These appeals filed by the assessee are directed against orders of the Commissioner of Income Tax (Appeals)-1 {CIT(A)}, Visakhapatnam vide Appeal Nos.156 to 159/2012-13 dated 30.3.2017 for the assessment years 2006-07 to 2009-10. Since, the facts are ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 2 identical and issues are common, they are clubbed, heard together and disposed-off by way of this common order for the sake of convenience.

2. In this case a survey u/s 133A of the Income Tax Act, 1961 (hereinafter called as the) was conducted by the A.O. and observed that the assessee has not filed the Return of income though certain sources of income such as interest from bank in its hands.. The assessee is a mutually aided co-operative society registered under the A.P. Mutually Aided Co-operative Societies Act, 1995. The source of income of the assessee is interest on loans, advances to its members and interest on fixed deposits held with the Karnataka Bank Limited. After conducting the survey on 31/10/2011, the assessee filed the Returns of Income for the A.Ys 2006-07 to 2009-10 on 4.11.2011 admitting the income as under: 2006-07 - ` 1,31,271/- 2007-08 - ` 3,25,759/- 2008-09 - ` 7,26,413/- 2009-10 - ` 5,97,509/- The A.O. reopened the assessments by issue of notices u/s 148 of the and the assessee submitted the reply stating that the returns of income filed on 4.11.2011 may be treated as a returns in response to notices issued u/s 148 of the on 22.11.2011. Assessment was completed u/s 143(3) r.w.s. 147 accepting the income returned. ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 3

3. The assessee filed appeal against the order passed u/s 143(3) r.w.s. 147 of the before the CIT(A) stating that the AO is not justified in initiating the proceedings u/s 147 of the act and the AO is not justified in assessing the income of the assessee as chargeable to income tax. The Ld.AR argued before the Ld.CIT(A) that the assessee is mutual cooperative credit society and its income is exempt and not taxable and there is no obligation on the assessee to file the return of income under the provisions of section 139 of theas its entire income being interest income earned during the previous year is not liable to income tax on the principle of mutuality as all its transactions are with the members. The Ld. CIT(A) dismissed the appeal of the assessee stating that though the notice u/s 148 was issued in this case, the A.O has not made any addition to the returned income and the notice issued u/s 148 of the was closed once the reply has received from the assessee. The CIT(A) further observed that even if the assessment proceedings initiated u/s 148 of the are held to be declared invalid, the returned income stands, as it is because no additions have been made to the returned income.

4. Aggrieved by the order of the assessing officer, the assessee is in appeal before this Tribunal. ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 4

5. During the appeal hearing, the Ld. A.R. argued that the society has filed the return of income offering the income and paid the tax, the income offered was accepted and the order was passed. The assessee is mutually aided co-operative society and its income was not liable for tax, which was not realized by the assessee at the time of filing the return of income and argued that there is no concession under law to tax the income which cannot be taxed. The assessee also placed reliance on circular No.14 of 1955 dated 11.4.1955 where CBDT stated that the A.O. should not take the advantage of the ignorance of the assessee. The assessee also relied on the case of Srikant G. Shah Vs. ITO (Bombay Tribunal) 108 ITD 577 and Nirmala L. Mehta Vs. A. Balasubrahmaniam, CIT & Ors (High Court of Bombay) 269 ITR 1 . The Ld. A.R. further argued that article 265 of the Constitution of India declared that no tax can be collected except by authority of law. Further, Honble Supreme Court in the case law in (1965) 56 ITR 67 held that if a particular income is not taxable under the, it cannot be taxed on the basis of estopplels or any other equitable doctrine. Therefore, the Ld. A.R. pleaded that though assessee has filed the return offering the income for tax, at the same time, the assessee is not precluded from making claim before the appellate authorities stating ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 5 that the income is not taxable and relied on the decision of Honble A.P. High Court in the casde of CWT Vs. N.B. Ataulla reported in 217 ITR 17.

6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The assessee was deriving the income from the members and interest from Karnataka bank ltd. The AO conducted the survey and observed that the assessee is earning the interest from Karnataka Bank Ltd it has not filed the Return of Income. The assessee filed the Return of Income immediately after the survey and the AO has completed the assessment accepting the Income returned and no addition was made to the Returned Income. The assessee is mutual cooperative society, and engaged in (i) To encourage thrift, self help and mutual aid among members and afford all facilities for cultivating the habit of thrift and saving among members in accordance with the principles of co- operation as enunciated under the provisions of section 3 of the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995; (ii) To accept deposits of money from the members repayable on demand or other wise and withdrawal by cheque, draft, order or otherwise for the purpose of lending or investment; and (iii) To borrow or raise money and to receive all types of short, medium and long term deposits and in ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 6 particular thrift, recurring, fixed and other deposits from its members etc., as per the objectives of the society.

