Case Number: ITA 668/DEL/2019
Appellant: The Osho Co-op L7 & C Society, Shop No. 2 Geeta Market Panipat
Respondent: ITO Ward 3, Panipat
Assessment Year: 2015-16
Result: Appeal Allowed for Statistical Purposes
Case Filed On: 2019-01-30
Order Type: Final Tribunal Order
Date of Order: 2020-02-04
Pronounced On: 2020-02-04
The Osho Co-op L7 & C Society, a cooperative society engaged in labor and construction activities, filed an appeal against the assessment order for the assessment year 2015-16. The appeal was directed against the order of the learned CIT(A), Karnal, dated 23.10.2018.
During the assessment proceedings, the Assessing Officer (AO) observed that the appellant, a contractor engaged in civil construction work for the HSAM Board, Panipat, had filed its return of income declaring a net profit of 0.61% against gross contract receipts of Rs.1,21,43,829/-. The declared net profit was Rs.74,950/-, and a refund of Rs.2,42,877/- was claimed on account of TDS.
The AO noted significant discrepancies, including:
The AO asked the appellant to produce various financial documents, which were not furnished despite ample opportunities. Consequently, the AO estimated the income at Rs.9,71,506/- by applying a net rate of 8% on the gross receipts.
The appellant contested the income estimation as arbitrary and high. They argued that they are a labor and construction cooperative society engaged in the collective disposal of labor of their members and should be eligible for deductions under Section 80P(vi) of the Income Tax Act, 1961. However, this claim was not properly represented during the assessment proceedings.
The CIT(A) upheld the AO’s decision, rejecting the books of accounts and the deduction claim under Section 80P. The CIT(A) observed that the appellant did not provide concrete evidence to support their claims, merely stating that the accounts were audited.
The Income Tax Appellate Tribunal (ITAT), comprising Smt. Diva Singh (Judicial Member), heard the case on 04.02.2020. The tribunal noted that the appellant failed to address the issue of Section 80P deduction before the CIT(A). Given the business’s nature and history, the tribunal found it appropriate to restore this issue to the CIT(A) for a proper finding.
The tribunal also considered the appellant’s argument that the profit rate of 8% was excessively high, referencing a similar case where a 2.5% profit rate was justified. The ITAT found no comparison or discussion on the past history of the appellant’s profit rates in the record.
The ITAT set aside the impugned order and remanded the case to the CIT(A) for a detailed discussion and proper representation on both the income estimation and the Section 80P deduction. The appeal was allowed for statistical purposes, ensuring that the issues are addressed comprehensively and in accordance with the law.
Source: Income Tax Appellate Tribunal, Delhi Benches ‘SMC’, New Delhi
Disclaimer: This article provides an overview of the case and is not a substitute for professional legal advice. For detailed information, readers are encouraged to refer to the official case documents and consult with a qualified legal professional.
The Osho Co-op vs ITO: Tax Dispute on Income Estimation and 80P Deduction for AY 2015-16
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