9911796707
TMI Blog2012 (7) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered under the Orissa Co-Operative Societies Act,1962 (Act 2 of 1963). Date of formation is 29.9.1970 under registration No.1185/BC issued by Deputy Registrar of Co-Op.Societies, Balasore. The area of operation of the society is confined to the district of Balasore. The object of the society shall be to promote the economic interest by providing employment opportunities to its members. Unemployed diploma holders or graduate in Engineering are eligible to become a member and shall be disposed of by the Board of Directors of the society. The graduate Engineers and diploma holder taking part time or whole time job elsewhere may no longer be treated as unemployed and should cease from membership. The assessee filed its return for the Assessment Year under consideration in ITR-7 on 29.9.2008 showing total income NIL after claiming deduction under Section 80(P)(2)(a)(vi) of the I.T.Act, 1961 under Chapter VI. The case was selected for scrutiny and after issuing necessary statutory notices the Assessing Officer passed the impugned order u/s.143(3) of the I.T.Act, wherein after discussing at length, he was of the view that the income of the assessee does not attributable to the specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not disclosed that he possesses PAN and filed income tax return. Perusal of income tax record it is found that he has filed income tax return in ITR-4 for the A.Y 2008-09 on 26-08-08 in this office showing total income Rs. 94,820. Under the head profit and gain Rs. 88,100 and Income from House property Rs. 6,720. He has shown in Schedule El of the return at si no. 6 under the head others, including exempt income of minor child Rs. 2,45,330. As discussed at Para 2.5.7 above, that Mr. Mohapatra is Managing Partners of a partnership firm name & style Satya Sai Filling Station (Petrol pump). Balance sheet of firm reflect that his capital in the firm is Rs. 4 80,000. Salary drawn during the year Rs. 96,000 and interest on capital is Rs. 52 600. Such discrepancy in the IT return and statement made by another partner Sri Niranjan Mohapa tra at discussed at same Para 2.5. 7 above, itself focus the role of Mr. Mohapa tra. At the advised by Managing partner, Shree Saitya Sai Filling Station attempted to proof that such transaction was made for purchase of fuel, however katchha parchi furnish by them without chronological number, does not give any factual evidence. Moreover, a prudent ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of facts or circumstances. 2. For that, the denial of grant of exemption U/s 80P(2)(a)(vi) deserves to be allowed on the ground that the denial is based upon distortion of facts and wrongful unilateral interpretation of taxing statute and Judicial pronouncements. 3. For that, the addition of Rs.2,82,03,238 U/s 40A(3) deserves to be deleted on the ground that no addition U/s4OA(3) can be Justifiable and legally sustainable when the very condition precedent for invocation of Section 40A(3) is absent. 4. For that the addition of Rs.2,82,03,238 u/s.40A(39) deserves to be deleted on the ground that no addition u/s.40A(3) can be made on sheer suspicion or surmises or on assumption and presumption without concrete finding of facts. 5. For that the addition of Rs.19,00,000 deserves to be deleted being unwarranted, unjustified and unlawful. In ITA No.304/CTK/2012: 1. For that, the denial of grant of exemption U/s 80P(2)(a)(vi) deserves to be reversed on the ground that, not only it is against Judicial propriety but also abuse of Judicial power, particularly when the issue of grant of exemption U/s 80P(2)(a)(vi) has been considered and decided in favour of the appellant time and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from taxation U/s. 80P(2)(a)(vi) right from A/Y 1973-1974 to till date. In the mean time the issue of exemption U/s. 80P(2)(a)(vi) has been the subject matter of judicial scrutiny by the Hon'ble High Court, once by way of writ in OJC No. 3761 of 92 decided on 5th April, 1994 and again in T.A. No. 67 to 70 of 2000 decided on 8th Dec,2008. 7.2. The first order that was passed by the Tribunal was a consolidated order for the A/Y 1974-1975 to 1978-1979 in ITA No. 228 to 232/CTK/1980 decided on 23.10.1981, wherein the Tribunal held that "Income actually derived from the labour of the members of the assessee would be exempt but not any income derived as a result of investment of capital or execution of any jobs by employed labour". The matter again came up before the SMC bench of this Tribunal for the A/Y 1973-1974 in ITA No. 238/CTK/81 decided on 12.03.1982 wherein the Tribunal took into consideration the previous order dt.23.10.1981 of the Tribunal and concurred with it but clarified further that "the labour of the graduate engineers in this context has to be understood in a broad sense, namely including supervision of the work executed with the help of masons daily labourers, elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dt.22.05.2000 dismissed the appeal of the revenue and allowed the exemption. Being aggrieved the revenue preferred appeal before the Hon'ble High Court in ITA No. 67 to 70 of 2000 and the High Court on 8th December, 2008 remanded the matter to the Tribunal to record a finding of fact as to whether income had been obtained by self employment by the members of the society collectively or employing labourers through contractors. It was held that "in case it is done by self employment, the society shall be entitled for getting exemption otherwise not". 