SIRI SANJEEVINI PATTINA SOUHARDA SAHAKARI NIYAMAT,SIRWAR vs. THE INCOME TAX OFFICER, WARD-1,, RAICHUR

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE

BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER

ITA Nos. 1386 & 1387/Bang/2024 Assessment Years : 2017-18 & 2020-21 M/s. Siri Sanjeevini Pattina Souharda Sahakari Niyamat, The Income Tax YAG Complex, Officer, Main Road, Ward – 1, Sirwar Taluk, Raichur. Devudurga, Vs. Sirwar – 584 129. PAN: AAJAS8119A APPELLANT RESPONDENT

Assessee by : Shri Ravishankar, Advocate Revenue by : Smt. Neha Sahay, JCIT-DR

Date of Hearing : 30-08-2024 Date of Pronouncement : 30-08-2024

ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals arises out of orders dated 21/12/2022 for A.Y. 2017-18 and 18/01/2024 for A.Y. 2020-21 passed by NFAC, Delhi.

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“APPLICATION FOR CONDONATION OF DELAY FILED UNDER SECTION 5 OF THE LIMITATION ACT, 1963 The Appellant above named most respectfully submits as follows- Brief History 1. The appellant, a registered Co-operative Society filed its return of income for the assessment year 2017-18 on 14.09.2017 declaring taxable income of Rs.Nil/- after claiming deduction under section 8013 of the Act. The case

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of the appellant was selected for scrutiny by way of issuance of notice under section 143(2) of the Act dt:14.07.2021 and thereafter an order under section 143(3) of the Act came to be passed on 28.08.2018 wherein the income was assessed at Rs.66,12,171/-. 2. The appellant being aggrieved filed an appeal before the Hon'ble CIT(A) and the order under section 250 of the Act was passed on 21.12.2022 wherein substantial relief to the extent of Rs.62,91,645/- was provided by partly allowing the appeal. 3. It is submitted that the learned CIT(A) issued only one hearing notice and disposed the appeal confirming disallowance of Rs.3,20,526/- with respect to pigmy commission expenditure claimed without deducting TDS. 4. The Chartered Accountant sought for consent to file an appeal against the CIT(A) order in so far as it was against the appellant. The appellant informed the Chartered Accountant that it will place the agenda for discussion in the next board meeting. 5. The appellant submits that an order under section 263 of the Act for the AY 2017-18 was passed on 30.03.2022 and thereafter an order under section 143(3) r.w.s 263 of the Act was passed on 01.03.2023 for the AY2o17-18 without making any additions. 6. It is submitted that the appellant lost track of the CIT(A) order for the AY 2017-18 due to multiple orders passed for the impugned year and accordingly the Chartered Accountant was not informed to file an appeal against the CIT(A) order. 7. The appellant approached the present counsel for filing an appeal before the Hon'ble Income Tax Appellate Tribunal for the assessment year 2020-21 and sought for advice for the course of action available against the CIT(A) order dt:21.12.2022. 8. The counsel after examining the documents, records for the assessment year 2017-18 informed the appellant that it has a good case on merits of the matter and advised the appellant to file an appeal before the Hon'ble Tribunal with delay.

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Hon'ble Apex Court in the case of Radha Krishna Rai Vs. Allahabad Bank & Others [2000] 9 Supreme Court Cases 733 and Commissioner of Income-tax Vs. West Bengal Infrastructure Development Finance Corporation limited (2011) 334 ITR 269 (SC). 16. The appellant craves leave of this Hon'ble Tribunal to file additional submission at the time of hearing of this appeal. 17. It is humbly prayed that this Hon'ble Tribunal takes a lenient and compassionate view and condone the delay of 520 days in filing the present appeal against the order of the learned Commissioner of Income-tax (Appeals), NFAC dated 21.12.2022 before this Hon'ble Tribunal and hear the same on merits for the advancement of substantial cause of justice.” 2.1. The Ld.AR thus prayed for the delay to be condoned and he placed reliance on the following decisions in support of the submission.

a) Hon'ble Jurisdictional High Court in the case of CIT & Another Vs. ISRO Satellite Center, in ITA No. 532 of 2008 vide order dated 28/10/2011 b) Coordinate Bench of this Tribunal in the case of Smt. Shakuntala Hegde, Legal Heir of Mr. Ramakrishna Hegde Vs. ACIT, in ITA No. 2785/Bang/2004 order dated 25/04/2006 c) Hon'ble High Court of Madras in the case of Commissioner of Income- tax Vs. K.S.P.Shanmugavel Nadar (1987) 30 Taxmann 133 (Madras). d) Hon'ble Tribunal in the case of M/s. Midas Polymer Compounds Pvt Ltd Vs. ACIT in ITA No.288/Coch/2017 dated 25.06.2018. e) Hon'ble High Court of Bombay in the case of Anatek Services Pvt Ltd Vs. Asst.Commissioner of Income-tax-10(1) in ITA No.102 of 2018 dated 11.02.2022. f) Hon'ble Apex Court in the case of Collector, Land Acquisition Vs. MST.Katiji and Others (1987) 167 ITR 471 and g) Concord of India Insurance Co. Ltd., Vs Smt. Nirmala Devi and Others 118 ITR 507.

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h) Hon'ble Apex Court in the case of Radha Krishna Rai Vs. Allahabad Bank & Others [2000] 9 Supreme Court Cases 733 and i) Commissioner of Income-tax Vs. West Bengal Infrastructure Development Finance Corporation limited (2011) 334 ITR 269 (SC). j) M/s. Space Employees Co-operative Housing Society Ltd. vs. ITO in ITA Nos. 1072 to 1074/Bang/2023 vide order dated 31/01/2024

We have perused the submissions advanced by both sides in the light of records placed before us.

2.2. From the affidavit filed by the assessee, there does not arise any malafide intention on behalf of assessee for not filing the present appeals before this Tribunal.

2.3. In our view, the assessee has made out a reasonable cause for the delay that is caused in filing the present appeals before this Tribunal. Nothing to establish any contrary intention has been filed by the revenue before this Tribunal. In our opinion there is a sufficient cause for condoning the delay as observed by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 in support of his contentions.

2.4. We place reliance on following observations by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 wherein, Hon’ble Court observed as under:- “The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in

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order to enable the courts to do substantial justice to parties by disposing of matters on de merits". The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. 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 appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that : 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at 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. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”

2.5. Considering the submissions by both sides and respectfully following the observation by Hon’ble Supreme Court, we find it fit to condone the delay caused in filing the present appeals as it is not attributable to the assessee. In any event, though the procedural law pertaining to the limitation has been drafted to construe it strictly, the fact remains that, considering such technicalities will not advance the cause of justice.

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2.6. We take support from the observations of Justice Krishna Iyer wherein he has quoted at various occasion while dealing with technicalities that “any interpretation that alludes substantive justice is not to be followed and that substantive justice must always prevail over procedural technicalities”. Even Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 has laid down a ratio of similar principles. Respectfully following the thoughts propounded by Late Hon’ble Justice Krishna Iyer, as well as various decisions of Hon’ble Supreme Court on similar issues, I condone the delay caused in filing the present appeals before this Tribunal. Accordingly, we condone the delay in filing the present appeal for A.Y. 2017-18 before this Tribunal. Considering the above facts, the delay of 520 days in filing the present appeal for A.Y. 2017-18 stands condoned.

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“APPLICATION FOR CONDONATION OF DELAY FILED UNDER SECTION 5 OF THE LIMITATION ACT, 1963 The Appellant above named most respectfully submits as follows- Brief History 1. The appellant, a registered Co-operative Society filed its return of income for the assessment year 2020-21 on 30.10.2020 declaring taxable income of Rs.Ni1/- after claiming deduction under section 8oP of the Act. The case of the appellant was selected for scrutiny by way of issuance of notice under section 143(2) of the Act dt:14.07.2021 and thereafter an order under section 143(3) of the Act came to be passed on 21.09.2022 wherein the income was assessed at Rs.40,07,016/-, being disallowance of deduction claimed under section 8oP of the Act. 2. The appellant being aggrieved filed an appeal before the Hon'ble CIT(A) and the order under section 250 of the Act was passed on 18.01.2024 dismissing the appeal. 3. It is submitted that the appellant had mentioned the mail id sspssnbankPgmail.com in the form 35 while filing the appeal on 12.12.2022, however, the hearing notices were sent to the mail id soppimathiitrPgmail.com which was operated by an assistant of the tax auditor who handled the income tax audit for the AY 2019-20 and AY 202021. 4. It is submitted that the assistant of the tax auditor failed to notice the hearing opportunity provided by the learned CIT(A) and the appellant was not seized of the fact that hearing notices were issued by the learned CIT(A). 5. The appellant appointed a new Chartered Accountant assigning the income tax audit for AY 2021-22 and onwards. It is submitted that the new Chartered Accountant while accessing the form 26AS for the AY 2024-25 in the first week of July 2024 observed that there is outstanding demand for the AY 2020-21 and advised the appellant to approach the present counsel who is located in Bangalore. 6. The appellant approached the counsel in the second week of July 2024 and the counsel sought for various documents to prepare the appeal and the said documents

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were provided in the third week of July 2024 and accordingly the appeal came to be filed on 23.07.2024, though the due date was 18.03.2024 resulting in a delay of 127 days for the reasons mentioned above. 7. The appellant humbly prays that this Hon'ble Tribunal considering the facts of the present case takes lenient and compassionate view and condone the delay in filing the present appeal against the order passed by the learned. Commissioner of Income-tax (Appeals), NFAC. 8. The appellant places reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT & Another Vs. ISRO Satellite Center, in ITA No. 532 of 2008 and other batch of appeal order dated 28/10/2011 has condoned the delay of 5 years in filing the appeal before the CIT[A], the relevant observation is at para 28 page 72 of the order. 9. The appellant places reliance on the decision of this Hon'ble Tribunal in the case of Smt. Shakuntala Hegde, Legal Heir of Mr. Ramakrishna Hegde Vs. ACIT, in ITA No. 2785/Bang/2004 order dated 25/04/2006 wherein the Hon'ble Tribunal has condoned the delay of 1,331 days i.e. 3 Years, 8 Months and 22 days in filing the appeal by the assessee. 10. The appellant places reliance on the decision of the Hon'ble High Court of Madras in the case of Commissioner of Income-tax Vs. K.S.P.Shanmugavel Nadar (1987) 30 Taxmann 133 (Madras). 11. The appellant places reliance on the decision of the Hon'ble Tribunal in the case of M/s. Midas Polymer Compounds Pvt Ltd Vs. ACIT in ITA No.288/Coch/2017 dated 25.06.2018. 12. The appellant places reliance on the decision of the Hon'ble High Court of Bombay in the case of Anatek Services Pvt Ltd Vs. Asst.Commissioner of Income-tax-io(1) in ITA No.102 of 2018 dated 11.02.2022. 13. It is humbly submitted that if this application for condonation of delay in filing the appeal is not allowed, the Appellant would be put to great hardship and irreparable injury per contra no hardship or injury would be caused to the Respondent if this application of Condonation of delay

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is allowed. Reliance is placed on the decision of the Hon'ble Apex Court in the case of Collector, Land Acquisition Vs. MST.Katiji and Others (1987) 167 ITR 471 and also in the case of Concord of India Insurance Co. Ltd., Vs Smt. Nirmala Devi and Others 118 ITR 507. Further the Appellant relies on another decision of the Hon'ble Apex Court in the case of Radha Krishna Rai Vs. Allahabad Bank & Others [2000] 9 Supreme Court Cases 733 and Commissioner of Income-tax Vs. West Bengal Infrastructure Development Finance Corporation limited (2011) 334 ITR 269 (SC). 14. The appellant craves leave of this Hon'ble Tribunal to file additional submission at the time of hearing of this appeal. 15. It is humbly prayed that this Hon'ble Tribunal takes a lenient and compassionate view and condone the delay of 127 days in filing the present appeal against the order of the learned Commissioner of Income-tax (Appeals), NFAC dated 18.01.2024 before this Hon'ble Tribunal and hear the same on merits for the advancement of substantial cause of justice.”

3.1. The Ld.AR submitted that all the notices and the impugned order were not sent to the address that was mentioned in form 35 and the same were sent to the address that was appearing in the income tax portal which was of the assessee’s erstwhile auditor. He thus prayed that assessee was absolutely unaware of the ex- parte order that was passed and only when the subsequent Chartered Accountant of assessee accessed form 26AS, the outstanding demand for A.Y. 2020-21 was noted. The Ld.AR submitted that immediately, the assessee preferred appeal before this Tribunal thereby causing delay of 127 days. The Ld.AR humbly prayed for the delay to be condoned as there was no malafide intention on behalf of the assessee in causing the delay.

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He relied on the submissions made for condonation application pertaining to Assessment Year 2017-18.

3.2. On the contrary, the Ld.DR placed reliance on orders passed by authorities below.

We have perused the submissions advanced by both sides in the light of records placed before us.

