SOYALA GRAM SEWA SAHAKARI SAMITI LIMITED,TONK vs. ITO, TONK, TONK

ORDER PER DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the assessee against the order of ld. CIT (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 4thJune, 2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2015-16. The assessee has raised the following grounds of appeal :-

2. That the ld. CIT (A) has erred in law in confirming the action of the Ld. AO in disallowing the claim of the appellant u/s 80P (2) of the Income tax Act, 1961 for Rs. 1,14,509/- on the alleged violation of the appellant in complying with the provisions of section 80A(5) of the Income tax Act, 1961.

3. That the ld. CIT (A) has erred in law in confirming the action of the Ld. AO in disallowing the claim of the appellant u/s 80P (2) of the Income tax Act, 1961 for Rs. 5,62,832/- being interest received from Co-operative Bank on the alleged violation of the appellant in complying with the provisions of section 80A(5) of the Income tax Act, 1961 4. That the appellant craves leave to add, amend, alter, withdrawn any of the grounds of appeal before hearing.

2. The appeal filed by the assessee is delayed by 26 days. The ld. A/R has filed condonation applications dated 28.08.2024 and 30.08.2024 along with an Affidavit of Shri Ram Narain, Secretary of Soyala Gram Sewa Sahakari Samiti Ltd., duly verified by Notary Public, which reads as under :- “ I, Ram Narain Jat S/o Shri Badri Lal Jat, aged years, secretary of Soyala Gram Sewa Sahkari Samiti Ltd., Gram Soyala, Jaipur Road, Tonk (Rajasthan) – 304 001, do hereby solemnly affirm and declare as under :-

Soyala Gram Sewa Sahakari Samiti Ltd., Tonk.

1. That for the AY 2015-16 assessment of Income of our society was finalized by the ld. AO, viz. Assessment Unit, NFAC, in terms of section 147 r.w.s. 144B of the Income Tax Act, 1961.

2. Being aggrieved from the order the ld. AO an appeal was preferred before the Hon’ble CIT (A), who passed order u/s 250 of the Income Tax Act, 1961 vide order dated 04.05.2024 and uploaded in the online account on the same day.

3. As the Hon’ble CIT (A) did not allow any relief to us and hence we decided to file appeal before the Hon’ble ITAT, JaipurBench, Jaipur and as per provisions of section 253(3) of the Income Tax Act, 1961 the appeal was required to be filed on or before 3rd August, 2024. However, the same could not be filed in time due to the reason that our counsel Shri Ravindra Kumar Jain, Advocate had to be admitted in hospital on 10.07.2024 for cardiac problem and was operated on 11.07.2024 and he was advised by the treating doctor to take bed rest till 1 month from the date of operation. Before expiry of one month on 4th August, 2024 his brother Shri Chandresh Kumar Jain, advocate had expired. On account of these reasons Shri Ravindra Jain could not attend his office till 16th August, 2024. Even during this period from 11.07.2024 to 18.08.2024 his mobile phone was also switched off as per advice of treating doctor. After his joining the office he took stock of his pending matters and only thereafter necessary preparations could be made for filing the instant appeal before the Hon’ble ITAT.

Jaipur, 27/08/2024. Sd/- (Ram Narain Jat) Deponent “ Considering the reasons mentioned in the said applications accompanied by an Affidavit of the assessee, we feel that the reasons mentioned in the Affidavit constitute sufficient cause for not filing the appeal within the time before us. Therefore, taking a lenient view and considering the principles laid down in the case of Collector, Land Acquisition vs. Mst. Katiji, 1987 AIR 1353 (SC), we condone the delay of 26 days in filing the appeal before us.

herein above is an additional ground which, due to inadvertence, could not be taken up before the ld. CIT (Appeals). The assessee has, thus, prayed that this additional ground being purely legal in nature and does not require any adjudication of facts, the same be admitted for adjudication. In this regard, the ld. AR placed reliance on the judgment of Hon’ble Supreme Court in the case of NTPC vs. CIT, 229 ITR 383 (SC).

4. We have heard both the sides in respect of admission of additional ground. The additional ground raised by the assessee is purely legal in nature and also goes to the root of the matter regarding the validity of the assessment. The assessee has disputed the action of the AO in violation of provisions of section 147 of the IT Soyala Gram Sewa Sahakari Samiti Ltd., Tonk. Act, 1961. Therefore, this issue raised by the assessee can be adjudicated on the basis of the facts and material available on the assessment record. Accordingly, in view of the decision of the Hon’ble Supreme Court in case of NTPC vs. CIT, 229 ITR 383 (SC) the additional ground raised by the assessee is admitted for adjudication.

5. The brief facts of the case are theassessee is a cooperative society registered under the name and style “Soyala Gram Sewa Sahakari Samiti Ltd.” The assessee society did not file its Return of Income for the year under consideration. On receipt of information that the assessee Samiti had made cash deposits to the tune of Rs.63,33,000/- in its account maintained with Axis Bank Limited during the year under consideration, the AO vide notice under section 148A(b) of the IT Act, 1961 afforded an opportunity to the assessee to explain the source of cash deposit in its bank account. However, no reply was filed by the assessee. Accordingly, the case of the assessee was reopened by issuing notice under section 148 of the IT Act, 1961 dated 29.03.2022 requiring the assessee to file its return of income. In response, the assessee filed its return of income declaring Nil income after claiming deduction of Rs. 1,14,509/- under section 80P on 16.01.2023. The AO framed the assessment under section 143(3) read with section 147, read with section 144B of the IT Act, 1961, after duly considering the submissions enclosing Soyala Gram Sewa Sahakari Samiti Ltd., Tonk. therewith relevant documents filed by the assessee, by passing the impugned order with an assessed income of Rs. 6,77,341/- on account of proposed additionon account of Interest income under section 56 of the IT Act of Rs. 5,62,832/- and addition on account of proposed disallowance under section 80P of Rs. 1,14,509/-.

The theory enunciated by the Hon`ble Courts in all these judgements is clearly applicable in the instant case and hence it is sincerely requested that the assessment order making disallowances on other items may please be quashed.”

Soyala Gram Sewa Sahakari Samiti Ltd., Tonk.

S.No. Name of Bank Cash Deposited 1. Axis Bank Limited Rs. 63,33,000/- Total Rs. 63,33,000/- “It is further noticed that the assessee has not filed his return of income for the AY 2015-16. In absence of return, the above transactions made by the assessee remains unexplained. Thus income from above transactions has not been offered for tax and due tax has not been paid.”

The issue of cash deposit was examined by the ld. AO during assessment proceedings and in the assessment order on page 6 the ld. AO states that no variation is proposed on the issue of cash deposit by the assessee society in its bank Soyala Gram Sewa Sahakari Samiti Ltd., Tonk. account and finally he has not made any addition on this score. He has disallowed the claim of the assessee u/s 80P claimed on interest from Bank and the surplus appearing in Profit and Loss Account. It is apparent that no addition has been made by the ld. AO on the issue on which reassessment was undertaken by him. In various case laws relied upon by the ld. AR the Hon`ble Courts including the jurisdictional High Court of Rajasthan have held that if the AO finds that the issue on which reassessment proceedings were initiated does not subsist then the ld. AO looses jurisdiction to assess other issues of concealment that comes to his knowledge. In this regard we quote the relevant findings of the Hon`ble Rajasthan High Court in the case of CIT v/s Shri Ram Singh (306 ITR 343) :-

“29. To clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the AO were to come to conclusion, that any income chargeable to tax, Which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact, that the AO entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the AO may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings under section 147. 30.xxx xxx 31. xxx xxx Soyala Gram Sewa Sahakari Samiti Ltd., Tonk.

Further it is noted that The ld. AO was required to stop at the point when he found that the issue of cash deposit of Rs. 63,33,000/- into bank account was out of genuine sources and was required to pass a NIL order.Once it is found that none of the reasons recorded by the Assessing Officer for initiating proceedings under section 147 was germane to initiation of such proceedings, then it has to be held that the AO had no reason to believe that any income had escaped assessment and, therefore, any further proceeding would be without jurisdiction. But still he moved further without having jurisdiction and made other additions in the assessment which is illegal as the AO has exhausted his jurisdiction as soon as he was satisfied Soyala Gram Sewa Sahakari Samiti Ltd., Tonk. that the cash deposit of Rs.63,33,000/- in the bank account of the assessee, for which the case of the assessee was reopened under the provisions of section 147 read with section 148 of the IT Act, was satisfactorily explained. Therefore, taking into consideration the various case laws discussed herein above, we are of the view that the other disallowances/additions made by the AO in the assessment order are illegal. We, therefore, allow the Ground no. 1 of the assessee and quash the other disallowances/additions made by the AO.

Order pronounced in the open court on 08/01/2025.