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Facts
The assessee, a primary credit cooperative society, failed to file its return of income by the due date and filed a belated return. The Assessing Officer disallowed a deduction claimed under section 80P due to the late filing and made additions under section 44AD. The CIT(A) partly allowed the appeal but confirmed the disallowance and additions, reducing the profit estimation.
Held
The Tribunal noted that in similar past cases for the assessee, the matter was remanded for quantification of deduction u/s 80P. However, for the current assessment year, due to the return not being filed by the due date, the deduction u/s 80P was disallowed. The additions under section 44AD were set aside and remanded for fresh assessment.
Key Issues
Whether the disallowance of deduction u/s 80P is justified when the return was filed belatedly, and whether additions made u/s 44AD based on estimated net profit are valid.
Sections Cited
80P, 139(1), 147, 144, 69A, 44AD, 80AC, 148, 148A, 270A, 270A(9)
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
ORDER PER VINAY BHAMORE, JM: Both the above captioned appeals filed by the assessee are directed against the separate orders dated 27.09.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2018-19 respectively. 2. Since the facts are identical and both the above captioned appeals were heard together, therefore, we proceed to dispose of the same by this common order. 3. First, we shall take up the appeal of the assessee in for adjudication.
4. The appellant has raised the following grounds of appeal :-
1. The Ld. AO erred in (CIT-A erred in confirming) making the disallowance of claim of Rs.25,48,804/-u/s 80P(2)(a)(i)/ 80P(2)(d) of the IT Act.
2. The Ld. CIT(A) ought to have appreciated the fact that claim u/s 80P(2)(a)(i) was claimed by filing return of income in response to notice u/s 148.
3. The Ld. AO erred in (CIT-A erred in confirming) making the addition of Rs.14,79,806/-which is 8% of Rs.1,84,97,572/-on account of Business Receipts u/s 44AD of the IT Act.
4. The Ld. AO erred in (CIT-A erred in confirming) making the addition of Rs.5,99,037/-which is 8% of Rs. 74,87,967/- on account of Business Receipts u/s 44AD of the IT Act.
5. The appellant craves for to leave, add, alter, modify, delete above grounds of appeal before or at the time of hearing, in the interest of natural justice.”
5. Facts of the case, in brief, are that the assessee is a primary credit cooperative society registered under Maharashtra Co- operative Societies Act and is engaged in accepting deposits and providing loan to its members. On the basis of information that the assessee society has deposited cash of Rs.83,26,709/- and the return of income has not been furnished, notice u/s 148A and 148 respectively were issued. The assessee furnished belated return in response to notice u/s 148 declaring taxable income at Nil after claiming deduction of Rs.25,48,804/- u/s 80P of the Act. The Assessing Officer observed that as per section 80AC, the deduction & 2434/PUN/2024 cannot be allowed unless the return of income was filed by the due date i.e. u/s 139(1) of the Act. Since the return of income was not filed u/s 139(1), the Assessing Officer disallowed the deduction of Rs.25,48,804/- claimed by the assessee u/s 80P of the Act and completed the assessment on a total income of Rs.51,47,357/- u/s 147 r.w.s. 144 of the Act. The above assessed income includes Rs.18,49,757/- u/s 69A and Rs.2,59,85,539/- u/s 69A and amount of Rs.7,48,796/- u/s 44AD and also deduction of Rs.25,48,804/- u/s 80P disallowed by the Assessing Officer.
6. After considering the reply of the assessee, Ld. CIT(A)/NFAC partly allowed the appeal of the assessee by restricting the income assessed by Assessing Officer to certain extent. However, the deduction claimed u/s 80P of Rs.25,48,804/- was confirmed by Ld. CIT(A)/NFAC. It is this order against which the assessee is in appeal before this Tribunal.
7. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR further submitted that in the case of the assessee for three assessment years i.e. for assessment years 2015-16, 2016-17 and 2018-19, proceedings u/s 147 were initiated and cases were reopened and assessment orders were passed by the Assessing & 2434/PUN/2024 Officer, out of which for assessment years 2015-16 and 2016-17 a Co-operative Bench of this Tribunal has already remanded back the matter to the file of Assessing Officer for quantification of deduction u/s 80P of the IT Act. Accordingly, it was prayed before the Bench to restore the case of this year also i.e. for assessment year 2018-19 to the file of the Assessing Officer.
8. Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.
We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that the assessee is a primary credit cooperative society and has not furnished its return of income for the period under consideration. Even the return of income in response to notice u/s 148 was filed belatedly. Since the assessee cooperative society did not furnished complete information as desired by the Assessing Officer, the assessment was completed u/s 147 r.w.s. 144B and deduction claimed u/s 80P was also disallowed. It is worthwhile to mention here that the Assessing Officer estimated 10% net profit u/s 44AD on total receipt and credit entries of the bank accounts. In first appeal, Ld. CIT(A)/NFAC has confirmed the disallowance of & 2434/PUN/2024 deduction u/s 80P of the Act, however, the net profit estimated by the Assessing Officer at 10% was reduced to 8% and the appeal was partly allowed. We further find that a Co-operative Bench of this Tribunal in assessee’s own case for assessment years 2015-16 and 2016-17 in and 2433/PUN/2024 order dated 06.01.2025 has already restored the matter back to the file of the Assessing Officer for quantification of deduction u/s 80P of the Act. However, in the light of section 80AC for this assessment year, we find that question of allowance of deduction u/s 80P does not arise since the return of income was not filed u/s 139(1) of the IT Act. However, the Assessing Officer has estimated net profit on gross receipt and total credit entries in the bank accounts which does not appear to be correct approach since the assessee has maintained regular books of accounts and audit under the respective Acts was also conducted by the specified auditor, a copy of which was also produced before us in the paper book. The copy of registration certificate of the cooperative society and other relevant documents are also filed before the Bench. We find force in the arguments of Ld. Counsel of the assessee that matter needs to be re-verified by the Assessing Officer and accordingly, we deem it appropriate to set-aside the matter back to the file of the Assessing Officer to pass & 2434/PUN/2024 assessment order afresh after considering the documents and other details furnished by the assessee. We make it clear that Ld. Counsel of the assessee has not pressed ground nos.1 and 2 raised in the memo of appeal by filing a separate letter to this effect that the assessee does not want to press ground nos.1 and 2 which is related to the claim of deduction u/s 80P of the IT Act. Accordingly, we dismiss ground nos.1 and 2 raised by the assessee as not pressed.
Accordingly, by adjudicating ground nos.3 and 4, which is related to the addition made u/s 44AD by estimating net profit on gross receipt and credit entries in bank accounts treating the same as business receipt, we set-aside the order passed by Ld. CIT(A)/NFAC and remand the matter back to the file of Assessing Officer to pass assessment order afresh as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by the Assessing Officer in this regard and produce relevant documents/evidences in support of its contentions without taking any adjournment under any pretext, otherwise the Assessing officer shall be at liberty to pass appropriate order as per law. Thus, the ground nos.3 and 4 raised by the assessee are allowed for statistical purposes. is partly allowed for statistical purposes.
: 12. The appellant raised the following grounds of appeal :- “1. The Ld. AO erred in levying (Ld. CIT-A erred in confirming) penalty u/s 270A of Rs.15,68,978/-.
2. The Penalty order passed by AO be quashed as the Assessing Officer who initiated penalty has not specified appropriate limb w/s 270A(9)(a) to (f) in the assessment order Further even the show cause notice issued does not specify the specific limb in which the penalty u/s 270A is being levied.
3. The Ld. AO erred in levying and CIT(A) confirming penalty in respect of the addition on account of disallowance of claim u/s 80P as all the relevant materials were on the record and therefore, should not be considered to be Under-reporting of Income.
4. In any case, the addition cannot be termed as Miss-reporting of income u/s 270A(9).
5. The appellant craves for to leave, add, alter, modify, delete above grounds of appeal before or at the time hearing, in the interest of natural justice.”
13. Since we have set-aside the quantum appeal order of the assessee and remanded the matter back to the file of the Assessing Officer to pass assessment order afresh, therefore, this being the consequential penalty order also needs to be set-aside and accordingly, we remand the issue of penalty back to the file of the Assessing Officer to decide the penalty afresh after passing quantum assessment order & also after providing reasonable & 2434/PUN/2024 opportunity of hearing to the assessee. Thus, the grounds raised by the assessee in the instant appeal are partly allowed.
14. In the result, the appeal filed by the assessee in is allowed for statistical purposes.
15. To sum up, the appeal in is allowed for statistical purposes and the appeal in