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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal by revenue arises out of order dated 02.01.2024 passed by NFAC, Delhi for A.Y. 2017-18.
Brief facts of the case are as under: 2.1 The assessee is a co-operative society & assessed to tax under Income Tax Officer W-1, Bagalkot. The assessee is Page 2 of Karnataka Cooperative Societies Act 1959. It is submitted that the assessee is engaged in the business of accepting the deposits from members and providing credit facilities to its members.
2.2 The Ld.AO observed that the income of assessee co-op. society was claimed as deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Ld.AO has for the reasons stated in his order denied the deduction. The assessee submitted that, the decision of Hon’ble Supreme Court in the case of Citizen Co- Operative society, Hyderabad is not applicable, as the facts of this case & assessee society case are different. It was also submitted in the written submissions that, as to how the decision of Citizen Co-operative society case is not applicable to assessee. Assessee also relied on the definition of “Member” as per Karnataka Co-Operative Societies Act 1959. The Ld.AO however came to the conclusion that, the assessee is carrying on business in violation of provisions of Karnataka Co-operative Societies Act, 1959 and deduction u/s. 80P is not allowable in view of Citizen Co-operative Society's order.
2.3 The Ld. AO noted that the assessee had deposited old currency notes from 10th Nov. 2016 onwards in banks as unexplained cash credit. It is submitted that, assessee had produced entire details of name of the depositor, account number, KYC proofs & amount of deposit everything is submitted during the course of assessment. It is submitted that, assessee’s responsibility to provide complete information about the Page 3 of depositors stood satisfied at the assessment stage itself. It is further submitted that the Ld.AO without any further verification treated the cash deposited as unexplained u/s. 68 and taxed it u/s. 115BBE.
2.4 Aggrieved by the order of the Ld.AO, assessee preferred appeal before Ld.CIT(A). The Ld.CIT(A) directed the Ld.AO to verify the dates upto which the SBN were collected by the assessee and allowed the credit for SBN upto the date of notification dated 14.11.2016.
2.5 Aggrieved by the order of Ld.CIT(A), revenue is appeal before this Tribunal.
At the outset, it is submitted that there is a delay of 62 days in filing the present appeal before this Tribunal.
3.1 The Ld.DR filed affidavit dated 03.05.2024 of the income tax officer, according to which the Ld.AO was held up in completing time barring assessment u/s. 148A from January 2024 to March 2024, due to which the delay occurred in filing the present appeal before this Tribunal. The Ld.DR on merits submitted that, the issue to verify the SBN collected by the assessee restricting the period only to notification date is contrary to the CBDT circulars issued. He thus prayed for the delay to be condoned and appeal heard on merits. The Ld.AR though opposed for condonation of delay, could not controvert the reasons submitted for delay.
Page 4 of We have perused the submissions advanced by both sides in the light of records placed before us. In our opinion there is a sufficient and reasonable cause to condone 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.
3.2 Considering the circumstances under which the delay was caused in filing the appeal before this Tribunal, we are of the opinion that, there was no malafide intention of the revenue in causing the delay to file the appeal. It is also that nothing contrary could be established by the assessee before us.
3.3 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 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.”
3.4 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 revenue. Accordingly, the delay in filing the appeal before this Tribunal stands condoned.
On merits of the case, it is noted that assessee made total cash deposits in Bank account in SBN to the tune of Rs.1,74,71,306/- during the demonetisation period. The Ld.CIT(A) granted partial relief by excluding cash deposited with assessee upto 14.11.2016. Against this direction, revenue is in appeal. The authorities below did not verify any documents filed by the assessee that might explain the cash deposits. The Ld.AR submitted that the deposits are by the members of assessee and is verifiable. In our opinion, evidences are required to be verified in the light of the circular/instructions issued by the CBDT as under:
Page 6 of The 1st instruction was issued on 21/02/2017 by instruction number 03/2017. b) The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. c) The 3rd instruction was in the form of a circular dated 15/11/2017 in F.No. 225/363/2017-ITA.II and the last one dated 09/08/2019 in F.no.225/145/2019-ITA.II.
These instructions gives a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases.
The assessee is directed to once again file all relevant details to substantiate its claim in line with the above applicable instructions, to the facts in present case. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash.
The Ld.AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to the assessee. The assessee may be granted physical hearing in order to justify its claim.
Page 7 of Accordingly, the grounds raised by the revenue stands partly allowed. In the result, the appeal filed by the revenue stands partly allowed for statistical purposes. Order pronounced in the open court on 24th June, 2024.