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Income Tax Appellate Tribunal, ‘SMC’ BENCH LUCKNOW
Before: HON’BLE SHRI G. D. PADMAHSHALI & SHRI SUBHASH MALGURIA
IN THE INCOME TAX APPELLATE TRIBUNAL, ‘SMC’ BENCH LUCKNOW BEFORE HON’BLE SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER AND SHRI SUBHASH MALGURIA, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 186/LKW/2023 निर्धारण वर्ा / Assessment Year : 2014-15 Cane Development Council Chilwaria, BRH C/o. Ayyubi Chamber, Raniganj, Lakhimpur Kheri, UP-262802. PAN: AAATC6087H . . . . . . . अपीलार्थी / Appellant
बिधम / V/s. The Income Tax Officer-1, Bahraich . . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : Mr Shubham Rastogi [‘Ld. AR’] Revenue by : Ms Adita Singh [‘Ld. DR’] सुनवाई की तारीख / Date of conclusive Hearing : 08/07/2024 घोषणा की तारीख / Date of Pronouncement : 08/07/2024 आदेश / ORDER Per G. D. Padmahshali, AM; This appeal is filed by the assessee u/s 253(1) of the Act challenging the DIN & Order No. ITBA/NFAC/S/250/2022-23/1051139179(1) dt. 22/03/2023 passed by the National Faceless Appeal Centre, Delhi [in short ‘NFAC/CIT(A)’] u/s 250 of the Income Tax Act [in short ‘the Act’] which in turn sprung out of order of assessment dt. 16/12/2016 passed u/s 143(3) of the Act by the Income Tax Officer-1, Bahraich [in short ‘AO’].
Briefly stated the facts of the case are that;
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Cane Development Council Chilwaria, BRH Vs ITO ITA No.186/LKW/2023 AY: 2014-15 The assessee is an association of person [in short ‘AOP’] claimed to 2.1 have been created by the order of Sugarcane Commissioner under the statutory provision of National Agricultural Development Schemes. The return of income filed by the assessee declaring ₹NIL income for 2.2 the assessment year 2013-14 [in short ‘AY’] was subjected to scrutiny, wherein the Ld. AO made two bullet additions viz; (a) ₹19,90,990 owning to 20% disallowance of expenditure incurred towards establishment expenses of ₹7,90,800/- and road construction expenses of ₹91,63,715/- and (b) addition of ₹2,52,251/- being interest received on fixed deposit receipts [in short ‘FDR’] by the assessee which remained to be offered to tax. Aggrieved assessee unsuccessfully contested the aforestated twin 2.3 additions in an appeal before first appellate authority. Still aggrieved by the impugned order, the assessee instituted the present appeal on as many as ten argumentative grounds, which in our considered view are inconsonance with rule 8 of ITAT Rules, 1963 hence we deem unfit its reproduction. However, it shall suffice to state that the present appeal seeks to adjudicate twin issues (a) authenticity of ad-hoc 20% disallowance and (b) taxability of interest earned on FDR vis-à-vis entitlement of deduction u/s 80P(2) of the Act.
At the outset, after vouching sufficiency of reasons beyond undeliberate 25 days delay in instituting the present appeal, in the larger interest of justice and after placing reliance on ‘Vijay Vishin Meghani Vs. DCIT & Anr.’ [2017 ITAT-Lucknow Page 2 of 5
Cane Development Council Chilwaria, BRH Vs ITO ITA No.186/LKW/2023 AY: 2014-15 398 ITR 250 (Bom)] and ‘Collector, Land Acquisition, Anantnag & Anr. Vs Ms Katiji and Ors.’ [1987, 167 ITR 5 (SC)] we condoned the same and proceeded to adjudicate the issue under challenge.
At the physical hearing, the Ld. AR at the outset could reiterate appellant’s all contentions and arguments which were raised by the assessee before both the tax authorities below. In upshot it is prayed that (a) the ad-hoc 20% disallowance made in its case is impermissible under the state as there are no specific instances of discrepancies/shortcomings were brought on record by the Ld. AO and (b) the assessee since not a co-operative society therefore the ratio laid down in ‘Tuggar’s Co-op. Sales Society Ltd. Vs ITO‘ [2019, 322 ITR 283 (SC)] can have no application in bringing to tax the interest earned of its FDR held with banks.
Au contraire, the Ld. DR Ms Singh submitted that, it is an admitted fact that the appellant assessee in not a co-operative society but an AOP. However, while contesting the disallowance/additions before the Ld. NFAC the assessee spuriously represented itself to be a co-operative society to draw clandestinely a deduction u/s 80P(2) of the Act against the interest income earned by it on FDR held with banks. Without prejudice to former contention, it is further submitted on behalf of the Revenue that, the impugned adjudication has failed to address both the disallowance & addition on merits conclusive giving independent findings in terms of s/s (6) of section 250 of the Act. In these
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Cane Development Council Chilwaria, BRH Vs ITO ITA No.186/LKW/2023 AY: 2014-15 circumstances the impugned order deserves to be set-aside to the file of Ld. NFAC for complying with the mandates of section 250(6) of the Act. The Ld. AR could hardly dislodge the averment & arguments of the Revenue.
We have heard rival parties’ submissions on limited issue of remand and subject to rule 18 of ITAT Rules, 1983 perused the material placed on record. We note that, while disposing the appeal the Ld. NFAC sheerly reproduced the findings of the Ld. AO at para 6 of impugned order and culminated the appellate proceedings perfunctorily without clearly recordings its independent findings against (a) each of the issue/point of determination, (b) decision arrived thereon and (c) cogent reasoning therefore. We are also stunned to note that, the Ld. NFAC did fail to attain & comment upon disparity of the facts presented by the assessee relating to its constitution ‘as co-operative society’ as against appellants confirmation before the Ld. AO that it was neither a co-operative society nor were entitled for any deduction u/s 80P(2) of the Act.
We are heedful to the restriction placed by clause (a) of sub-section (1) of section 251 of the Act which obligates the Ld. CIT(A) to adjudicate the issue either by confirming or annulling the addition or reducing or enhancing the addition made by the assessing officer without the right to remand the matter back. However, while exercising the jurisdiction u/s 251(1)(a) of the
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Cane Development Council Chilwaria, BRH Vs ITO ITA No.186/LKW/2023 AY: 2014-15 Act, the Ld. CIT(A) is mandated to state point of determination, its decision thereon and clear reasons therefore in terms of section 250(6) of the Act.
It is a trite law as laid down by Hon’ble Supreme Court in case ‘Chandra Kishore Jha Vs Mahavir Prasad’ reported in 8 SCC 266 (SC), that ‘if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner’. Therefore, any adjudication sidestepping the mandate of section 250(6) of the Act renders it as irregular hence deserves to be set-aside.
In view of former discussion & reasoning, without commenting on merits, we set aside the impugned order and remand the file back to the Ld. NFAC with a direction to deal therewith de-novo after according two effective opportunities and pass a speaking order in terms of section 250(6) of the Act.
The appeal in result is ALLOWED FOR STATISTICAL PURPOSES. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Monday, 08th day of July, 2024
-S/d- -S/d- SUBHASH MALGURIA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER Lucknow ; दिनाांक / Dated : 08th day of July, 2024 आदेश की प्रनिनलनप अग्रेनर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-NFAC, Delhi (India) 4. The Concerned CIT 5. DR, ITAT, Bench ‘SMS’, Lucknow 6. गार्डफ़ाइल / Guard File. आिेशानुसार / By Order, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादिकरण, पुणे / ITAT, Lucknow
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