DCIT, CIRCLE-1(1), BHUBANESWAR, BHUBANESWAR vs. M/S . THE ORISSA STATE CO-OPERATIVE AGRICULTURAL & RURAL DEVELOPMENT BANK LTD., BHUBANESWAR

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.424/CTK/2014 Assessment Year : 2011-2012

DCIT, Circle 1(1), Vs. The Orissa State Co- Bhubaneswar. operative Agricultural & Rural Development Bank Ltd., A/34, J.N.Marg, Kharvel Nagar, Unit-III, Bhubaneswar. PAN/GIR No. AABAT 0086 F (Appellant) .. ( Respondent)

Assessee by : Shri J.K.Mishra Revenue by : Shri B.N.Das, DR

Date of Hearing : 30/05/ 2017 Date of Pronouncement : 31 /05/ 2017

O R D E R Per Pavan Kumar Gadale, JM This is an appeal filed by the revenue against the order of CIT(A)-1,

Bhubaneswar, dated 14.8.2014, for the assessment year 2011-12.

adjournment petition on the ground that the conducting lawyer Shri

A.K.Ray is unable to appear for hearing due to his severe illness. Since the

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appeal can be decided, we rejected the adjournment and proceed to decide

the appeal on merits.

“1. On the facts and circumstances of the case, the CI(A) is not justified in deleting the addition made by the AO to take the income at Nil in place of the income assessed by the AO, when the ld CIT(A) upheld the AO’s action in ignoring the audit report based on provisional accounts. 2. On the facts and in the circumstances of the case, the CIT(A) is not justified in not adjudicating on the issue of carry forward and set off of losses claimed by the assessee.” 4. Brief facts of the case are that the assessee is a State Co-operative

Bank and filed the Return of income on 29.9.2011 declaring total income

at Rs. Nil. The Return of income was processed u/s.143(1) of the Act and

the case was selected for scrutiny under CASS. Notices u/s.143(2) and

142(1) were issued . In compliance, the ld A.R. of the assessee appeared

from time to time and the case was discussed. The Assessing Officer on

the basis of financial statements found that the assessee society Books of

accounts are Audited u/s.44AB of the Act and filed the Return of income

as per the provisional information available with Auditors. The assessee is

a co-operative society governed by statutory audit and audit was completed

on 19.10.2012 and the Assessing Officer considered the statutory audit

report in the assessment proceedings but since the assessee society has

not filed the Revised return of income and the statutory audit was not done

and whereas tax audit is based on the provisional figures, the Assessing

Officer rejected the accounts u/s.145(3) and did not allow Business loss

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to be carried forward on the basis of provisional accounts and assessed

income at Rs.1,49,99,840/- and passed order u/s.143(3) r.w.s. 145(3) of

the Income tax Act, 1961 on 6.2.2014.

filed appeal with the CIT(A). In the appellate proceedings, ld A.R. of the

assessee argued and supported with written submission on nature of

activities conducted and the Reasons for not filing the statutory audit

report. The CIT(A) having considered the written submissions and the

findings of the Assessing Officer observed that the assessee has filed return

of income u/s.139(3) r.w.s. 139(1) on 29.9.2011 claiming current year loss

of Rs.1,38,03,189/- whereas the Assessing Officer relied on the judicial

decision and observed that since no revised return was filed, declined to

Accept the tax audit report. The CIT(A) observed the Accounts are not

approved by the Auditor General of Co-operative Society, Orissa as the

statutory audit report obtained after the tax audit report u/s.44AB. The

assessee has filed Audit report Based on the provisional accounts and the

Assessing Officer has not issued notice u/s.139(9) to rectify the defect.

The CIT(A) further observed that the assessee has filed Audit report within

time frame of assessment proceedings as there was delay in getting

accounts audited by the Auditor General of Co-operative Society, Orissa

and further the assessee has complied with the provisions u/s.44AB of the

Act and the Assessing Officer was not correct to rely on the same audit

report ignoring Audited P&L account and directed the Assessing Officer to

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consider the Assessed income at Nil and partly allowed the appeal by order

dated 14.8.2014.

before the Tribunal. Ld D.R. submitted that the CIT(A) has erred in not

considering the findings of the Assessing Officer and directing the

Assessing Officer to consider the income as Nil. The Assessing Officer has

considered the statutory Audited Accounts but because no Revised return

was filed hence claim was declined and the CIT(A) erred in not calling for

comments from the Assessing Officer and prayed for allowing the appeal.

materials available on record. Prima facie, we find that the assessee being

a co-operative society is engaged in the business of providing agricultural

loan in rural areas to the farmers. The assessee has filed Return of income

within due date u/s.139(1) of the Act. The statutory audit has to be

conducted by the Auditor General of Cooperative Society, Orissa, and since

it was not completed before filing of Return of income on due date, the

assessee had no other option but to file the Return of income under section

139(1) of the Act alongwith Tax audit report u/s.44AB of the Act in Form

3CA and 3CD. The assessee had complied with the provisions of filing

Return of income within time limit u/s.139(1) of the Act and in the

assessment proceedings, the Assessing Officer has ignored this facts and

also accepted the statutory audit report dated 19.10.2012 but has omitted

to consider the report. We are of the opinion that the Assessing Officer

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should have considered and accept the Audit report with reasons explained

for the delay. Accordingly, in the interest of justice, we remit the disputed

issue to the file of the Assessing officer to verify and examine and pass the

order on merits and the assessee shall be provided adequate opportunity

of hearing and shall co-operative in filing in statutory Audit report and

other details in respect of claim before passing the order

purposes.

Order pronounced on 31 /05/2017.

Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Cuttack; Dated 31 /05/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : DCIT, Circle 1(1), Bhubaneswar. 2. The Respondent. The Orissa State Co- operative Agricultural & Rural Development Bank Ltd., A/34, J.N.Marg, Kharvel Nagar, Unit-III, Bhubaneswar 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack