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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI RAJESH KUMAR & SHRI PAVAN KUMAR GADALE
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the assessee against the order dated 03.04.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2015-16 which in turn arising out of the order of Assistant Commissioner of Income Tax (CPC) [hereinafter referred to as the ACIT(CPC)].
2. The grounds taken by the assessee are reproduced as under : “1. The Learned CIT (A) erred in not condoning the delay in filing the appeal.
2 M/s. Himachal Culture Association Co-op. Credit Society Ltd.
The Learned CIT (A) erred in not deciding the issue of deduction u/s.80-P of the I.T. Act, 1961 to the Appellant Co-operative Credit Society which has been added u/s. 143(1) when the same was legally impermissible.
The Learned CIT (A) erred in not reversing the order u/s. 154 of the I.T. Act, 1961 as it is passed without issuing notice to the assessee, particularly when the Jurisdictional High Court had decided and settled the issue and therefore violated the Principles of Natural Justice.
4. The order passed by the CIT (A) may kindly be set aside. The appellant craves leave to adduce, add, amend, alter or delete any of above ground of appeal before or at the time of hearing of this appeal.”
3. The only issue raised by the assessee is against the order of Ld. CIT(A) upholding the order of ACIT(CPC) wherein the deduction claimed by the assessee under section 80P(2)(a)(i) has been rejected by the CPC in an order passed under section 143(1) of the Act and Ld. CIT(A) also upholding the action of the AO in rejecting the rectification application moved by the assessee under section 154 of the Act.
The facts in brief are that assessee is credit co-operative society giving credits and financial assistance to and accepting deposits from its members only. The said society is registered under Maharashtra Government Society Act and is wholly and exclusively engaged in providing credit facilities to its members and no business is transacted with persons other than the members of the society. The primary objective of the assessee is to inculcate and engage the members to save money and uplift their standard of living by mutual financial assistance and is in the nature of self help group for the members. The society claimed deduction under section 80P(2)(a)(i) from its income in the return of income filed on 14.09.2015. The gross total income of the assessee was Rs.11,09,201/- which was claimed as exempt under section 80P(2)(a)(i) of the Act. The books of 3 M/s. Himachal Culture Association Co-op. Credit Society Ltd. accounts of the assessee were audited by the auditors of the society. The return of the assessee was processed under section 143(1) vide order dated 12.11.2015 wherein the deduction claimed by the assessee under chapter VIA under section 80P(2)(a)(i) was rejected and a tax demand of Rs.3,29,760/- was raised. Thereafter, the assessee moved a rectification application before the CPC, Bangalore. However, the same was also rejected in a standard manner without application of any mind by passing the same order as was passed under section 143(1) of the Act dated 17.02.2016 which was passed in consequence to the rectification application filed by the assessee. Thereafter, the assessee preferred an appeal before the Ld. CIT(A) which was late by 440 days and we note that assessee has explained the delay in filing the appeal before the Ld. CIT(A) which has been discussed by the appellate authority in the appellate order. The Ld. CIT(A) also discussed the merits of the case and after taking into consideration the reply of the assessee rejected the appeal of the assessee by observing and holding that the appeal is filed late by 440 days and the delay is not explained without giving its decision on merit.
After hearing both the parties and perusing the material on record, we observe that the assessee is a co-operative credit society engaged in the business of providing financial assistance to its members which is met out from deposits which it accepts from its members and thus ,the society is not doing business with public at large. The object of the society is to promote saving habits in the members and is in the nature of self help group. The society has been earning similar income in the past
4 M/s. Himachal Culture Association Co-op. Credit Society Ltd. also and in the assessment year 2014-15 a similar claim of the assessee society was rejected by the AO. However, in appellate proceedings the Ld. CIT(A) vide order No.CIT(A)-38/ITO- 26(1)(5)/IT-400/2016-17 allowed the appeal of the assessee.
The facts in the current year are identical to one as were involved in the A.Y. 2014-15. The undisputed facts are that the assessee is deriving income by way of interest from its members and is also paying interest to those members from whom it accepts deposits and net surplus is claimed as exempt under section 80P(2)(a)(i) of the Act. The Ld. CIT(A) has merely rejected the claim of the assessee on the technical grounds after discussing the merit of the case that the appeal of the assessee is barred by limitation. In our opinion, the appeal should not be denied on the basis of technicalities specially in those cases where the people involved are not educated and the mere rejection of condonation of delay should not result in unnecessary harassment and non consideration of meritorious matters being rejected at the threshold. The case of the assessee finds support from the decision of Hon’ble Apex Court decision in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. 167 ITR 471 wherein the Hon’ble Supreme Court has, while considering the delay in filing the appeal has held as under: “2.2 In view of the reasons stated hereinabove, it is prayed that the delay in filing the above appeal be condoned. In this connection, reliance is placed on the judgement of the Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Ors. (167 ITR 471), wherein while considering the delay in filing an appeal by the state, the Hon'ble Supreme Court observed as under.
"It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not 5 M/s. Himachal Culture Association Co-op. Credit Society Ltd. appear to have percolated down to all other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that:
1. 1. Ordinarily a litigant does not benefit by lodging an appeal late.
2. Refusing to condone delay can result in a meritorious matter being thrown out 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, common sense and pragmatic manner.
4. When substantial justice and technical considerations are pitted against each other, 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 non-deliberate delay.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malafides. 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 it is expected to do so.”
Even on merits the case of the assessee is squarely covered by the following decisions: 1. Quepem Urban Co-operative Credit Society Ltd. vs. ACIT [2015] 377 ITR 272 (Bombay) [2015] 58 taxmann.com 113 2. Pr. CIT vs. Goa PWD Staff Co-op. Credit Society Ltd. [2016] 73 taxmann.com 381 [Bombay] 3. Belgaum Merchants Co-op. Credit Society Ltd. vs. CIT(A) [2015] 64 taxmann.com 274 (Karnataka) 4. CIT vs. Jafari Momin Vikas Co-op. Credit Society Ltd. [2014] 362 ITR331(Gujarat) 5. CIT vs. Kalpadi Co-operative Township Ltd. [2016] 74 taxmann.com 226 (Madras)
Since in this case the claim of the assessee has been accepted by the Revenue in the year 2014-15, therefore there is no ground or justification for rejecting the claim in the current year. Moreover, the CPC has no authority to reject the claim under section 80P(2)(a)(i) of the Act in an order passed under section 143(1) of the Act which is a summary assessment and thus even the order passed by CPC and subsequent rejection of the rectification application moved by the assessee is also 6 M/s. Himachal Culture Association Co-op. Credit Society Ltd. wrong and thus can not be sustained. In view of these facts, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to allow this claim of the assessee under section 80P(2a)(i).
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 03.02.2021.