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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED & Ms. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the assessee against the order dated 16.03.2020 passed by the PCIT, Gandhinagar, Ahmedabad for the Assessment Year 2015-16.
The grounds of appeal raised by the assessee are as under :
“(1) On the facts and in the circumstances of the case, the order passed by the learned CIT, Gandhinagar, Ahmedabad u/s.263 of the I.T. Act is void ab initio being bad in law.
(2) On the facts and in the circumstances of the case, the learned CIT erred in setting aside the assessment order dated 20.07.2017 passed by the Income Tax Officer, Patan Ward-5, Mehsana under section 143(3) of the Act, directing the Assessing Officer to pass a fresh assessment order.
Page 2 of 3 3. The assessee is a Co-operative Society carrying on business of providing credit facilities to its members. The return of income was filed by the assessee on 15.09.2016 declaring total income at Rs.3,18,490/-. The case was selected for scrutiny and the assessment under section 143(3) of the Income Tax Act, 1961 was finalised on 20.07.2017 thereby making addition of Rs.49,919/- on account of undisclosed commission and interest income. A proposal was received from the Assessing Officer for revision of the order passed by the Assessing Officer under Section 143(3) of the Act on 08.05.2018 as the Assessing Officer has allowed the interest income from Co-operative Banks which was otherwise not allowable in the light of principles enunciated by Hon’ble Karnataka High Court in Totgars Co-operative Sales Society, 83 Taxmann.com 140. It was found that the assessee society earned interest income from Mehsana Urban Co-operative Bank amounting to Rs.8,05,041/- and the net interest mount claimed under Section 80P was Rs.6,61,617/- after deducting the interest paid on overdraft against Fixed Deposits. The PCIT, Gandhinagar issued show cause notice under Section 263 of the Act for which the assessee filed its submission and objected the proceedings under Section 263 of the Act. The PCIT vide order dated 16.03.2020 set aside the Assessment Order passed under Section 143(3) of the Act and directed the Assessing Officer to reframe the assessment denovo.
Being aggrieved by the Order under Section 263 of the Act, the assessee is in appeal before us.
The Ld. AR submitted that the PCIT has ignored the fact that the issue of interest was very much before the Assessing Officer in assessment proceedings under Section 143(3) of the Act. Therefore, there should not be any revision of the order as envisaged in Section 263 of the Act.
The Ld. DR relied upon the order of the PCIT.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the entire details called for during the assessment proceedings were submitted by the assessee at the time of assessment under Section 143(3) of the Act and the Assessing Officer was very well aware that Page 3 of 3 section 80P claim was reflected in the details of the assessee. The assessee vide letter dated 22.05.2017 submitted the details regarding deduction under Section 80P of the Act which was claimed in the return of income which included in the interest income from Mehsana Urban Co-operative Bank. The PCIT has issued the show cause notice under Section 263 on 14.02.2020 on the very same issue which was verified by the Assessing Officer in Section 143(3) proceedings itself. Once the issue verified by the Assessing Officer and the jurisdictional Court has allowed the said claim related to interest income earned from Co-operative Bank, the PCIT cannot exercise Section 263 of the Act. The ld. A.R. aptly relied upon the decision of State Bank of India vs. CIT (2016) 72 Taxmann.com 64 dated 25.04.2016. On the basis of Hon’ble Karnataka High Court decision in the case of Totgars Co-operative Sales Society (supra), the PCIT cannot invoke provisions of section 263 of the Act. Thus, Section 263 does not sustain and appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 21st day of February, 2022.