2024 (12) TMI 123 - HC - Income Tax

Exemption u/s 80P(2)(d) - Availability of exemption u/s 80P(2)(d) in re-assessment proceedings - petitioner has neglected assessment in as much as neither filed his Returns nor participated in the proceedings after the notice was issued u/s 148 - HELD THAT - Having considered the submissions made by the learned counsel for the petitioner and the learned Standing Counsel for the respondent, the Court is of the view that the final issue relating to the availability of exemption u/s 80P(2)(d) of the Act, cannot be decided under Article 226 of the Constitution of India. In this case, no doubt the petitioner has neglected. However, the petitioner does deserve one more opportunity to went out his grievances in the re-assessment proceedings. Therefore, the case is remitted back to the respondent to pass fresh orders on merits and in accordance with law from the stage of show cause notice after the issuance of Section 148 notices to the petitioner, since the petitioner has neglected by not filing of Return both at the stage of filing of regular Return under Section 139(4) of the Act and has not participated in the proceedings, despite the service of the show cause notice through post to the petitioner. Since the petitioner has neglected and did not comply with the requirements of the Act, under new regime, the petitioner is directed to pay a sum of Rs.20,000/- to the credit of Chief Justice Relief Fund, Madras High Court, Chennai, on or before 29.11.2024.

Summary

Issues:
1. Entitlement to deduction under Section 80P(2)(d) of the Income Tax Act, 1961.
2. Compliance with Section 139(4) of the Act and response to notices under Section 148A(d) and Section 148.
3. Failure to participate in proceedings and assistance from Auditor.
4. Compliance with Section 144B of the Act and quashing of the Impugned Order.
5. Availability of exemption under Section 80P(2)(d) in re-assessment proceedings.
6. Requirement to pay a sum to the Chief Justice Relief Fund and participation in de-novo proceedings.

Analysis:
1. The petitioner, a Primary Agricultural Co-operative Credit Society, claimed entitlement to deduction under Section 80P(2)(d) of the Income Tax Act, 1961 based on interest received from Co-operative Banks. The petitioner's Auditor was blamed for not filing regular Returns under Section 139(4), leading to notices under Section 148A(d) and Section 148.

2. The petitioner, despite filing Returns post-notice, failed to participate in the proceedings and attributed this to the Auditor's failure to assist. The counsel argued non-compliance with Section 144B for issuance of the draft order, citing a previous court decision for reference.

3. The Standing Counsel contended that the petitioner neglected assessment by not filing Returns under Section 139(4) and failing to participate post-notice under Section 148. Emphasis was placed on the petitioner's non-compliance leading to the impugned order.

4. The Court, after considering submissions, ruled that the issue of exemption under Section 80P(2)(d) could not be decided under Article 226. Despite the petitioner's neglect, the Court granted one more opportunity for the petitioner to address grievances in re-assessment proceedings.

5. The petitioner was directed to pay a sum to the Chief Justice Relief Fund and participate in de-novo proceedings. Failure to cooperate would lead to action by the respondent based on available records. The impugned order was quashed, and the petitioner was instructed to file a consolidated reply within 30 days.

6. The Writ Petition was disposed of with directions for compliance, emphasizing the need for the petitioner to participate in the proceedings and cooperate with the respondent. No costs were awarded, and compliance reporting was scheduled for a specific date.