Vildirect: IncomeTax-caselaws-1970-VIL-445-ITAT-BLR

1970-VIL-445-ITAT-BLR

Income Tax Appellate Tribunal BANGALORE

ITA NoS.1203 And 1204/Bang/2019

Date: 01.01.1970

THE STATE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.

PR. COMMISSIONER OF INCOME TAX, BANGALORE-5, BANGALORE.

JUDGMENT

PER SHRI PAVAN KUMAR GADALE, JM :

These are the appeals filed by the assessee against different orders of Pr. CIT, Bangalore-5 passed under Section 263 of the Income Tax Act, 1961 ('the Act').Since the issues are identical and similar, they are clubbed and heard together and consolidated order is passed. For the sake of convenience, we shall take up the appeal ITA No.1203/Bang/2019 and the facts narrated therein. The assessee has raised the following grounds of appeal:

1. The Pr. CIT erred in invoking the provisions of section 263 of the Act ignoring the fact that the eligibility for exemption u/s 80P of the act was examined by the A.O. during the course of assessment.

2. The Pr. CIT was not correct in not appreciating the facts that the A.O. has verified the exemption claimed u/s. 80P and allowed the exemption based on Hon'ble Jurisdictional High Court decision.

3. The Pr. CIT was wrong in not appreciating the facts that the Society has fulfilled all necessary conditions for claiming of exemption u/s. 80P as the Appellant's activities are to provide credit facilities to its members.

4. The Pr. CIT was not correct in not following the Jurisdictional Hon'ble ITAT, Bangalore decision of Appellant's Own case for AY 2008-09 & AY 2009-10 dated 05.09.2018, where, the Hon'ble ITAT has allowed the exemption u/s. 80P claimed by the Appellant.

5. The Appellant craves leave to add, to alter, to amend or to delete any of the grounds that may be urged at the time of hearing for the Appeal

2. The assessee is a society registered under Karnataka Societies Act. The Membership of the society is for the staff of State Bank of Mysore and outsiders are not eligible to become members, and the amount collected by the society is utilized for the benefit of the employees. The assesse filed the Return of Income on 9.10.2014 with total income Rs NIL after claiming deduction u/sec80P of the Act.

Subsequently, the case was selected for scrutiny under CASS and Notice under Section 143(2) and 142(1) of the Act along with questionnaire were issued. In compliance, the learned Authorized Representative appeared from time to time and submitted the details and the return of Income was accepted. Subsequently, Revision Notice under Section 263 of the Act was issued, that no enquiry was conducted in respect of details submitted by the assessee in the assessment proceedings and the Assessing Officer has failed to examine the allowability of deduction under Section 80P of the Act. The assessee has filed reply with details supporting the claim of deduction u/sec80P of the Act and objections on 11.2.2019 referred at page 3 to 11 of the revision order, and filed written submissions. The contentions of the assessee, that an enquiry conducted by the Assessing Officer and accepted claim under Section 80P of the Act and relied on judicial decisions.

Whereas Pr CIT has set aside the order of Assessing Officer and directed the Assessing Officer to make fresh examination of claim of deduction u/sec80P of the Act and to make enquiry into the nature of income earned by the assessee attributable to the providing credit facilities to members of the society and passed revision order underSec263 of the Act on 26.03.2019. Aggrieved by the order Pr CIT, the assessee has filed an appeal with the Tribunal.

3. The learned Authorized Representative’s contentions are that the PriCIT has ignored the deduction under Section 80P of the Act, which was examined in the course of assessment proceedings. The Assessing Officer has made enquiries and for earlier assessment years the exemption was granted. Therefore, the order passed u/sec143 (3)of the Act is not erroneous nor prejudicial to the interest of revenue and prayed for quashing the orders of the PrCIT. Contra, the learned Departmental Representative supported the order of PrCIT and filed written submissions and relied on judicial decisions, that when no enquiry was conducted by the AO, as per provisions of Section 263 of the Act, the order is subjected to Revision and the PrCIT has only directed for fresh examination.

