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Facts
The assessee, an agricultural credit co-operative society, deposited cash during demonetization period. The AO treated these deposits as unexplained income under Section 69A and taxed them under Section 115BBE. The assessee claimed exemption and did not file an income tax return, later providing expenditure details.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal for not being maintainable under Section 249(4) as the assessee's income was claimed to be exempt, thus not liable for advance tax. The Tribunal further held that the dismissal on merits was also unsustainable and remitted the issue back to the CIT(A) for fresh consideration.
Key Issues
1. Maintainability of appeal before CIT(A) when no tax was paid due to claimed exemption. 2. Whether the CIT(A) correctly dismissed the appeal on merits without considering the assessee's submissions.
Sections Cited
69A, 115BBE, 144, 250, 249(4), 142(1), 133(6), 80P
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PAN NO :AAQCS7844H APPELLANT RESPONDENT Appellant by : Sri Ramangowda S. Gowda, A.R. Respondent by : Sri Ganesh R. Ghale, Standing counsel for department Date of Hearing : 14.10.2024 Date of Pronouncement : 09.01.2025 O R D E R
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 18.7.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1066817120(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2017-18. The assessee has raised following grounds of appeal:
Srirampura Prathamika Krishi Pathina Sahakara Sangha Limited, Chitradurga Page 2 of 5 2. Brief facts of the case are that the assessee is a primary agricultural credit co-operative society established under the Karnataka State Co-operative Society Act, 1959 and is providing credit facilities to its members and also supplying the items like kerosene, fertilizers, food grains, etc. for the purpose of supplying them to its members. The notice u/s 142(1) of the Act was issued on 4.1.2018 calling for return of income for the assessment year 2017- 18 on or before 3.2.2018 but the assessee has neither filed any return of income nor filed any submission or response to the above notice. Further, during the course of assessment proceedings, the AO found that assessee has deposited huge cash into his bank account with CDCC bank Hosadurga. The information has also been called for from the bank u/s 133(6) of the Act and on verification of the same, it was found that the assessee had deposited during the demonetized period a sum of Rs.13,82,000/-. The AO in his assessment order had observed that the assessee vide letter dated 5.9.2019 furnished the details of income and expenditure statement, profit & loss account and cash book. Further, the assessee in the said letter stated that they have exempted income for the financial year 2016- 17 and therefore, not filed the income tax return for the said period. The AO found the submission made by the assessee as not satisfactory and as the assessee had deposited cash in old currencies of denomination of Rs.500/- & Rs.1,000/-, amounting to Rs.13,32,000/- into their bank account, the entire deposits were treated as assessee’s unaccounted income for the assessment year 2017-18 by invoking the provisions of section 69A of the Act and taxed u/s 115BBE of the Act.
2.1 Further, as the assessee had audited his books of accounts as per the provisions of the State Co-operative Society Act of Karnataka and the net profit as per income and expenditure statement was amounting to Rs.1,13,376/- and hence a sum of Rs.1,13,376/- was Srirampura Prathamika Krishi Pathina Sahakara Sangha Limited, Chitradurga Page 3 of 5 also considered by the AO as income of the assessee and brought to tax and accordingly, assessed on a total income of Rs.14,45,376/-.
Aggrieved by the assessment completed u/s 144 of the Act dated 25.11.2019, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
3.1 The ld. CIT(A)/NFAC dismissed the appeal of the assessee on the ground that the assessee had not paid the tax on returned income and the particulars of payment was also not mentioned in column 8 of Form 35. Further, as there was no response to deficiency letter dated 3.6.2024 and accordingly held that as the assessee has not paid tax on returned income/particulars of payment was not mentioned in column 8 of Form 35, the appeal of the assessee is not maintainable as per section 249(4) of the Act. Further, even on the merits of the case, ld. CIT(A) by relying on the order of ITAT SMC ‘C’ Bench Bangalore in dated 18.2.2022 has dismissed this ground also by holding that there was no response from the assessee to various notices/SCN issued by the AO. Aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before the Tribunal. Before us, the ld. A.R. of the assessee submitted that before the AO, the assessee had categorically submitted that the entire income of the assessee are exempted and therefore, the assessee have not filed the income tax return for the said period. Therefore, dismissing the appeal on the ground that appeal is not maintainable as per section 249(4) of the Act is illegal and bad in law. Further, the ld. A.R. of the assessee submitted that the case law relied upon by the assessee is not at all applicable to the present fact of the case as during the course of assessment proceedings, the assessee has submitted income and expenditure account along with cash book during the course of assessment Srirampura Prathamika Krishi Pathina Sahakara Sangha Limited, Chitradurga Page 4 of 5 proceedings & the AO has passed an Order U/s 144 of the Act only on the ground that the assessee had not filed its return of Income.
Ld. D.R. on the other hand supported the orders of the authorities below.
We have heard the rival submissions and perused the materials available on record. It is pertinent to note that the provisions of section 249(4)(b) of the Act is clear that appeal before the ld. CIT(A) should be admitted only when the assessee has paid an amount equal to the amount of advance tax, which was payable by him. Where the return of income has not been filed the proviso to said section also describe that the assessee will get exemption from this clause, if an application is made before the ld. CIT(A) for not paying an amount equal to the amount of advance tax for any good and sufficient reason to be recorded in writing. In the instant case, as observed by the AO in para 6 of the assessment order that the assessee vide letter dated 5.9.2019 had stated that they have exempted income for the financial year 2016-17 and therefore, not filed the income tax return for the said period. Before us also, ld. A.R. of the assessee submitted that the assessee’s income are exempted and therefore, the question of paying advance tax does not arise in the case of the assessee as no amount is payable by the assessee. Being so, we are of the opinion that dismissing the appeal on the grounds that the same is not maintainable as per section 249(4) of the Act is not sustainable as the income of the assessee are exempt from income tax. The assessee is not liable to pay any advance tax even though they have not filed the return of income. Therefore, this ground of the assessee is allowed. 5.1 Further, with regard to dismissal of the appeal on the merit of the case by relying on the decision of this ITAT in dated 18.2.2022 is also not sustainable as in that case, there was no response from the assessee to various notices/SCN issued by the AO, where as in the present case assessee Srirampura Prathamika Krishi Pathina Sahakara Sangha Limited, Chitradurga Page 5 of 5 had submitted the reply along with the cash book and income and expenditure account during the course of assessment proceedings. We are of the considered opinion that since the ld. CIT(A)/NFAC has not considered the grounds of appeal raised by the assessee on merits and therefore in the interest of justice and equity, we are remitting the entire issue in dispute to the file of ld. CIT(A)/NFAC for fresh consideration and to decide the same on merits in accordance with law after giving reasonable opportunity of being heard to the assessee. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 9th Jan, 2025