ITAT Bangalore Judgments — April 2024

The Tribunal observed that the levy of interest under section 234A for 28 months was prima facie a mistake apparent from the record, as it should have been calculated only up to the date of filing the return. For AY 2022-23, a similar rectification was made by the CPC without levying interest. Therefore, for equity and justice, the issue regarding the levy of interest under section 234A for AY 2021-22 was restored to the Assessing Officer.

The CIT(Exemptions) condoned the delay in filing Form 10B, citing a ransomware attack as a reasonable cause for the delay. The Tribunal noted that since the delay in filing Form 10B has been condoned by the CIT(Exemptions), it is appropriate to send the matter back to the Assessing Officer for fresh consideration.

The Tribunal accepted the assessee's explanation that their former auditor/accountant did not forward the hearing notices due to closure of business and non-payment of retainer fees. The Tribunal found the ex-parte order to be unreasonable and decided to grant another opportunity.

The Tribunal held that the assessee's initial mistake in applying for PAN as a company was corrected, and it should be recognized as a co-operative society from AY 2017-18 onwards. Regarding the unexplained cash, the Tribunal upheld the CIT(A)'s direction to the AO to verify the source and application of funds.

The tribunal noted that as per CBDT Circular No.37/2016, disallowances of provisions for interest expenses and NPA are eligible for deduction under Section 80P(2)(a)(i) on the enhanced business profit. Therefore, grounds related to these disallowances were allowed.

The Tribunal found that there was a bonafide reason for the delay, citing the assessee's senior citizen status and reliance on a dormant email address for communication. Relying on the Supreme Court judgment in Collector, Land Acquisition v. Mst. Katiji, the Tribunal condoned the delay.

The Tribunal held that the amount adjusted against the bank guarantee for non-completion of work is a revenue expenditure and not a capital expenditure. The disallowance of Rs. 3,00,000/- was therefore deleted. For the interest expense, the matter was remanded to the AO to verify the payment of interest in the subsequent year.

The Tribunal noted that the CIT(A) had sent four notices through the portal, but the assessee did not respond as they were not served with physical notice and were not well-versed with the online procedures. Hence, the Tribunal felt that one more opportunity should be granted.

The Tribunal acknowledged that the CIT(A) had sent notices through the portal, but the assessee had not responded, and no physical notice was served. Considering the assessee's submissions about unfamiliarity with the system, the Tribunal felt that granting another opportunity was appropriate.

The Tribunal noted that the income from business or profession was reduced in the rectification order, but the interest under Section 234C remained unchanged. The Tribunal found this to be a mistake apparent on the face of the record.

The Tribunal acknowledged that the assessee did not respond to notices sent through the portal but was not served with physical notices. Considering the assessee's unfamiliarity with the procedures, the Tribunal felt that one more opportunity should be granted.

The tribunal noted that for AY 2022-23, a rectification order was passed without levying interest under section 234A. For AY 2021-22, the levy of interest under section 234A for 28 months was considered a prima facie mistake apparent from the record, as it should have been calculated only up to the date of filing the return.

The Tribunal noted that the NFAC dismissed the appeal without considering the assessee's submissions and without a remand report. The Assessing Officer also failed to submit a remand report when called upon by the NFAC. Thus, the Tribunal found it appropriate to remit the issue back to the Assessing Officer.

The Tribunal noted that the additions for interest income and sales tax refund were not justified as these were already included in the gross receipts. Regarding the profit on contract receipts, considering the facts and to cut short litigation, the Tribunal directed the AO to re-compute the income at 5.5% instead of the 8% confirmed by the lower authorities.

The Tribunal accepted the assessee's explanation for the delay in filing the appeal due to a change of residence and non-receipt of notices. The Tribunal condoned the delay and set aside the CIT(A)'s order.

The Tribunal held that the interest earned from credit facilities extended to members, including nominal and associate members, is eligible for deduction under Section 80P(2)(a)(i). Regarding interest/dividend from investments, the Tribunal directed the AO to verify if the investments were made with co-operative societies, and if so, the deduction under Section 80P(2)(d) would be allowed.

The Tribunal held that the assessee qualifies for deduction under Section 80P(2)(a)(i) as the Karnataka Co-operative Societies Act defines 'member' to include nominal and associate members. For interest earned on investments, the Tribunal directed the AO to verify if the interest was earned from investments with cooperative societies, and if so, it would be eligible for deduction under Section 80P(2)(d). Otherwise, it would be considered 'Income from other sources' under Section 56, with relief for cost of funds under Section 57.

The Tribunal held that the assessee is eligible for deduction under Section 80P(2)(a)(i) for interest earned on credit facilities extended to its members, including nominal and associate members, as per the definition of 'member' under the Karnataka Co-operative Societies Act. The Tribunal also ruled that interest earned on investments made out of reserve funds is attributable to the business of providing credit facilities and thus eligible for deduction under Section 80P(2)(d).

The Tribunal condoned the delay of 122 days, citing sufficient reasons and relevant case law. After hearing both parties, the Tribunal determined that the issue required further detailed examination by the revenue authorities.

The CIT(A) erred in passing an ex-parte order without considering the submissions and documents filed by the assessee. The Tribunal restored the matter to the CIT(A) for fresh adjudication.

The Tribunal noted that the AO/DRP did not adequately analyze the nature of the reimbursements and whether they constituted income. The Tribunal also found that the AO failed to provide sufficient opportunity for the assessee to be heard on this issue. Relying on prior decisions concerning similar facts, the Tribunal remanded the issue to the AO/TPO for fresh verification.

