LAKSAR CO OPERATIVE CANE DEV. UNION LTD.,LAKSAR vs ITO, W- 1(3)(4), ROORKEE, ROORKEE

Income Tax Appellate Tribunal, DEHRADUN BENCH ‘DB’: DEHRADUN

Before: SHRI CHALLA NAGENDRA PRASAD & SHRI AVDHESH KUMAR MISHRA

For Respondent: Shri A. S. Rana, Sr. DR

Hearing: 07/05/2025Pronounced: 07/05/2025

A.Y. 2019-20 Laksar Co. Operative Cane Dev Income Tax Officer, Union Limited, Ward-1(3)(4), Laksar, Distt-Haridwar, Vs. Roorkee, (Uttarakhand) Uttarakhand PAN: AAATL3984E (Appellant) (Respondent) Appellant by None Respondent by Shri A. S. Rana, Sr. DR Date of Hearing 07/05/2025 Date of Pronouncement 07/05/2025 ORDER PER AVDHESH KUMAR MISHRA, AM

This appeal of the assessee for the Assessment Year (‘AY’) 2019-20 is directed against the order dated 14.05.2024 of the Commissioner of Income Tax(Appeals), NFAC, New Delhi [‘CIT(A)’].

The assessee has raised following grounds of appeal: - “i. Because on whole facts, circumstances of the case and in law, the CIT(A) has erred in dismissing appeal of the appellant.

ii. Because while passing impugned order dismissing appeal, the Id. CIT (A) has neither considered the material ground numbers (ii), (iii) of an application dt. 04.04.2024 filed u/s 250(5) of Income Tax Act 1961 on 04.04.2024 before him nor has adjudicated upon it on merits, particularly iii. Because while passing impugned order dismissing appeal, the Id. CIT (A) has not considered the written submission dt. 05.04.2024 filed before him on 05.04.2024 in support of grounds of appeal. iv. Because the Id. CIT(A) has erred in holding that ground no. 1 to 5 and 7 of the grounds of appeal of the appellant pertains to mainly to not allowing the claim of 80P in the case, ignoring the specific ground no. 4 of the original grounds of appeal (Form 35 e-filed) and also the specific ground no. (ii) of an application dt. 04.04.2024 e-filed u/s 250(5) before him on 04.04.2024 as well as the written submission made in para no. 2 of the written submission dt. 05.04.2024 е-filed on 05.04.2024 r/w a supplementary written submission dt. 05.04.2024 (e-filed on 05.04.2024) r/w a second supplementary written submission dt. 05.04.2024 (e-filed on 05.04.2024) in support of additional grounds taken in said application dt. 04.04.2024 e-filed u/s 250(5) before him. v. Because the application filed u/s 154 on 23.02.2021 before the Id. JAO has wrongly and illegally been rejected in as much as on whole facts, circumstances of the case, materials on record and in law, an 'adjustment of Rs. 57080005/- made in the intimation order dt. 02.12.2020 passed u/s 143(1) on account of disallowance of claim of deduction u/s 80P was, being beyond the purview of Sec. 143(1)(a), a mistake apparent on record liable to be rectified u/s 154, hence the Id. CIT(A) is not justified and correct in dismissing the appeal filed against the rejection order dt. 27.07.2021 of application dt. 23.02.2021 u/s 154 against the Intimation order dt. 02.12.2020 u/s 143(1). vi. Because the ground taken by the Id. CIT(A) for dismissing the appeal are either irrelevant or incorrect and unjustified. vii. Because considering whole facts, circumstances of the case and materials on record, the application filed u/s 154 before JAO on 23.02.2021 deserves to be accepted. viii. That the appellant craves leave to argue any other ground/s at time of hearing of appeal.”

Laksar Co. Operative Cane Dev. Union Ltd.