7.7. The ITAT in turn remanded the matter to the A.O. for fact finding and the A.O. concluded in the remand report dt.11.08.2009 that a. "The assessee did not employ labourers through contractors. b. The work was completed with the help of outside labourers too. The supervisory work as well as one part of main work, was undertaken by the members of the assessee society. But it was simply not possible to get the full work done solely with the labour of the members of the society. Considering the volume of the work, employment of outside labour was obligatory for the assessee society." Considering this remand report and direction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted and found at Page 5 to 11 of the written submissions filed before the CIT(A). He reiterated the same before us. The learned AR of the assessee submitted that the Assessing Officer has summon the President and Members of the Society to appear before him along with the books on any day from 22.9.2010 to 24.9.2010 as comfortable for cross examination in support of the work done and proof of identity. In response to this, the Secretary and President along with Advocate and other members of the society along with the books of account were very much present in the Assessing Officer's Office till the evening of 24.9.2010 but they were not examined nor the books were verified by the Assessing Officer and they were sent back with the observation of the Assessing Officer that there is no necessity for further examination. Immediately on 24.9.2010 itself the AR of the assessee has written a letter to the Assessing Officer which is extracted in para 3.4. of the assessment order of the AO. Under these facts and circumstances of the case, the learned AR of the assessee contended that the crucial aspect of the case was not examined by the Assessing Officer in order to deviate from the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport in pursuance to the direction of said decision in ITA No. ITA No.99/100/101/CTK/1995 and 106/CTK/1996 dt.22.5.2000 for the AYs 1989-90 to 1992-93, the Assessing Officer has not given care to do that exercise as was done by his predecessor because he was well aware that if that exercise is done, the matter will go in favour of the assessee and that is why he made an observation in paragraph 3.5 to cover up his lapses. This conduct of the Assessing Officer clearly shows that he was pre-determined on the issue and made all the proceedings an eye wash to show that he complied the required procedure with an ulterior motive in denying the claim of the assessee u/s.80P(2)(a)(vi) of the I.T.Act. Under these facts and circumstances of the case, the learned AR of the assessee submitted that the action of the Assessing Officer and the learned CIT(A) in confirming the action of the Assessing Officer are not at all justified which requires to be set aside by allowing exemption u/s.80P(2)(a)(vi) of the I.T.Act as claimed by the assessee. 7.12. In view of the above, the learned AR of the assessee submitted that on the facts and circumstances the assessee is entitled to exemption u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned by the learned AR of the assessee during the course of hearing, the Departmental appeal filed before the jurisdictional High Court in ITA No.67 to 70 of 2000, Hon'ble High Court has remanded the matter by passing order dt.8.12.2008 to the Tribunal to record a finding of fact as to whether income had been obtained by self employment by the members of the society collectively or employing labourers through contractors. It is further held by Hon'ble High Court that in case it is done by self-employment, the society shall be entitled for getting exemption otherwise not. While dealing with the case in pursuance to the direction of Hon'ble High Court, this Tribunal called for a remand report from the Assessing Officer regarding this aspect and the Assessing Officer has sent a remand report dt.11.8.2009 stating that the assessee did not employ labourers through contractors. The work was completed with the help of outside labourers too. The supervisory work as well as one part of main work, was undertaken by the members of the assessee society. But it was simply not possible to get the full work done solely with the labour of the members of the society. Considering the volume of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption u/s.80P(2)(a)(vi) of the I.T.Act to the assessee merely on assumptions and presumptions. It is also further found from the assessment order that he has not even examined the contractees who have awarded the contracts to the assessee as to how the assessee has executed the contract whether by the Members of the society or otherwise. Though the Assessing Officer has written a very lengthy order of assessment of 39 pages, he has not made any observation about this primary aspect which goes to the root of the issue and he has not devoted any time to that effect. From this conduct of the AO, it is clear that the Assessing Officer was predetermined to disallow the claim of the assessee without ascertaining as to whether the income had been obtained by self employment by the Members of the society collectively or employing labourers through contractors. 9.2. That apart, the AO has also not even made out any material on record either by examining the President/Members of the assessee-society regarding the way in which the assessee has executed the contracts. Since there is already a finding on this issue in favour of the assessee basing on the remand report given by the predecesso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed by the Government of Orissa and it was not the case of the AO that the auditors who audited the accounts of the assessee has raised any objection for the financial activities of the assessee. Apart from that the assessee has not claimed any deduction of this provision though shown as provision for Roller. When the assessee has not claimed any deduction, addition of such amount to the total income of the assessee is not tenable under law and hence, the addition of Rs.19 lakhs made on this score is hereby directed to be deleted. 12. For the reasons discussed above, ITA No.303/CTK/2012 filed by the assessee is allowed. 13. Now coming to ITA No.304/CTK/2012, the issue raised in this appeal is regarding the rectification made by the AO u/s.154 of the I.T.Act by making disallowance u/s.40A(3) by 100% of the amounts paid in cash beyond the limit prescribed under the I.T.Act i.e., beyond Rs.20,000 as against 20% disallowed in the original assessment. The Assessing Officer has relied on the amended provisions of Section 40A(3) by the Finance Act, 2003 w.e.f. 1.4.2008 which is applicable to the present period under consideration. This issue raised in ITA No. 304/CTK/2012 requires no fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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