INCOME TAX OFFICER, RAWATBHATA ROAD vs. BOREKHEDA GRAM SEWA SAHAKARI SAMITI, HEAD OFFICE NEAR DWARKADIS

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR BEFORE: SHRI SANDEEP GOSAIN, JM & DR DIPAK P. RIPOTE, AM ITA No. 599/JP/2024 Assessment Year : 2014-15 The ITO Borekheda Gram Sewa Sahakari Samiti Ltd. Vs. Ward 2(2) Head Office Near Dwarkadis Mandir Kota Baran Road, Borkheda, Kota-324 001 PAN/GIR No.: AAAAB 1723 C Appellant Respondent Assessee by : Shri Siddharth Ranka, Advocate Revenue by: Shri Rajesh Kumar Meena, Addl. CIT-DR Date of Hearing : 04/07/2024 Date of Pronouncement: 24/07/2024 ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the Revenue is directed against order of the ld. CIT(A) dated 04-03-2024, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2014-15 raising following ground of appeal. (a) Whether on the facts and circumstances of the case, the learned CIT(A), NFAC, Delhi was justified in allowing the appeal of assessee on technical ground (which was taken / raised by the applicant assessee as additional ground during the appellate proceedings only and not in the appeal, originally filed) and not on merits?

2 ITA NO. 599/JP/2024 ITO, WARD 2(2), KOTA VS BOREKHEDA GRAM SEWA SAHAKARI SAMITI LTD, KOTA

(b) Whether on the facts and circumstances of the case, the learned CIT(A), NFAC, Delhi was justified in deleting the addition made by the AO by way of disallowing the deduction of Rs. 1,70,71,488/- u/s 80P(2) of the I.T. Act 1961 by considering the interest received / earned on FDR from Bank (KCCB Bhimganj mandi, KCCB Rampura & Nagrik Sahakari Bank, Gumanpura, Kota) which was not allowable to the assessee u/s 80P(2)(d), being interest earned from the investments made with a co-operative Bank and not on the Interest received from Investments made with the Co-operative Societies?

Apropos Grounds of appeal of the Department, it is noted that the ld. CIT(A) 2.1 has allowed the appeal of the assessee vide his order dated 04-03-2024 giving therein following narration:-

‘’5.1…….. Adverting to the facts of the present matter, as brought above, the application of provisions of first proviso to section 147 is NOT in question. In this connection it is noted that the reasons of reopening recorded by the Ld. AO clearly indicate these reasons DO NOT contain any such allegation to the effect of failure on the part of the assessee-appellant that it had failed to make true and full disclosure of all material facts necessary for its assessment for the AY under consideration. The reasons recorded are reproduced for sake of ready reference. ANNEXURE The assessee had filed return of income on 29.11.2014 declaring total income of Rs. NIL after claiming deduction of Re. 1.70.71,488 u/s 80P of the IT Act. 1961. Assessment in this case was completed u/s 143(3) on 23.10.2016 and income assossed at Rs. 3,19,540 by making an addition on account of disallowanc deduction claimed disallowance of 00P of the LT Act 1961 amounting to Ra 3,19,541/-. As per the provision of section 80 (2)(d) of the IT. Act. 1961 wherein it is clearly mentioned that ‘’in respect of any income by

3 ITA NO. 599/JP/2024 ITO, WARD 2(2), KOTA VS BOREKHEDA GRAM SEWA SAHAKARI SAMITI LTD, KOTA way interest or dividends derived by the cooperative society from its investments with any other cooperative society, the whole of such income is allowable. But in the instant case, the assessee had claimed and was allowed deduction of income of Rs.1,70, 71,488/- u/s 80P on being interest received from FDR of Rs.3,77,28,522/- from Bank (KCCB Bhimganjmandi, KCCB Rampura & Nagrik Sahakari Bank Gumanpura, Kota) which was not allowable u/s 80P(2)(d) of the Act. Thus, irregular allowance of deduction resulted in under computation of income of assessee by Rs.1,67,51,945/- involving under charge of tax of Rs.75,73,002/- On the basis of above facts, I have reason to believe that incone amounting Re. 1,67,61,045/- has escaped assessment within the meaning of Section 147 of the I.T. Act, 1961

Thus, it is evident that the above referred decisions of Hon'ble Apex Court and the Hon'ble High Court, Madras in the case of Durr India (P.) Ltd (supra) are squarely applicable in the facts and circumstances of the present matter appreciating the fact that the reasons recorded by the Ld. AO do not contain any allegation w.r.t failure of the assessee to make true and full disclosure of all material facts, necessary for its assessment even though the same is mandated vide provisions of first proviso to section 147 when the reopening is resorted beyond four years from the end of the relevant AY and scrutiny assessment has been earlier completed in such matter. Hence, respectfully following the ratio decidendi in the above referred decisions [i.e. failure on the part of the assessee to fully and truly disclose all material particulars would constitute the "Jurisdictional fact" for invoking extended period of limitation and failure to record the existence of the above jurisdictional fact while invoking the extended period under the proviso to section 147 of the Act, would vitiate the entire proceedings) the action of the Ld. AO in resorting to the provisions of section 147 for the year under consideration without complying with the provisions of first proviso thereto is NOT tenable in law and resultantly the validity of consequential impugned reassessment proceedings u/s 148 culminating in passing the Impugned order cannot be sustained- in the facts and circumstances of the

4 ITA NO. 599/JP/2024 ITO, WARD 2(2), KOTA VS BOREKHEDA GRAM SEWA SAHAKARI SAMITI LTD, KOTA present matter-as discussed above, and accordingly, the corresponding ground is to be treated as ALLOWED. Before parting it is mentioned that since the ground/contentions of the appellant w.r.t to the Jurisdictional issue relating to the provisions of first proviso to section 147 have been decided [allowed] as above [Para 5]. the balance grounds resultantly now partake academic nature- NOT requiring adjudication, hence, for technical purposes, the same are to be treated as DISMISSED without going into merits or any other issues thereof/thereto.’’

2.2 During the course of hearing, the ld. DR supported the order of the AO.

2.3 On the other hand, the ld. AR of the assessee supported the order of the ld. CIT(A) and also filed the written submission containing 71 pages as well as compendium index of 27case laws .

2.4 We have heard both the parties and perused the materials available on record. Brief facts of the case are that the assessee is a cooperative society, registered under Rajasthan Cooperative Society Act, 1960 and engaged in the business of financial services. The assessee has filed its return of income for the year under consideration on 29-11-2014 declaring total income at Nil after claiming deduction of Rs.1,70,71,488/- u/s 80P of the Act and the same processed u/s 143(1) of the Act. Further, it is noted that regular scrutiny assessment was completed in the case vide order dated 28-1-2016 u/s 143(3) at an assessed income

5 ITA NO. 599/JP/2024 ITO, WARD 2(2), KOTA VS BOREKHEDA GRAM SEWA SAHAKARI SAMITI LTD, KOTA of Rs.3,19,541/-. Subsequently, the case of the assessee was reopened by the AO by issuance of Notice u/s 148 on 19-03-2021 w.r.t. issues relating to deduction u/s 80P(2)(d) and the subject reassessment proceedings were completed at an assessed income of Rs.1,73,91,029/- after denying deduction u/s 80P(2)(d) of the Act. The Bench noted that the ld.AR of the assessee has filed the detailed written submission as well as the case laws which are not imperative to repeat it. The Bench noted from the written submission of the ld. AR of the assessee that there was no failure on the part of the assessee to disclose, truly and fully all materials facts which are necessary for its assessment for the year under consideration at the time of original assessment and thus the conditions required for initiation of reassessment proceedings as stipulated in the proviso to Section 147 of the Act were not satisfied. The Bench further noted that the ld. CIT(A) has also very explicitly observed in his order that AO do not contain any allegation w.r.t failure of the assessee to make true and full disclosure of all material facts, necessary for its assessment even though the same is mandated vide provisions of first proviso to section 147 when the reopening is resorted beyond four years from the end of the relevant AY and scrutiny assessment has been earlier completed in such matter. It is further noted that the Department has not advanced any contrary material against the order of the ld. CIT(A) except to rely upon the assessment order. Hence, in view of the present facts and circumstances of the case, the Bench feels that the

6 ITA NO. 599/JP/2024 ITO, WARD 2(2), KOTA VS BOREKHEDA GRAM SEWA SAHAKARI SAMITI LTD, KOTA order passed by the ld. CIT(A) does not require any interference and the same is sustained. Thus the appeal of the Revenue is dismissed.

3.0 In the result, the appeal of the Revenue is dismissed

Order pronounced in the open court on 24 /07/2024

Sd/- Sd/- (Dr Dipak P. Ripote) (Sandeep Gosain) Accountant Member Judicial Member Jaipur Dated:- 24 /07/2024 *Mishra Copy of the order forwarded to: 1. The Appellant- The ITO, Ward 2(2), Kota 2. The Respondent- Borekheda Gram Seva Sahakari Samiti, Kota 3. The ld CIT 4. DR, ITAT, Jaipur 5. Guard File (ITA No. 599/JP/2024) By order,

Asstt. Registrar