3.3. It is also noted that there is no malafide intention on behalf of assessee in not filing the present appeal before this Tribunal, within the period of limitation. Nothing to establish any such intention has been filed by the revenue before this Tribunal. In our opinion there is a sufficient cause for condoning the delay as observed by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 in support of his contentions.

3.4. We place reliance on following observations by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 wherein, Hon’ble Court observed as under:- “The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits". The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court

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has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that : 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at 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. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”

3.5. Considering the submissions by both sides and respectfully following the observation by Hon’ble Supreme Court, we find it fit to condone the delay caused in filing the present appeal as it is not attributable to the assessee. In any event, though the procedural law pertaining to the limitation has been drafted to construe it strictly, the fact remains that, considering such technicalities will not advance the cause of justice. Accordingly, we condone the delay in filing the present appeal for A.Y. 2020-21 before this Tribunal.

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commission paid to pigmy agents for not withholding the taxes on the interest paid to its members in accordance with the provisions of section 194A of the act. The Ld.AR submitted that the assessing officer denied the claim by holding that the assessee being a Souharda sahakari was not eligible to claim the benefit as provided u/s. 194A which is available only for co- operative societies.

4.1. The Ld.AR further submitted that disallowance u/s. 40(a)(ia) was also made for not deducting TDS by invoking the provisions of section 194H on the commission paid to the pigmy agents. The Ld.AR placed reliance on the decision of Coordinate Bench of this Tribunal in case of The Mandya District Co-operative Central Bank Ltd. vs. ACIT in ITA Nos. 2116/Bang/2017 & 1251/Bang/2019 for A.Ys. 2011-12 & 2015-16 vide order dated 10/02/2021 wherein an identical issue was considered in favour of assessee.

4.2. The Ld.DR on the contrary submitted that necessary verification is to be made in respect of whether the payment is more than the salary paid. She submitted that this aspect has not been verified.

We have perused the submissions advanced by both sides in the light of records placed before us.

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4.3. We also note that the decision of Coordinate Bench of this Tribunal relied by the Ld.AR, is held that the payments made to a pigmy deposit collectors cannot be treated as a commission and cannot be subjected to disallowance u/s. 40(a)(ia) for non- deduction of TDS. It is also noted that this Tribunal has held that the payment made to the pigmy deposit collectors are to be treated as salary that is liable to TDS u/s. 192 of the act as per the Circular No. F.No.275/25/2007/ITB dated 03/03/2008.

4.4. The CBDT circular referred by this Tribunal in the decision noted hereinabove has been clarified vide letter dated 12/12/2007, treating the remuneration (commission) earned by the pigmy deposit collectors as salary and subject to TDS under section 192 of the Act. Vide Circular dated 03/03/2008 the position has been reiterated and confirmed by CBDT followed by 01/12/2011 and 14/12/2011. The subsequent clarifications by CBDT States applicability of provisions of section 192 of the Act on the remuneration earned by pigmy deposit collectors, and that, the same will be treated as salary. In the light of the Circulars and subsequent clarifications issued by CBDT, in our view the authorities below could not have treated the payment made by assessee to the pigmy deposit collectors as commission for making disallowance under section 40(a)(ia) of the Act for non-deduction of TDS under section 194H of the Act.

4.5. However in all fairness, the Ld.AR agreed that there needs to be carried out certain verification in respect of the same.

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Accordingly, we remit this issue back to the Ld.AO to consider the claim of assessee in accordance with law after carrying out necessary verification. The observations of this Tribunal in case of The Mandya District Co-operative Central Bank Ltd. vs. ACIT (supra) may be followed in order to analyse the issue. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly, the grounds raised by the assessee for A.Y. 2017-18 stands partly allowed for statistical purposes.

5.1. We make it clear that if the interest earned by assessee from the banks, that are considered under the head “Income from other sources”, necessary relief to be granted to the assessee u/s 57 of the Act in respect of cost of

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funds and proportionate administrative and other expenses in accordance with law. Accordingly, the issue is restored to the file of Ld.AO to recompute the income under head “Other Sources” as directed hereinabove. Accordingly, the grounds raised by the assessee for A.Y. 2020-21 stands partly allowed for statistical purposes.

In the result, both the appeals filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 30th August, 2024.

Sd/- Sd/- (WASEEM AHMED) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 30th August, 2024. /MS /

Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order

Assistant Registrar, ITAT, Bangalore