SHREE PUSHPAGIRI SOUHARDA SAHAKARI NIYAMITHA ,HASSAN vs. INCOME TAX OFFICER, WARD-2, , HASSAN

PER KESHAV DUBEY, JUDICIAL MEMBER:

2. Facts of the issue are that in this case assessee claimed deduction of Rs.3,28,434/- u/s 80P of the Act, which has been denied by the ld. AO. Further, an amount of Rs.2,94,430/- from e- stamping business and income from bank interest on which also assessee claimed deduction u/s 80P of the Act. The same has been denied and treated as income from other sources. Further, assessee made a deposit of Rs.8,76,95,000/- into assessee’s bank account during demonetization period. Out of this, an amount of Shree Pushpagiri Souhara Sahakari Niyamitha, Hassan Page 2 of 6 Rs.75,52,500/- has been treated as unexplained income u/s 68 r.w.s. 115BBE of the Act. Against this assessee went in appeal before ld. CIT(A). Before ld. CIT(A), assessee has not participated in the appellate proceedings. Hence, NFAC was of the opinion that assessee was not interested to prosecute the appeal. Accordingly, for want of prosecution, appeal was dismissed. Against this assessee is in appeal before us.

3. We have heard the rival submissions and perused the materials available on record. Before us, ld. A.R. submitted that due to some misunderstanding in the management, assessee was not able to send the hearing notices sent by NFAC to its counsel. As such, the counsel of the assessee could not have been attended the proceedings before NFAC and that the entire issue is remitted to the file of ld. AO, so as to decide it afresh. In our opinion, the issue relating to 80P of the Act is required to be decided afresh in view of the binding decision of the Tribunal. 3.1. The Hon’ble Apex Court in the case of Mavilayi Service Co- operative Bank Ltd. & Ors. v. CIT & Anr. (123 taxman.com 161) had held that the co-operative societies providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) of the Act. The Hon’ble Apex Court after considering the judicial pronouncements on the subject, had stated the term “member” has not been defined under the Income-tax Act. It was, therefore, stated by the Hon’ble Apex Court that the term “member” in the respective State Co- operative Societies Acts under which the societies are registered have to be taken into consideration. The Hon’ble Apex Court held that if nominal / associate member is not prohibited under the said Act, for being taken as a member, the income earned on account of providing credit facilities to such member also qualify for deduction u/s 80P(2)(a)(i) of the Act. It was further held by the Hon’ble Apex Court that section 80P(4) of the I.T. Act is to be read as a proviso. It was stated by the Hon’ble Apex Court that section 80P(4) of the Act now Shree Pushpagiri Souhara Sahakari Niyamitha, Hassan Page 3 of 6 specifically excludes only co-operative banks which are co-operative societies engaged in the business of banking i.e. engaged in lending money to members of the public, which have a license in this behalf from the RBI. The Hon’ble Apex Court had enunciated various principles in regard to deduction u/s 80P of the Act. On identical factual situation, the Bangalore Bench of the Tribunal in the case of M/s. Ravindra Multipurpose Cooperative Society Ltd. v. ITO in (order dated 31.08.2021) had remanded the issue to the files of the A.O. for de novo consideration. The Tribunal directed the A.O. to follow the dictum laid down by the Hon’ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. (supra). The relevant finding of the Co-ordinate Bench of the Tribunal in the case of M/s. Ravindra Multipurpose Cooperative Society Ltd. v. ITO (supra), reads as follows:-