2023 (3) TMI 368 - HC - Income Tax

Faceless inquiry or Valuation - scope of the term technically not feasible - Deduction u/s 80P - Co-operative society claiming an exemption of interest - HELD THAT - The claim of the petitioner is that the Virudhunagar District Central Cooperative Bank is a Cooperative society and not a scheduled bank and therefore, the judgment of the Hon'ble Apex Court in Totgars, Co-operative Sale Society Limited 2010 (2) TMI 3 - SUPREME COURT will not be applicable to the facts of the case. The issue therein was that the Co-operative society claiming an exemption of interest that it had received from the scheduled bank would be exempted under Section 80P(2)(a)(i) of the Act. The judgment of the Hon'ble Apex Court could not be applied to this case, as the exemption now claimed by the petitioner is under Section 80P(2)(d) - Hence, the reliance placed upon by the Department on the said judgment to the facts of the case, in our view, is not correct. With regard to the claim of the petitioner that the Virudhunagar District Central Cooperative Bank is a cooperative society and not a scheduled bank are all factual disputes that will have to be raised before the appellate authority. The respondents herein have given a specific finding that the said Virudhunagar District Central Cooperative Bank is not a Co-operative society. Petitioner that Section 142B of the Act does not provide the petitioner with an opportunity of hearing cannot be made by the petitioner, as it had not challenged the statutory provisions of Section 142B of the Act, which provides for a faceless interface. The petitioner in this case pursuant to the notice issued under Section 142 of the Act invoking the scheme u/s 142B of the Act and having replied with necessary documents has participated in the enquiry under the faceless interface and hence, it cannot now turn back and say that it is prejudiced by such a procedure. The term technically not feasible in Section 142B(1)(a) of the Act would only mean that when it is not technologically feasible to invoke such provisions between the Department and the assessee. The technical advancement had reached new heights. Hence, the contentions petitioner that it is not having the technological feasibility, deserves no consideration. In this case, Standing Counsel for the respondents had invited my attention to the order of assessment, wherein in paragraph No.2, the details of opportunities given have been tabulated. From it, it could be seen that the petitioner had been given sufficient opportunity to explain its case. Further reliance placed upon by the learned counsel for the petitioner to the judgment of this Court in a batch of writ petitions also, in my view, would not be applicable and would not be any assistance to him. The reason we arrive at is that there again the Court had given a finding that the authority has simply relied upon the Totgars s case 2010 (2) TMI 3 - SUPREME COURT and has not dealt with the merits of the case, namely whether the bank in which the society had invested was a Co-operative society or not. In the present case, there is a specific finding by the Department that the investments made by the petitioner in Virudhunagar District Central Cooperative Bank is not a Cooperative society and it is a banking institution. Hence, in my view the writ petitioner has got an alternative remedy of filing an appeal and the petitioner is directed to file an appeal before the appellate authority against the order impugned in this writ petition. Writ Petition is dismissed with liberty to the petitioner to file an appeal before the appropriate authority. From the order impugned, the limitation for filing an appeal is 30 days. The order impugned had been passed on 20.12.2022 and the petitioner had approached this Court on 12.01.2023.

Issues:
- Eligibility for exemption under Section 80P(2)(d) of the Income Tax Act
- Violation of principles of natural justice in assessment order
- Technological feasibility in e-proceedings under Section 142B of the Act
- Applicability of legal judgments in support of respective arguments

Eligibility for Exemption under Section 80P(2)(d) of the Income Tax Act:

The petitioner, a Primary Agricultural Cooperative Credit Society, claimed exemption under Section 80P(2)(d) for interest earned from fixed deposits in a cooperative bank. The court analyzed the claim, noting the distinction from a previous case involving a scheduled bank. The court emphasized that factual disputes regarding the bank's classification should be raised before the appellate authority. The respondents had determined that the bank in question was not a cooperative society, impacting the eligibility for the claimed exemption.

Violation of Principles of Natural Justice in Assessment Order:

The petitioner argued that the assessment order lacked a personal hearing, violating principles of natural justice. The court considered this argument, highlighting the petitioner's claim of inability to fully participate in e-proceedings under Section 142B of the Act. The petitioner referenced a previous judgment directing a personal hearing for similar circumstances. However, the court found that the petitioner had engaged in the faceless interface process under Section 142B, dismissing the argument of lack of opportunity for a hearing.

Technological Feasibility in E-proceedings under Section 142B of the Act:

The petitioner contended that it lacked the technological knowhow to engage in e-proceedings as per Section 142B of the Act. The court rejected this argument, stating that the petitioner's participation in the process indicated technological feasibility. The court clarified that the term "technically not feasible" in the Act referred to technological limitations between the department and the assessee. As the petitioner had interacted through the faceless interface, the court deemed the argument invalid.

Applicability of Legal Judgments in Support of Respective Arguments:

Both parties cited legal judgments to support their arguments. The petitioner referenced cases involving cooperative societies and exemptions under the Act. The respondents relied on judgments emphasizing the availability of appellate remedies and the implementation of statutory provisions. The court assessed these references, emphasizing the need for factual disputes to be addressed through the appellate process. It directed the petitioner to file an appeal against the order in question within the prescribed timeline.

In conclusion, the court dismissed the writ petition, granting the petitioner the liberty to file an appeal before the appropriate authority. The court instructed the exclusion of the period during the writ petition's pendency while calculating the appeal's limitation period. No costs were awarded, and the connected miscellaneous petitions were closed.

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