2019 (7) TMI 710 - HC - Income Tax

Reopening of assessment - entitled to the benefit of Section 80P - whether the primary agricultural credit societies are entitled for the deduction or nor? - HELD THAT - There is no disputation or disagreement before this Court that these matters are squarely covered by a common order in TIRUCHENGODE AGRICULTURAL PRODUCERS COOPERATIVE MARKETING SOCIETY LTD., S-1308 AMMAPET PRIMARY AGRICULTURAL COOPERATIVE BANK LTD. 2016 (8) TMI 560 - MADRAS HIGH COURT Since department has filed SLPs against these orders, the following order is passed a) All the four impugned notices will be kept in abeyance and there will be no further proceedings pursuant to the same until disposal of the SLPs said to have been filed by respondent / Revenue in Hon'ble Supreme Court against the aforesaid order of Hon'ble Division Bench (supra) b) If the SLPs are in favour of the Revenue, the impugned orders will stand revived and law will take its course. If the aforesaid scenario unfolds, it is open to the writ petitioner assessee to take all objections and defences available to section 148 notice including calling for reasons and limitation. c) If the SLPs end in favour of assessees and if the aforesaid Hon'ble Division Bench orders are confirmed or if the Hon'ble Supreme Court refuses to interfere with the orders of the High Court, all the four impugned notices will stand set aside without further reference to this Court. d) Though obvious it is made clear that this order pertains to benefit u/s 80-P of IT Act qua writ petitioners covered by Hon'ble Division Bench orders against which Revenue submits that SLPs have been filed before Hon'ble Supreme Court and therefore, this order will not preclude Revenue from proceeding against writ petitioners in a manner known to law with regard to other issues, if any.

Summary

Issues Involved:
Interpretation of Section 80P of the Income Tax Act, 1961 for Cooperative Societies; Validity of notices issued under Section 148 of the IT Act; Application of the judgment by the Hon'ble Division Bench in Tax Case Appeal Numbers; Limitation periods for notices under Section 148 of the IT Act.

Analysis:

1. Interpretation of Section 80P of the Income Tax Act, 1961 for Cooperative Societies:
The writ petitions involved Cooperative Societies claiming benefits under Section 80P of the IT Act. The key contention was that a Division Bench of the High Court had previously held that such societies were entitled to this benefit. The judgment in Tax Case Appeal Numbers raised substantial questions of law regarding the applicability of Section 80P to Cooperative Societies. The Hon'ble Division Bench answered these questions in favor of the assessee, emphasizing that primary agricultural credit societies were entitled to deductions under this section. The judgment clarified that the object of a cooperative bank differs from that of a credit society, thus excluding cooperative banks from the benefits under Section 80P.

2. Validity of notices issued under Section 148 of the IT Act:
The impugned notices issued under Section 148 of the IT Act were challenged by the Cooperative Societies based on the previous judgment. The High Court noted that the Division Bench's ruling applied to the present cases. Despite the Revenue's submission that Special Leave Petitions were filed in the Supreme Court, the High Court held that the Division Bench's order remained in force. However, the Revenue raised concerns about the limitation periods for re-issuing notices under Section 148 if the impugned notices were set aside.

3. Application of the judgment by the Hon'ble Division Bench in Tax Case Appeal Numbers:
The judgment in Tax Case Appeal Numbers provided a legal precedent for Cooperative Societies seeking benefits under Section 80P. The High Court acknowledged that the Division Bench's decision applied to the current cases, and it was binding on the authorities. The High Court decided to keep the impugned notices in abeyance pending the outcome of the Special Leave Petitions filed by the Revenue in the Supreme Court.

4. Limitation periods for notices under Section 148 of the IT Act:
The Revenue highlighted concerns regarding the limitation periods for re-issuing notices under Section 148 if the impugned notices were set aside. Different limitation periods were prescribed under various sections of the IT Act, and the Revenue argued that re-issuing notices might be time-barred. The High Court refrained from expressing an opinion on this issue at the time of passing the order.

In conclusion, the High Court disposed of the writ petitions by keeping the impugned notices in abeyance pending the outcome of the Special Leave Petitions filed by the Revenue. The judgment by the Hon'ble Division Bench in Tax Case Appeal Numbers played a significant role in determining the rights of Cooperative Societies under Section 80P of the IT Act. The High Court's decision balanced the legal principles with the practical implications of potential re-issuance of notices under Section 148, considering the limitation periods involved.