4. We heard the rival contentions and perused the material on record. Prima facie, the disputed issue is with respect to satisfaction of twin conditions for Revision under Section 263 of the Act being erroneous and prejudicial to the interest of revenue. The learned Authorized Representative has emphasized that the order passed by the Prin. CIT is bad in law as it does not satisfy the twin conditions, and emphasized that the assessee is entitled for exemption under Section 80P of the Act and in the scrutiny proceedings, the Assessing Officer has conducted enquiries in respect of income and claims. We on perusal of the assessment order, find that the Assessing Officer has issued Notice under Section 142(1) of the Act along with questionnaire, But there are no findings or observations of the Assessing Officer that he has conducted enquiries in respect of income and claims made by the assessee. In the course of hearing, the Bench wanted the LdAR to furnish details filed in response to notice under Section 142(1) of the Act and questionnaire, the learned Authorized Representative could not substantiate with material evidences filed in the Assessment proceedings. The fact remains that the order passed by the Assessing Officer prima facie, is without conduct of Enquiry. We found the co-ordinate bench of this Tribunal in Smt. Malini Subramanian Vs Prin. CIT in ITA No.935/Bang/2016 Dt.27.09.2019 observed at Para 6, which is read as under :

“ 6. The Hon’ble Supreme Court has held that the existence of twin conditions, viz., the assessment order should be erroneous and it should be prejudicial to the interests of revenue, should be shown in the revision order passed u/s 263 of the Act. The Hon’ble Apex Court has further held that non-application of mind on the part of the Income-tax Officer would make the assessment order erroneous. In the instant case, we notice that the assessing officer did not conduct any enquiry at all with regard to the claim of “Good Will” made by the assessee. The Ld A.R also could not demonstrate that the AO did conduct enquiry and has taken a possible view.”

5. Similarly, the co-ordinate bench of this Tribunal in the case of Mysore Minerals Limited Vs. CIT (ITA No.464/Bang/2014 Dt.25.01.2019 observed at page 9 para 13 read as under :

“ 13. We have given a careful consideration to the rival submissions. At the outset we agree with the submissions made by the ld DR that in the present case, the CIT has not exercised jurisdiction u/s 263 of the Act on the ground of ‘no enquiry’ made by the AO or ‘lack of enquiry’ made by the AO. The CIT has held that conclusions drawn by the AO in allowing expenditure set out in the show cause u/s 263 of the Act ought not to have been allowed as deduction. We, therefore, hold that the jurisdiction u/s 263 of the Act was validly invoked by the CIT.”

Prima facie, on applying the ratio of decision to the present case, we find that the Assessing Officer could not conduct enquiry into income and claims made by the assessee nor the assessee could demonstrate with evidences that the Assessing Officer has conducted the enquiry. We find as per provisions of Section 263 of the Act Expln.2 w.e.f 1.6.2015 is as under-

“Section 263 (1)

Explanation 1 ……….

Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,-

(a) the order is passed without making inquiries or verification which should have been made;

(b) the order is passed allowing any relief without inquiring into the claim;

(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or

(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.”

Considering the facts and circumstances, provisions of law and judicial decisions, we are of the opinion that the Assessing Officer has passed the order without conducting enquiries or verifications, and The PrCIT has set aside the order passed under Section 143(3) of the Act by the Assessing Officer and directed the A.O for fresh examination in respect of incomes and claims. Accordingly, we are not inclined to interfere with the order of PrCIT and of the view that there is no infirmity in the revision order of Pr CIT and upheld the same and dismissed the grounds of appeal of assessee.

6. Similarly, for the Assessment Year 2015-16, the facts and issues are identical.

And the decision held in ITA No.1203/Bang/2018 for the Assessment Year 2014- 15 shall apply. Accordingly, the grounds of appeal of assessee for the Assessment Year 2015-16 are dismissed.

7. In the result, both the appeals filed by the assessee are dismissed.

Pronounced in the open court on the date mentioned on the caption page.

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