Income Tax Appellate Tribunal Chandigarh Ito, W6(3), Mohali vs The Star CoOperative Labour & ... on 21 August, 2024 आयकर अपीलीय अिधकरण,च ीगढ़ ायपीठ "बी" , च ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "B", CHANDIGARH HEARING THROUGH: PHYSICAL MODE ी िव म िसंह यादव, लेखा सद एवं ी परे श म. जोशी, ाियक सद BEFORE: SHRI. VIKRAM SINGH YADAV, AM & SHRI. PARESH M. JOSHI, JM आयकर अपील सं ./ ITA NO. 1015/Chd/2019 िनधारण वष / Assessment Year : 201213 The ITO बनाम The Star Cooperative Labour & Ward 6(3), Mohali Construction Society Ltd. H.No. 3232, Sector 70, Mohali ायी लेखा सं ./PAN NO: AAJPD0748D अपीलाथ /Appellant थ /Respondent िनधा रती की ओर से /Assessee by : Shri Nalin Nohria, CA and Shri B.K. Nohria, CA राज की ओर से / Revenue by : Shri Vivek Vardhan, JCIT, Sr. DR सु नवाई की तारीख/Date of Hearing : 08/08/2024 उदघोषणा की तारीख/Date of Pronouncement : 21/08/2024 आदे श/Order PER PARESH M. JOSHI, J.M. : This is an appeal which is filed by the Revenue under section 253 of the Income Tax Act, 1961 as they are aggrieved by an order dt. 12/04/2019 passed in Appeal No. 10328/2/1718 by the Ld. CIT(A) in terms of Section 250(6) of the Income Tax Act, 1961 which is hereinafter referred to as the "impugned order". Factual Matrix 2. The assessee is a registered cooperative society under the Cooperative Societies Act, 1912 and the prime object of the society is to promote the economic interest of manual labour, skilled worker for the purpose of obtaining and execution of work contracts of Govt. Municipal Corporation or Private work. The society is primarily engaged in construction work with Govt. and Semi Govt. Departments. 3. Income Tax Return was filed on 30/09/2012 declaring NIL income. The original assessment was framed under section 143(3) vide order dt. 28/02/2015 2 by the then DCIT Circle 6(1), while framing the assessment, the returned income was accepted. 4. Subsequently, it was noticed by the A.O. that order passed by the then A.O. under section 143(3) dated 28/2/2015 is erroneous in so far as it is prejudicial to the interest of the revenue in terms of provisions of section 263 of the Income Tax Act, 1961. Therefore, the case was referred by the A.O. to the Pr. Commissioner of Income Tax2, Chandigarh with the recommendation for invoking the provisions of section 263 of the Income Tax Act, 1961. Consequently, a show cause notice was issued to the assessee by the Pr. Commissioner of Income Tax2, Chandigarh on 10.2.2017 for invoking the provisions of Section 263 with the following observation: "Please refer to the return of income filed by you on 30.9.2012 declaring returned income at NIL and the assessment order u/s 143(3) passed by the Dy. Commissioner of Income Tax, Circle 6(1), Mohali (the assessing officer concerned in your case) on 28.2.2015 at returned income. 5. Perusal of assessment record in your case for the A. Y. 201213 reveals that the following issues remained unexplained on the part of assessing officer: i) A perusal of Profit & Loss account reveals that during the year under consideration you had earned income on account of work contracts which included receipts on account of materials also. As per provisions of section 80P(2)(a)(vi) an assessee being a cooperative society engaged in the collective disposal of the labour of its members is eligible for deduction equal to the whole of amount of profits and gains of business atrributable to such activity subject to conditions laid down in the proviso. The assesee had earned income on account of work contracts including receipts on account of materials and had claimed deduction u/s 80P of Rs. 14,70,481/. As such you had not fulfilled the conditions laid down u/s 80P of the Act and hence you were not eligible for the deduction. The issue was neither examined by the A.O. nor you offered any detail regarding such income during the assessment proceedings before allowing the said deduction to you. 6. In view of the facts stated above, it appears that the assessment framed u/s 143(3) on 28.2.2015 is erroneous in so far as prejudicial to the intrest of the revenue in terms of provisions of section 2