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Facts
The assessee, Mantri Ganna Vikas Parishad, filed its return declaring Nil income, claiming exemption under Section 80P of the Income Tax Act, 1961. The AO rejected the Section 80P claim, disallowed 50% of expenses, and added interest income, completing the assessment under Section 143(3). The assessee's appeal to the Addl/JCIT(A)-5 was dismissed due to a delay of 183 days in filing.
Held
The Tribunal noted that the CIT(A) dismissed the appeal solely on grounds of delay without addressing the merits. Considering the assessee deserves an opportunity to present its case, the Tribunal restored the matter to the file of the Assessing Officer for a fresh assessment with a direction to provide a reasonable opportunity of being heard to the assessee.
Key Issues
The key issues were the CIT(A)'s dismissal of the appeal due to a delay of 183 days without condoning it or addressing the merits, and whether the assessee was entitled to Section 80P deduction, and the justification for the AO's ad-hoc expense disallowance and interest income addition.
Sections Cited
80P, 2(19), 143(3)
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2014-15 Mantri Ganna Vikas Parishad v. The Income Tax Officer-1 Parsendi, Bahraich Bahraich C/o Ayyubi Chambers Raniganj, Lakhimpur Kheri TAN/PAN:AAALM1622L (Appellant) (Respondent) Appellant by: Shri K. R. Rastogi, C.A. Respondent by: Shri Sanjeev Krishna Sharma, D.R. Date of hearing: 18 03 2025 Date of pronouncement: 19 03 2025 O R D E R
This appeal has been preferred by the assessee against order dated 16.08.2024, passed by the Addl/JCIT(A)-5, Mumbai for Assessment Year 2017-18.
The brief facts of the case are that the assessee filed its return of income for the year under consideration in ITR-5 on 21.09.2015, declaring income at Nil and claiming whole of its receipts exempt under section 80P of the Income Tax Act, 1961 (hereinafter called “the Act’). The case of the assessee was selected for scrutiny under CASS. In this case, the main issue involved was whether the assessee was entitled for deduction under section 80P of the Act or not. In support of its claim, the assessee submitted reply with supporting documents. After considering the submissions of the assessee, the Assessing Officer (AO) observed that deduction under section 80P of the Act was allowable to Co-operative Societies and that since the assessee neither fell under the definition of ‘Co-operative Society’ as defined under section 2(19) of the Act and nor was supported by section 5 of the U.P. Sugar Cane (Requisition of Supply & Purchase) Act, 1953, the deduction claimed by the assessee under section 80P of the Act is not allowable. The AO held that the assessee had suppressed its net assets by showing its bank balance at low and that it was clear that the assessee had produced inaccurate particulars in its final accounts and, therefore, the books of account of the assessee were rejected. The AO, accordingly, did not accept the expenses booked by the assessee and disallowed 50% of such expenses out of the expenses debited in the profit and loss account of the assessee. The AO also noticed from the Income & Expenditure Account that the assessee had earned interest of Rs.1,79,568/- from Bank FDs and deposits, which was added to the income of the assessee. The AO completed the assessment under section 143(3) of the Act, computing the income of the assessee as under:
Gross Commission received from Sugar Mills :Rs.19,83,835/- Less disallowance of 50% expenses :Rs.09,91,917/-
Rs.09,91,917/- Addition of interest income :Rs.01,79,568/- Total income :Rs.11,71,485/- Rounded off :Rs.11,71,490/-
Aggrieved, the Assessee preferred an appeal before the Ld. First Appellate Authority. The Addl/JCIT(A)-5, Mumbai dismissed the appeal of the assessee for the reason of there being a delay of 183 days in filing of the appeal before the Ld. First Appellate Authority.
Now, the assessee has approached this Tribunal challenging the dismissal of its appeal by the Addl/JCIT(A)-5, Mumbai by raising the following grounds of appeal:
1. That the Ld. Additional / JCIT (A)-5, Mumbai, erred on facts and in law in dismissing the appeal in limine without condoning the delay in filing of the appeal.
2. That the Addl. / JCIT (A) erred in not considering that the Assessee has duly explained the Cause for delay in filing of Appeal. WITHOUT PREJUDICE TO ABOVE 3. That the Authorities below erred on facts and in law in making adhoc disallowance of Rs.9,91,917/- being 50% of the expenses debited without appreciating that the Assessee is a State Government body governed by Cane Commissioner under the U. P. Sugar Cane Regulation Act and all the funds have been incurred as per the directions of the Cane Commissioner.
4. That the Authorities below erred on facts and in law in not considering that the Assessee is Fund Management Body of the State Government established by an Order passed by the Cane Commissioner, U.P., without any right of absolute ownership over the funds placed at its disposal and thus neither the expenditure nor the Income belongs to the Assessee Counsel.
5. That the Authorities below erred on facts and in law in treating Income on Bank FDR's Rs.179568/- as Income from other sources by relying on the judgement of Hon'ble Supreme Court in the case of Totgars reported in 322 ITR 283 without appreciating that the said judgement pertains to Co-operative Societies and the Assessee is not a Co- operative Society.
6. The Additions upheld are highly excessive, contrary to the facts, law, Rules, Regulations and principle of natural justice without providing sufficient opportunity to have its say on the reasons relied upon by him.
During the course of hearing before me, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the Addl/JCIT(A)-5, Mumbai had dismissed the appeal of the assessee for the reason of delay of 183 days in filing of the appeal before the Ld. First Appellate Authority and that the Addl/JCIT(A)-5, Mumbai had not dealt with the issues in dispute on merits. The Ld. A.R. prayed that the matter may be restored to the file of the AO for deciding the issues in dispute on merits of the case.
The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the Assessing Officer as requested by the Ld. A.R.
I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the assessee deserves an opportunity to present its case and, therefore, I restore this file to the AO with a direction to frame the assessment afresh after providing reasonable opportunity of being heard to the assessee. I also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
In the result, the appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open Court on 19/03/2025.