NEKARAR PATTINA SAHAKARI SANGH NIYMIT,NAVANAGAR, BAGALKOT vs. INCOME TAX OFFICER WARD 1, BAGALKOT, BAGALKOT, KARNATAKA

At the outset, it was noticed that appeal was filed with a delay of 3 days before the Tribunal. Assessee submitted a petition for condonation of delay along with supporting affidavit. On perusal of the affidavit, it was noticed that assessee’s AR could not file the appeal due to technical issues relating to digital signature certificate which resulted in unsuccessful submission of the appeal on the e-filing portal. It was also stated that it is neither intentional nor deliberate on the part of the assessee. Considering the submissions made by the assessee, we are of the opinion that the assessee had sufficient cause, and therefore we condone the delay of 3 days as assessee has a reasonable cause and proceed to decide the case on merits.

Briefly stated the facts of the case are assessee is a Co-operative Society, filed its return of income on 14.12.2021 admitting gross total income of Rs.51,65,631/- and claimed deduction under Chapter VI A amounting to Rs.51,65,631/- thereby declaring a total income of Nil. Subsequently, the return was selected for scrutiny under CASS and statutory notices under sections 143(2) and 142(1) of the Act were issued on various dates to the assessee. The assessee replied to the notices issued by the Ld. AO on various dates. Subsequently, a show cause notice has been issued on 12.03.2022 and 08.09.2022 for which the assessee furnished its reply on 15.03.2022 and 30.09.2022. It was noticed that assessee has claimed deduction under section 80P of the Act amounting to Rs.51,65,631/- wherein the Ld. AO observed that the assessee has received interest income of Rs.32,60,797/- from banks while claiming deduction under section 80P of the Act. The Ld. AO considering the provisions of section 80P(2)(a)(i) of the Act observed that Rs.32,60,797/- was not received by the assessee while carrying on the business of banking or providing credit facilities to its members. The Ld. AO relying on the decision of the Hon’ble jurisdictional High court in the case of PCIT and Anr. Vs. Totgars Co-operative Sales Society reported in 395 ITR 611 by holding that income earned from deposits with any other bank shall be considered as “income from other sources” and not “income from business” and therefore deduction under section 80P(2)(d) of the Act cannot be allowed to the assessee. The Ld. AO therefore disallowed the assessee’s claim for deduction with respect to interest on investments made in bank which was found to be ineligible under section 80P of the Act. The disallowance made by the Ld. AO under section 80P(2)(d) of the Act is Rs.28,50,331/- .

On being aggrieved by the disallowance made by the Ld. AO, the assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee without condoning the delay and thereby upheld the Order of the Ld. AO.

On being aggrieved by the Order of the Ld. CIT(A), assessee is in appeal before us by raising the following grounds:

Ground Nos.1, 2 and 10 are general in nature and needs no adjudication. Ground No.3 agitates against the dismissal of the appeal without condoning the delay of 81 days by the Ld. CIT(A). On this issue, the Ld. AR submitted that since the assessee has not received the Assessment Order through the registered email IDs available on the income tax portal, assessee was aware of the existence of the Assessment Order only on 3 07.01.2023 when the assessee logged into the income tax portal. Assessee noticed that Assessment Order was sent to a different email ID which does not belong to the assessee. He therefore prayed that the Ld. CIT(A) ought to have considered the delay when sufficient cause has been established by the assessee and proceeded to decide the case on merits. He therefore prayed to remand the matter back to the Ld. CIT(A) for adjudication.

Per contra, the Ld. DR relied on the Orders of the Revenue authorities.

We have heard the rival contentions and perused the reasons furnished by the assessee for the delay in filing of appeal before the Ld. CIT(A) for a period of 81 days. We notice that assessee has sufficient cause for filing the appeal with a delay of 81 days. The Ld. CIT(A) ought to have considered the cause furnished by the assessee for filing the appeal with a delay which is not intentional nor deliberate on the part of the assessee. We therefore condone the delay of 81 days before the Ld. CIT(A) and direct the Ld. CIT(A) to adjudicate the case on merits in accordance with law by providing an opportunity of being heard to the assessee. At the same time, we caution the assessee not to seek unnecessary adjournments during the assessment proceedings failing which the Ld. CIT(A) is at liberty to adjudicate the case on merits in accordance with the materials available on record. Accordingly, ground No.3 is allowed. Other grounds raised by the assessee on merits are not adjudicated since the issue has been remitted back to the Ld. CIT(A).

In the result, appeal of the assessee is partly allowed for statistical purposes.