7. The AO has completed the assessment accepting the returned income and the assessee has not made any claim regarding the exemption of income on mutuality basis before the AO. However the assessee raised the issue before the CIT(A) but the Ld.CIT(A) dismissed the assessees contention stating that the proceedings u/s 148 are aimed at income escaping the assessment. In this case the assessee has filed the return of income after conducting the survey. The assessing officer has issued notice u/s 148 and initiated the assessment proceedings and assessed the income. Therefore the ld. CIT(A) is not prevented from taking up the issue of exemption in appeal. The appellate authorities are bound to take up the issues and adjudicate on the grounds raised by the assessee. The Ld.AR relied on Srikant G. Shah Vs. ITO (Bombay Tribunal) 108 ITD 577 where in the coordinate bench held as under

18. We have given a careful consideration to the rival submissions made before us. We have also carefully gone through the relevant facts and the judicial pronouncements cited before us. In our view, the grounds raised by the assessee in appellate proceedings to the effect that the interest income disclosed by him in the returns of income filed in response to notices issued under section 148 must be excluded from his total income, has to be entertained and dealt with on merits. Similarly Pune B bench in ITA Nos.288 to 291/PN/2014 for the A.Ys. : 2006-07, 2007-08, 2007-08 & 2008-09 in the case of The Asst. ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 7 Commissioner of Income Tax,Circle-8, Pune vs Bajaj Finance Limited, held that after section 143(3) of thewas amended by the Finance Act (No.2) 1998 w.e.f. 01.10.1998, As per the amendment, the assessment under section 143(3) of the Act, inter-alia, envisages the Assessing Officer to grant refund of any amount due to the assessee consequent to the assessment and therefore, the Assessing Officer is statutorily empowered to determine the revised income which can be lower than the returned income.

8. The Ld.AR relied on th CBDT circular No.14 of 1955 dated

11.4.1955 and stated that the A.O. should not take the advantage of the assesseess ignorance of law to his advantage. Ld.AR also taken the reference of Honble Supreme Court decision in the case of V. Mr. P. Firm, Muar* 56 ITR 67 (SC) and argued that that if a particular income is not taxable under the Income Tax Act, it cannot be taxed on the basis of estoppels or any other equitable doctrine. Though the facts of the case law relied on by the assessee is quite different and the issue is not related to voluntary filing of return of income, the observation in the case is still relevant. Therefore following the judicial precedents and the facts of the case we are of the view that in the interest of justice the AO is empowered determine the true and correct income which can be lesser than the returned income. ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 8

9. The assessee is a Mutually Aided Co-operative credit Society and the entire income of the society is not exempt and only that part of the income which is derived by the assessee from the members is not taxable on the principle of mutuality. For this purpose there should be complete identity between the contributors and the participators. Honble Supreme Court in the case of Bangalore Club 29 Taxmann.com 29 considered the issue of mutuality and taken view that the principle of mutuality relates to the notion that a person cannot make a profit from himself. An amount received from oneself is not recorded as income and is therefore is not subject to tax. Only the income which comes within the definition of section 2(24) of theis subject to tax. Under the Income Tax Act, in the case of cooperative societies the interest income of the assessee is allowed as deduction u/s 80P(2)(d) of the, which reads as under: In respect of any income by way of interest or dividend derived by the co-operative society from investments with any other co operative society, the whole of such amount.

10. The interest income derived by the assessee from the Karnataka Bank is still taxable. As held by Honble Supreme Court in the case of Bangalore Club cited (supra) and Totgars Co-operative Sale Society Ltd. V. ITO (2010) 322 ITR 283, the interest on deposits is not the business ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 9 income but income from other sources and the society is not entitled to special deduction u/s 80P(2)(d) of the. In the instant case, the assessee has made deposits with the Karnataka Bank Limited, which is not member of the society and the same is not to be allowed as a deduction u/s 80P(2)(d) of the. Therefore, the entire interest income derived by the assessee from the Karnataka Bank Limited is taxable. This view is supported by the Honble Supreme Court judgement cited (supra) in 322 ITR 283 and the Bangalore Club 29 Taxmann.com 29. The assessee in the paper book furnished in the returns of income but not furnished the actual amount of interest received by the assessee from the Karnataka Bank Limited. The A.O also has not given any finding on the interest received by the assessee from the banks. Even though the interest received on mandatory deposits the same is taxable. Therefore, in the interest of justice, we are of the considered opinion that the case should be remitted back to the file of the A.O. to examine the nature of receipts which are exempt on principle of mutuality basis and taxable receipts such as interest received from Karnataka Bank and any other receipts and determine the true and correct income as per law. Accordingly, the assessment in this case is set aside de novo to redo the assessment. ITA Nos.275 to 278 /Vizag/2017 The Kesava Hanuman Mutually Aided Co-operative Society Ltd., VSKP 10

11. In the result, all the appeals filed by the assessee are allowed for statistical purposes. The above order was pronounced in the open court on 25 th Apr18. Sd/- Sd/- (. ) ( . . . .. . . .  ") (V. DURGA RAO) (D.S. SUNDER SINGH)  /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /Visakhapatnam: /Dated : 25.04.2018 VG/SPS   )# *#/Copy of the order forwarded to:-

1.  / The Appellant The Kesava Hanuman Mutually Aided Co-operative Society Ltd., D.No.9-1-222/1, Rama Talkies Road, CBM Compound, Visakhapatnam

2.  / The Respondent The ITO, Ward-3(1), Visakhapatnam

3. + / The Pr. CIT-1, Visakhapatnam

4. + () / The CIT (A)-1, Visakhapatnam

5. #  .,  ., # / DR, ITAT, Visakhapatnam

6.  / Guard file / BY ORDER // True Copy // Sr. Private Secretary ITAT, VISAKHAPATNAM