The relevant facts giving rise to this appeal are that the assessee, a cooperative society, filed its Income Tax Return (‘ITR’) of the relevant year on 24.08.2019 declaring Nil income after claiming deduction of Rs.5,70,80,005/- under section 80P of the Income Tax Act, 1961 (‘Act’). The said ITR was processed under section 143(1) of the Act, wherein the Assessing Officer (‘AO’)- CPC did not allow the claim of deduction of Rs.5,70,80,005/- under section 80P of the Act on the reasoning “In Schedule 80P, deduction u/s 80P(2)(a)(i) to (vii) cannot be more non speculative and non-specified business income.”, which resulted consequential tax liability on the assessee. Thereafter, the assessee filed an application under section 154 of the Act before the AO-CPC, who directed the assessee to contact the Jurisdictional AO in this regard. Accordingly, the assessee filed a fresh rectification application under section 154 of the Act before the Jurisdictional AO on 23.02.2021.

3.1 In the fresh rectification application under section 154 of the Act, the assessee, placing emphasis on the processing and assessments of earlier years, claimed that its income was deductible under section 80P of the Act as allowed in all earlier years. However, the said rectification application under section 154 of the Act was rejected by the Jurisdictional AO on the reasoning that the deduction under section 80P of the Act would be allowed subject to certain conditions, which could be verified only after certain enquiries as there was no evidence thereto was annexed with the ITR. The AO, placing reliance on the decision of the Hon'ble Supreme Court (AIR 1960 HC 137), further held that the said claim of deduction under section 80P of the Act was thus not 3 Laksar Co. Operative Cane Dev. Union Ltd. apparent from the record; therefore, the same could not be rectified under section 154 of the Act as the mistake pointed out by the assessee could be established by a long-drawn process of reasoning on the point.

3.2 Aggrieved with the rejection of rectification application under section 154 of the Act, the assessee appealed before the CIT(A). but did not succeed. The break-up of the income submitted, by the assessee, before the CIT(A) is as under: i. Interest from S/F accounts: Rs.13,15,940/- ii. Receipts from R.B Narain Singh: Rs.5,57,33,780/- Sugar Mills Lhaksar as per 26AS: iii. Interest on Income Tax refunds: Rs.30,285/- Total Rs.5,70,80,005/- The claim of deduction of Rs.5,70,80,005/- under section 80P of the Act was not allowed on the reasoning “In Schedule 80P, deduction u/s 80P(2)(a)(i) to (vii) cannot be more non speculative and non-specified business income.”. It was submitted before the Ld. CIT(A) that the amount of Rs.5,70,80,010/- was paid by M/s R.B Narain Singh Sugar Mills Lhaksar in consonance with the State Govt. direction and such receipts had been claimed as deduction under section 80P(2) of the Act, which has been allowed since decades. The relevant finding of the Ld. CIT(A) is as under: “5.2 These grounds pertain to mainly to not allowing the claim of 80P in the case of the assessee. The return was processed by the CPC on 02.12.2020 and the claim of deduction u/s 80P was rejected by the CPC The reasons for rejection are stated as under: ………. 4 Laksar Co. Operative Cane Dev. Union Ltd. ………. 5.3 Aggrieved by the order passed by the CPC u/s 143(1), assessee moved an application before the CPC and CPC directed the assessee to contact the AO in this regard.

5.4 The assessee filed a rectification application before the AO on 23.02.2021 and the AO in the order dated 27.07.2021 has rejected the application made by the assessee and relevant parts are reproduced as under:

“In this application it is claimed by the assessee that the income shown in return was not taxable as it was exempt u/s 80P and claimed that the refund claimed in the return may be allowed to it. The assessee in this regard has referred to past record wherein deductions u/s 8OP(2) have been claimed. Assessee's application has been considered carefully. In this case CPC Bangalore has disallowed claim of deduction u/s 8OP(2) claimed by assessee in its return. The deductions u/s 80P(2) as prescribed in the Income Tax Act is not automatic and for claiming such deductions, the assessee has to fulfil certain conditions mentioned therein. In order to decide whether assessee's income qualifies for deduction u/s 80P(2), certain verifications and enquiries have to be conducted, as there is no evidence on record to show that the income earned qualifies for deductions u/s 80P(2). The income which can be rectified u/s 154 should be apparent from the record. The mistake as pointed out by the learned counsel of the assessee is not apparent from the record and the mistake pointed out by counsel is that error which has to be established by a long-drawn process of reasoning on the point and there may conceivably be two opinions. The Hon'ble Supreme Court (AIR 1960 HC 137) has held that "an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions, can hardly be said to be an error apparent on the face of record where an error is far from self-exempt and it has to be established by lengthy & complicated arguments. Such an error cannot be rectified. Further no error can be said to be apparent on the face of record, if it is not manifest or self-evident & requires an examination of arguments to establish it. Since in this case, it is not manifest that the income earned was from activities carried on as mentioned in the section 80P(2). Therefore, it is held that there is no mistake apparent from record & accordingly application of the assessee u/s 154 is hereby rejected”