The Tribunal condoned the delay of 51 days, considering the assessee's explanation of poor ITBA portal knowledge and non-resident status. The case was remitted to the AO to re-examine the issue of cash deposits during demonetization, as the original order was passed ex-parte.

The Tribunal noted that grounds related to transfer pricing (1.1 to 1.8) were settled by an Advance Pricing Agreement and were dismissed as not pressed. The issues related to Section 14A were remitted to the AO for fresh consideration based on previous ITAT rulings. The disallowance under Section 40(a)(i) concerning reimbursement of salary costs was decided in favor of the assessee, following previous tribunal orders. The issue of deduction under Section 80G was restored to the AO for fresh examination. The ground regarding education cess was allowed in favor of the assessee. The ground concerning rectification of mistakes was ordered to be examined by the AO. The ground regarding penalty proceedings was also to be examined by the AO.

The Tribunal held that a notice under Section 148 is a jurisdictional notice, and its valid existence is a prerequisite for the AO to exercise jurisdiction under Section 147. The initial notice issued to the deceased assessee was null and void, and the subsequent notice to the legal heir was barred by limitation. The Tribunal also distinguished Section 292BB, stating it does not apply when the assessee is deceased and could not have participated in the proceedings.

The Tribunal noted that the Supreme Court has held that cooperative societies providing credit facilities to members are entitled to deduction under Section 80P(2)(a)(i). The definition of 'member' should be interpreted in light of the relevant State Cooperative Societies Act. For interest earned from cooperative banks, the AO is directed to verify if the investment was made with cooperative societies and if so, the deduction under Section 80P(2)(d) is allowable as per Supreme Court rulings. If interest from banks is treated as 'income from other sources', relief under Section 57 is to be granted.

The Tribunal noted that the Supreme Court in Mavilayi Service Co-operative Bank Ltd. held that cooperative societies providing credit facilities to members are eligible for deduction under Section 80P(2)(a)(i). The definition of 'member' should be considered in light of the respective State Co-operative Societies Act. Section 80P(4) excludes cooperative banks engaged in banking business. The issue of deduction for interest from cooperative banks was remitted to the AO for fresh consideration based on the Apex Court's judgment. For interest income from other banks treated as "income from other sources", relief was directed to be granted under Section 57 if applicable.

The Tribunal restored the issue of deduction under section 80P(2)(a)(i) to the AO for fresh consideration, following the Apex Court's ruling in Mavilayi Service Co-operative Bank Ltd. regarding 'members'. For deduction under section 80P(2)(d), the AO was directed to verify if interest was earned from investments with Cooperative Societies. If so, deduction is allowable. Otherwise, if income is treated as 'Income from Other Sources', relief under section 57 is to be granted.

The tribunal noted that the AO and CIT(A) did not verify the documents submitted by the assessee and did not consider the application for additional evidence. The tribunal also referred to CBDT circulars regarding the verification of cash deposits during demonetisation. The tribunal directed the assessee to furnish details and directed the AO to verify them.

The Tribunal noted that the Supreme Court in Mavilayi Service Co-operative Bank Ltd. case held that the interpretation of 'member' should consider the respective State Cooperative Societies Act. The Tribunal also referred to the Bangalore Bench's order in M/s. Ravindra Multipurpose Cooperative Society Ltd. case, remanding the issue for de novo consideration by the AO. For interest income from cooperative banks, the AO is directed to verify if the income is from investments in cooperative societies and if so, is eligible for deduction under section 80P(2)(d). If taxed as 'income from other sources', relief under section 57 is to be considered.

The Tribunal directed the AO to verify if the interest income was earned from investments made with Cooperative Societies. If so, the assessee is entitled to deduction under section 80P(2)(d) of the IT Act, following the Supreme Court's decision. If the interest is considered 'income from other sources', relief under section 57 of the Act should be granted.

The Tribunal, referring to the Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr., stated that the definition of 'member' under the respective State Co-operative Societies Act must be considered. The Tribunal also noted that Section 80P(4) excludes co-operative banks engaged in banking business. The issue of deduction under Section 80P(2)(a)(i) was remitted to the AO for de novo consideration.

The Tribunal condoned the delay in filing the appeals, finding sufficient reason. Citing previous judgments, the Tribunal held that it is proper to examine whether the tax consultant, Mr. Nagesh Shastry, was solely responsible for the fraudulent claims and if the assessee's actions were bonafide. If the assessee's act was bonafide and the consultant was solely responsible, the penalty cannot be levied.

The Tribunal condoned the delay in filing the appeals, finding sufficient reason. Citing previous judgments, the Tribunal held that if the tax consultant is solely responsible for the fraudulent act and the assessee's actions were bonafide, no penalty can be levied. The issue was remitted to the AO for fresh consideration.

The Tribunal condoned the short delay in filing the appeals after finding sufficient reason. Referring to various precedents, the Tribunal held that it is proper to examine whether the tax consultant, Mr. Nagesh Shastry, was solely responsible for the fraudulent act. If the assessee's act was bonafide and the consultant was solely responsible, the penalty cannot be levied. Therefore, the issue was remitted back to the Assessing Officer for fresh consideration.

The Tribunal referred to the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd., stating that income from credit facilities provided to members, including nominal/associate members (if permitted by the Co-operative Societies Act), is eligible for deduction u/s 80P(2)(a)(i). Section 80P(4) excludes only co-operative banks engaged in public banking. For interest income from investments, it directed the AO to verify if it was from investments with co-operative societies, citing the Supreme Court's decision in Kerala State Co-operative Agricultural and Rural Development Bank Ltd. If income is treated as 'income from other sources', relief u/s 57 would be applicable.