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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: SRI RAJESH KUMAR & PRADIP KUMAR CHOUBEY
order
: November 29th, 2024 ORDER
Per Pradip Kumar Choubey, Judicial Member:
The instant appeal filed by the Revenue pertaining to the Assessment Year (in short ‘AY’) 2021-22 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income- tax (Appeals)-NFAC, Delhi [in short ld. ‘CIT(A)’] dated 03.11.2023 arising out of the assessment order framed u/s 143(3) r.w.s. 144B of the Act dated 23.12.2022. 1.1. The brief facts of the case of the appellant are that Sanhati Co-Operative I.T.A. No.: 1366/KOL/2023 Assessment Year: 2021-22 Sanhati Co-Operative Credit Society Limited. Credit Society Limited duly registered under the West Bengal Cooperative Society Act filed its return of income for the AY 2021-22 declaring total income of Rs. 'NIL'. Case of the assessee has been selected for scrutiny and the issue involved in the scrutiny is claim of deduction u/s 80P of the Act. Assessee was provided opportunity of being heard by issuing notices but assessee in spite of giving several opportunities filed only submission without submitting any documents, hence, the Assessing Officer (hereinafter referred to as ld. 'AO') added the interest income of Rs. 27,84,151/-, disclosed by the assessee as interest earned on credit fascilities by disallowing claimed u/s 80P of the act, variation on account of interest on FD/TD u/s 56 of the Act of Rs. 4,76,817/-, variation on account of unexplained cash deposit u/s 68 of the Act worth of Rs. 59,75,000/- and variation on account of unexplained investment to FD/TD 68* amounting to Rs. 52,65,558/- and total income declared as Rs. 1,45,01,526/-. The assessee preferred an appeal against the said order of the Ld. AO to the Ld. CIT(A) wherein Ld. CIT(A) after considering the documents and submissions allowed the appeal of the assessee. Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred. 1.2. The ld. Counsel appeared on behalf of the revenue challenges the impugned order thereby submitting that Ld. CIT(A) has not appreciated the facts and merely on the ground that assessee is a registered cooperative society gave deduction u/s 80P(2)(a)(i) of the Act though the assessee did not file any supporting documents. The ld. Counsel further submits that the assessee did not file any documentary evidence before the Ld. AO rather the same has been filed before the Ld. CIT(A), which is not admissible as per Rule 46A of the Income Tax Rules, 1962. The ld. Counsel further submits that Ld. CIT(A) has further committed wrong in not appreciating the fact that when the assessee has made fresh term deposits of Rs. 53,62,558/- with scheduled commercial bank during the year under reference and the source of the same has not been provided during scrutiny proceeding, the Ld. AO was right in treating the term of deposit of Rs. 53,62,558/- as unexplained. The main
Page 2 of 5 I.T.A. No.: 1366/KOL/2023 Assessment Year: 2021-22 Sanhati Co-Operative Credit Society Limited. contention of the ld. Counsel on behalf of the revenue is that Ld. CIT(A) has to give an opportunity to the Ld. AO to be heard him before accepting any additional evidence. 1.3. Contrary to that, ld. Counsel appeared on behalf of the assessee supports the impugned order thereby submitting that before the Ld. AO the assessee has filed his response and clearly stated that the assessee is a registered society entitled to claim deduction u/s 80P of the Act. The learned counsel further submits that the order passed by the Ld. AO u/s 143(3) r.w.s. 144B of the Act. The ld. Counsel for the assessee further submits that primary business of the assessee is to providing banking and credit facilities to its members and sec 80P(2)(a)(i) of the Act allows deduction to cooperative society engaged in banking or providing credit facilities to its members. The ld. Counsel for the assessee submits that hon Karnataka High Court in the case of CIT vs. Karnata State Cooperative Apex Bank reported in [2001] 251 ITR 194 (SC) has been held that investment in fixed deposit by cooperative society is a banking activity and the interest income earned thereon is a business income. The ld. Counsel for the assessee further submits that entire interest income earned from the investment has already been considered under the ambit of Section 80P(2)(a)(i) of the Act and is eligible for deduction. Ld. Counsel for the assessee submits that Ld. CIT(A) has thoroughly discussed the evidence of the assessee and after considering the entire facts of the case and the documentary evidence, appeal of the assessee has been allowed.
We have perused the order of the Ld. CIT(A) as well as the Ld. AO. On perusal of both the order, the following facts have been emerged a) The assessee Sanhati Co-Operative Credit Society Limited is registered under the West Bengal Cooperative Society Act. b) The society's primary activity is providing banking and credit facilities to its members. c) For the AY 2021-22 assessee filed its return declaring total income of Rs. Rs. 'NIL' by claiming deduction u/s 80P of the Act.
Page 3 of 5 I.T.A. No.: 1366/KOL/2023 Assessment Year: 2021-22 Sanhati Co-Operative Credit Society Limited. 2.1. The order of the Ld. AO reveals that A.O has passed an order on the ground that the assessee has furnished only copy of certificate of registration of amendment of by-laws and copy of object of the society and computation of the income and no other relevant details to justify its claim u/s 80P(2)(a)(i) of the Act. Hence, the claim of the assessee is proposed to disallow in absence of the evidence. 2.2. Now, going over the order of the Ld. CIT(A), it appears to us that during appellate proceeding the appellant has furnished documents regarding its eligibility for claiming deduction u/s 80P of the Act. The Ld. CIT(A) has considered the documents and submissions and thereafter allowed the appeal of the assessee by observing that appellant is entitled to deduction u/s 80P(2)(a)(i) of the Act. The submission of the ld. Counsel for the revenue is that before accepting any additional evidence Ld. CIT(A) has to permit the Ld. AO to verify the same do not impress us as the present case is not the case of filing of any additional evidence. The assessee has filed documents before the Ld. CIT(A) with respect to the claim of deduction u/s 80P of the Act. It is not in dispute that primary business of the assessee is providing banking and credit facilities to its members and sec 80P of the Act allows deduction to cooperative societies engaged in banking or providing credit facilities to its members. In the case of Karnataka State Co-operative Apex Bank (supra) it has been held that the investment in fixed deposit by cooperative society is a banking activity and the interest income earned thereon is a business income. We further find that deposits were made by genuine members of the credit society and that was duly accounted in the books of accounts. Primary function of the credit society is to provide loan to its members and the inflow of funds through deposits is a natural routine occurrence in the course of the business. On careful consideration of the order of the Ld. CIT(A) it appears to us that before coming into the conclusion Ld. CIT(A) has considered the documents filed by the assessee and thereafter allowed the appeal of the assessee.
Keeping in view the above findings of the Ld. CIT(A), we do not find any Page 4 of 5 I.T.A. No.: 1366/KOL/2023 Assessment Year: 2021-22 Sanhati Co-Operative Credit Society Limited. infirmity in the impugned order. Accordingly, the appeal of the Revenue is hereby dismissed.
In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 29th November, 2024. Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 29.11.2024 Bidhan (P.S.) Copy of the order forwarded to:
1. 1. ITO, Ward-25(1), Kolkata.
2. Sanhati Co-Operative Credit Society Limited, Dhalua, Garia Station Road, Sonarpur, South 24 Parganas, West Bengal, 700152.
3. CIT(A)-NFAC, Delhi.
4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata.