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Facts
The assessee, a cooperative society, claimed deduction under Chapter VIA for Rs. 7,13,863, including Rs. 6,18,867 as interest from investments. The Assessing Officer disallowed this deduction, citing the violation of mutuality and relying on Apex Court judgments. Additionally, Rs. 23,39,500 received as demonetized currency deposits were treated as unexplained income under Section 115BBE.
Held
The Tribunal noted that the assessee claimed deduction under Chapter VIA and had additions made for demonetization period cash deposits. While the FAA gave multiple opportunities, there was no response from the assessee. In the interest of justice, the issue is remitted to the CIT(Appeals) for fresh consideration.
Key Issues
Whether the denial of deduction under Chapter VIA and the addition for unexplained cash deposits were justified, and if the assessee was denied a proper opportunity of being heard by the FAA.
Sections Cited
80P(2)(a)(i), 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
Date of hearing : 05.08.2024 Date of Pronouncement : 13.08.2024 O R D E R
Per Laxmi Prasad Sahu, Accountant Member
This appeal is filed by the assessee against the order dated 21.06.2024 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2017-18.
Briefly stated the facts of the case are that the assessee is a cooperative society and derives income from advances given to its members both nominal and associate members. The assessee filed return of income on 25.12.2017 admitting total income at Nil. The case was selected for scrutiny and statutory notices issued to the assessee. During the course of assessment proceedings, it was noticed that the assessee claimed deduction under Chapter VIA of Rs.7,13,863 out of which Rs.6,18,867 was received as interest from investments in banks which were also claimed as business income and claimed deduction u/s. 80P(2)(a)(i) of the Act. However the AO did not accept. He further noted that as per byelaws assessee has various type of members and they have no equal rights, accordingly deduction u/s. 80P(2)(a)(i) of the Act was not allowed by relying on the judgement of the co-ordinate bench of the Bangalore in the case of & 1221/Bang/2019 dated 18.10.2019 for the AY 2016-17. The AO also relied on the judgment of Apex Court in the case of Citizen Cooperative Society Ltd. in Civil Appeal No.102045/2017 dated 8.8.2017 and observed that assessee has violated the concept of mutuality and deduction u/s. 80P(2)(a)(i) of the Act was not allowed to the assessee. Further the AO noted that during the demonetisation period assessee has received deposits from its members in demonetized currency notes of Rs.1000 and 500. The assessee has opening balance of Rs.6,26,679 as on 9.11.2016. Accordingly the AO after discussing the guidelines/instructions issued in this regard disallowed Rs.23,39,500 and treated as unexplained money and applied section 115BBE of the Act. Accordingly the assessed income was determined at Rs.30,53,360. Aggrieved from the above order the assessee filed appeal before the First Appellate Authority (FAA).
The ld. FAA issued various notices on different dates, but there was no response from the assessee’s side. Therefore after relying on Apex Court judgment, he dismissed the appeal of the assessee.
The ld. AR submitted that the FAA has not given proper opportunity to the assessee and dismissed the appeal without going into the merits of the case. Further in respect of non-service of notices the ld. AR submitted that it might have gone into the spam folder. Therefore assessee was unable to see the notices. Therefore he requested that if a chance is given to the assessee, he undertook to represent and substantiate the case of the assessee with evidence before the lower authorities.
The ld. DR relied on the order of lower authorities and objected to sending back the matter to lower authorities. He submitted that various notices were issued, but there was no response from the assessee’s side, therefore the CIT(Appeals) was bound to complete the appellate proceedings ex parte.
Considering the rival submissions, we note that there was denial of deduction claimed by the assessee under Chapter VIA and addition is also made towards cash deposits during the demonetisation period which were received from the members of Rs.23,39,500. We note that the ld. FAA gave four opportunities to the assessee, but there was no response from assessee’s side. Considering the facts and in the interest of justice, we remit the issue to the CIT(Appeals) for fresh consideration and decision as per law. The assessee is directed to update its email id, communication address and other details and file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings and in case of further default, the assessee shall not be entitled to any leniency.
In the result, the appeal by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 13th day of August, 2024.
Sd/- Sd/- ( BEENA PILLAI ) (LAXMI PRASAD SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER