INCOME TAX OFFCER, AMDEKAR NAGAR, AMEBDKAR NAGAR vs. M/S SAHKARI GANNA VIKAS SAMITI, AMBEDKAR NAGAR

ITA 92/ALLD/2020Status: DisposedITAT Allahabad11 March 2022AY 2014-201518 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) had erred in allowing deduction under Section 80P without adjudicating on crucial issues that go to the root of the matter. Specifically, the CIT(A) failed to determine whether the assessee qualified as a 'co-operative society' as defined under Section 2(19) of the Act, which is a prerequisite for claiming deduction under Section 80P. The Tribunal noted that the CIT(A) also did not address the AO's concerns regarding the failure of the assessee to substantiate its gross receipts and commission income, the rejection of its books of accounts under Section 145(3) for AY 2015-16, and the non-furnishing of a tax audit report despite being covered by Section 44AB. The Tribunal acknowledged that Section 80P provisions are benevolent but emphasized the onus on the assessee to provide necessary facts and the need for fact-finding inquiries by the authorities. Citing the Supreme Court's judgment in Mavilayi Service Co-operative Bank Limited v. CIT, the Tribunal decided to set aside the CIT(A)'s order on the issue of Section 80P deduction and restore the matter to the CIT(A) for fresh adjudication. The CIT(A) was directed to pass a detailed, reasoned, and speaking order after making necessary inquiries and verifications, providing the assessee with an adequate opportunity of being heard. The Tribunal explicitly stated that it had not commented on the merits of the issue and kept all contentions open. The appeals were allowed for statistical purposes.

What were the facts?

The Revenue filed two appeals (ITA No. 92/Alld./2020 and 93/Alld/2020) against the orders of the CIT(A) for Assessment Years (AYs) 2014-15 and 2015-16. These appeals arose from assessment orders passed by the Assessing Officer (AO) under Section 143(3) of the Income-tax Act, 1961. The assessee, Sahkari Ganna Vikas Samiti, claimed to be a co-operative society engaged in marketing crops and providing agricultural inputs to its members. The AO denied deduction under Section 80P, holding the assessee to be an 'Association of Persons' (AOP) due to its registration with the Registrar, Cane Co-operative Societies, U.P., whom the AO deemed not competent. The AO also rejected the assessee's books of accounts for AY 2015-16 under Section 145(3) for failure to substantiate income sources and for not furnishing a tax audit report. The CIT(A) granted relief by allowing deduction under Section 80P on commission income, without addressing the assessee's status or the AO's objections.

What were the issues?

1. Whether the learned CIT(A) was right in concluding that the receipts from sugar mills were business receipts, without a finding on the efforts made in earning commission from sugarcane supplied by growers. (Question of fact/law) 2. Whether the learned CIT(A) was right in directing deduction under Section 80P in respect of gross receipts from sugar mills, without a finding that such receipts were duly earned as business receipts. (Question of law) 3. Whether the learned CIT(A) erred in law by partially allowing the claim of deduction under Section 80P in respect of commission income, without recording a finding on whether the assessee's status as a co-operative society, within the meaning of Section 2(19), could be accepted in the absence of registration under the Societies Registration Act, 1912. (Question of law) Assessee's contentions (implied from facts and CIT(A)'s order): The assessee contended it is a co-operative society registered under the U.P. Sahkari Samiti Adhiniyam, 1912, providing services to its farmer members and is therefore eligible for deduction under Section 80P. Revenue's contentions: The Revenue argued that the CIT(A) failed to record findings of fact regarding the earning of commission and the nature of receipts. It was also argued that the CIT(A) erred in allowing deduction under Section 80P without determining if the assessee qualified as a co-operative society under Section 2(19) due to its registration with the Registrar, Cane Co-operative Societies, U.P., and in the absence of registration under the Societies Registration Act, 1912. The Revenue also highlighted the failure to substantiate income sources, rejection of books of accounts, and non-furnishing of tax audit reports.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 80P,Section 2(19),Section 145(3),Section 44AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ALLAHABAD BENCH, ALLAHABAD

Before: SHRI VIJAY PAL RAO & SHRI RAMIT KOCHAR

Hearing: 10.03.2022Pronounced: 11.03.2022

PER Bench:

These two appeals, filed by Revenue, being ITA No. 92/Alld./2020 and 93/Alld/2020 for assessment year(s)(ay’s): 2014-15 and 2015-16 respectively, are directed against two separate appellate order(s)both dated 20.05.2020, firstly in Appeal No. CIT(A)/Faizabad/16-17/10097 for ay: 2014-15 and secondly in Appeal No. CIT(A), Lucknow-1/11010/19-20 for ay: 2015-16 respectively, passed And ITA No. 93/ALLD/2020

SahkariGannaVikasSamiti, Akbarpur, Ambedkarnagar,U.P.

Assessment Year: 2014-15 and 2015-16

by learned Commissioner of Income Tax (Appeals)-1, Lucknow, U.P. (hereinafter called

The order continues below.

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