal, citing substantial justice. The appeal was remitted back to the AO for fresh adjudication after providing the assessee with a reasonable opportunity of being heard.
Key Issues
Whether the addition on account of cash deposits is sustainable and if the assessee is eligible for deduction u/s 80P.
Sections Cited
250, 143(3), 80P, 69A, 115BBE, 253, 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal filed by the assessee against the order of ld. CIT(A)/NFAC dated 29.1.2024 vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1060231766(1) for the assessment year 2017-18 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”).
The assessee has raised following grounds of appeal:
There is a delay of 213 days in filing the appeal before this Tribunal. The assessee has filed a detailed affidavit sworn before the notary on 29.11.2024 explaining the reason for delay which is reproduced below for ease of reference and convenience:
3.1 On going through the affidavit submitted before us, we are of the opinion that the explanation given is bonafide and it is a good and sufficient reason to condone the delay of 213 days in filing the appeal before us. It is noted that there is no malafide intention on the part of the assessee in not filing the present appeal within time. In these circumstances, it cannot be said that assessee is very callous in its approach in filing the appeal before us.
3.2 At this stage, it is appropriate to refer to the judgement of Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
(2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
3.3 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. In our opinion, this is a fit case to condone the delay of 213 days in filing the appeal before this Tribunal. Accordingly, the delay is condoned and the appeal is taken up for adjudication on merits.
The brief facts of the case are that the Assessee is a Primary Agriculture Credit Co-Operative Society registered under The Karnataka State Co-Operative Societies Act, 1959. The assessee filed the Return of Income for AY 2017-2018 on 30/03/2018 vide e- filing declaring total Income of Rs. Nil. The Gross total income of the Assessee is Rs. 12,43,031/-. Assessee claimed the deduction U/s 80P(2) of the Act amounting to Rs. 12,43,031/-. Assessee's case was selected for Scrutiny and notice U/s 143(2) of the Act was issued on 09/08/2018 and subsequently notice U/s 142(1) of the Primary Agricultural Cooperative Society, Turuvekere Page 10 of 13 Act was issued calling for details duly supported by documentary evidence. In support of the return of income filed, Assessee has submitted the Audited Balance Sheet and Profit and Loss account of the Society. Further, during the course of assessment proceedings, the assessee was asked to explain the sources for cash deposits made during the demonetization period aggregating to Rs.47,00,000/- and Justification of claim of deduction U/s 80P of the Act. Regarding Cash deposit of Rs. 47,00,000/- the assessee submitted that Rs. 25,00,000/-was deposited on 10/11/2016 and balance of Rs.22,00,000/- was deposited on 11/11/2016. Further it was submitted that the total amount of Rs. 47,00,000/-was deposited out of amount received from the Members of the society in support of the same, the assessee claimed to have submitted the list of members from whom amount was received.
4.1. The AO rejected the submissions of the Assessee on the following grounds. (i) The list submitted was not signed by the authorized person. (ii) Counter foil for remitting the cash to the society and ledger extract was not produced for verification.
4.2. The AO rejecting the submissions of the Assessee made addition on account of cash deposits amounting to Rs. 47,00,000/- as unexplained money U/s 69A of the Act.
4.3 Regarding Assessee's claim of deduction U/s 80P of the Act, the assessee submitted that it is Primary Agriculture Credit Co- Operative Society. The object of the society is providing financial accommodation to its members for agriculture activities including marketing crops furnishing therewith a copy of its by-law to that effect. The AO not being satisfied with the explanation of the assessee, disallowed the deduction U/s 80P of the Act, citing two of Primary Agricultural Cooperative Society, Turuvekere Page 11 of 13 the objects of the society on the ground that such two activities are not entitled to claim deduction U/s 80P of the Act as any income of the society attributable to these two objects is beyond the ambit of deduction under 80P of the Act.
Aggrieved with the order of ld. AO, the assessee went in appeal before ld. CIT(A)/NFAC who dismissed the appeal of the assessee on the ground that assessee was unable to furnish explanation about the nature and source of the cash deposits and the AO was also not satisfied with the explanation offered. Further, with regard to claim of section 80(P)(2), the ld. CIT(A)/NFAC was of the view that the object of the society was to provide gold loans to members and nominal members and also to sell the materials from the village industries on commission basis and accordingly, the assessee society are not qualified to avail deduction. Further, ld. CIT(A) was of the view that assessee has also not furnished any material evidence that the society has not earned its income attributable to these activities and accordingly dismissed the appeal of the assessee.
Aggrieved by the order of ld. CIT(A)/NFAC, the assessee is in appeal before us.
7 Before us, ld. A.R. of the assessee vehemently submitted that society is working with a limited staff who also do not possess any technical competence in computers to handle the income tax proceedings. Further, the assessee society lost the track of old e- mail ID and accordingly they could not submit the relevant details before the AO during the course of assessment proceedings. Further, the assessee could not make any submission since his tax practitioner’s health condition was critical and accordingly, prayed to allow one more opportunity of hearing before the AO and also undertakes to appear before him with the necessary
Ld. D.R. on the other hand supported the orders of authorities below.
We have heard the rival submissions and perused the materials available on record. We take a note of the fact that during the course of assessment proceedings, the assessee society has submitted that the amount of Rs.47,00,000/- was deposited out of the amount received from the members of the society. In support of its claim, the list of members from whom amount is received is also submitted. The ld. AO rejected the submission of the assessee on the ground that the list of members submitted is not signed and counterfoil for remitting the cash and ledger extract is not submitted. Further, with regard to claim of deduction u/s 80P(2) of the Act, the ld. AO was of the opinion that as the objective of the society is to provide gold loan to members and nominal members as well as to sell the materials from the village industries on commission basis, therefore, assessee society does not fit in section 80P of the act. Being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we are remitting the entire issues in dispute in the present appeal to the file of ld. AO for fresh adjudication in accordance with the law after affording reasonable opportunity of being heard to the assessee. Further, we also direct the AO to verify whether the society has earned any income attributable to its commission business as observed by him in the Assessment order. The assessee society is also directed to cooperate with the proceedings before the revenue authorities and to file the relevant submissions/documents /information which would be essential and required by the revenue authority for proper adjudication of the case. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.