Laksar Co. Operative Cane Dev. Union Ltd. 5.5 Now coming to the appeal filed before this office, whether the AO was right in rejecting the rectification application u/s 154 of the Act. The reason given by the CPC in the order u/s 143(1) is that the deduction u/s 80P cannot be more than the non-speculative and non-specified business income. The assessee while filing the application has wrongly claimed excess deductions beyond the income offered in the heads non-speculative and non-specified business income. In this background CPC has denied the deduction. In the 154 proceedings before the AO the AO has stated that the mistake apparent from records as claimed by the assessee in the application is not mistake within the meaning of 154 of the Act to be rectified. The AO is right in rejecting the application under section 154 and I do not find any infirmity in the action of the AO.

5.6 The assessee either during the assessment proceedings or during the appellate proceedings has failed to explain on how its claim before AO is mistake apparent from record within meaning of section 154 and the rejection of application by the AO in this regard is confirmed.

Before us, none appeared on behalf of the assessee. Therefore, we heard the Ld. Sr. Departmental Representative (‘Sr. DR’). With the help of facts mentioned in orders of the Authorities below, prayed for dismissal of the appeal. On specific query by us, the Sr. DR admitted that the issue in dispute had not been decided on merit by the Ld. CIT(A). On our specific query, the Ld. Sr. DR submitted that the issue had been decided from the angle of prima- facie mistake rectifiable under section 154 of the Act and not on the merit of disallowance of claim of deduction under section 80P of the Act particularly when the said deduction under section 80P of the Act was never disallowed in the past in the case of the assessee.

We have heard Ld. Sr. DR and have perused the material available on the record. We take note of the fact that the Ld. CIT(A) has dismissed the Laksar Co. Operative Cane Dev. Union Ltd. appeal on the issue that whether there was any prima-facie mistake crept in the processed under section 143(1) of the Act and not on the scope of adjustment required to be made under section 143(1) of the Act and genuineness of the claim of deduction under section 80P of the Act particularly when the said deduction under section 80P of the Act was never disallowed in the past in the case of the assessee. Further, the Ld. CIT(A) has not commented on the assessee’s submission that (i) the issue of deduction under section 80P of the Act is contentious and thus, the disallowance of deduction under section 80P of the Act cannot be made under section 143(1) of the Act and (ii) the case laws relied upon by the assessee even after extracting the assessee’s written submission in the impugned order.

The grounds raised above clearly show that the Ld. CIT(A) has not taken cognizance of the assessee’s submission dated 05.04.2024 е-filed on 05.04.2024 read with a supplementary written submission dated 05.04.2024 (e-filed on 05.04.2024) read with a second supplementary written submission dt. 05.04.2024 (e-filed on 05.04.2024) in support of additional grounds taken in said application dated 04.04.2024 e-filed before him.

In view the above, without offering any comment on merit of the case, we deem it fit to set aside the impugned order and remit the matter back to the file of the Ld. CIT(A) for deciding the case afresh, in accordance with law, on the issues raised above in para 5 and 6 of this order, after providing adequate opportunity of being heard to the appellant assessee. Ordered

In the result, the assessee’s appeal is allowed for statistical purposes.

Order pronounced in open Court on 07th May, 2025. Sd/- Sd/-

LAKSAR CO OPERATIVE CANE DEV. UNION LTD.,LAKSAR vs. ITO, W- 1(3)(4), ROORKEE, ROORKEE