SSMP SAHAKARI SANGHA,BAGALKOT vs. INCOME TAX OFFICER WARD- 1, BAGALKOT

In this appeal, the assessee has raised the following grounds: -

We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is a Co-Operative Credit Society registered under the Karnataka State Co-Operative Societies Act, 1959. The assessee is engaged in accepting deposits and providing credit facilities to its members and making investments. For the year under consideration, the assessee filed its return of income on 17/10/2017, declaring gross income of INR 22,71,847 after claiming deduction under Chapter – VIA amounting to INR, and thereafter declared total income of INR Nil. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, it was observed that the assessee earned interest income from investments with BDCC bank, other co-operative banks, and nationalised banks. The Assessing Officer (“AO”), vide order dated 17/10/2019, passed under section 143(3) of the Act, held the interest income to be taxable as income from other sources in view of the decision of the Hon’ble Karnataka High Court in Totagars Sale Co-operative Credit Society. Accordingly, the deduction claimed by the assessee under section 80P of the Act was disallowed.

Since the appeal filed by the assessee before the learned Addl./Joint CIT(A) was delayed by 56 days, the learned Addl./Joint CIT(A), disagreeing with the submissions of the assessee, held that there is no sufficient cause for condonation of the delay in filing the appeal. Accordingly, vide impugned order, the appeal filed by the assessee was dismissed on the ground of delay. Being aggrieved, the assessee is in appeal before us.

As per the assessee, since it did not receive the notice of demand and assessment order by post, it was not aware of the same and therefore could not take the necessary steps for filing the appeal before the learned CIT(A). As per the assessee, a hard copy of the assessment order was received on 07/01/2020. Accordingly, the appeal before the learned CIT(A) was filed within 4 days on 11/01/2020. Thus, as per the assessee, since the appeal was filed within the prescribed limitation period, there is no delay in filing the appeal before the learned CIT(A). As per the assessee, the place of its business, i.e., Kerur, is a small place, and access to the Internet or email is not possible, and there is no trained manpower.

We find that the reasons stated by the assessee for seeking condonation of delay before the learned CIT(A) fall within the parameters for grant of condonation laid down by the Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag vs. M.S. Katiji and others, reported in 1987 SCR (2) 387. It is well-established that the rules of procedure are handmade of justice. When the substantial justice taking into consideration are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, it is evident that the assessee did not stand to benefit from the late filing of the appeal.

Accordingly, in view of the facts and circumstances of the present case, as noted above, we are of the considered view that the assessee has proved sufficient cause for not filing the appeal before the learned CIT(A) within the prescribed limitation period. Accordingly, we are of the view that delay should be condoned. Hence, the impugned order is set aside, and the appeal of the assessee is restored to the file of the learned CIT(A) / learned Addl./Joint CIT(A) for de novo consideration, after condoning the delay in filing the appeal by the assessee. We order accordingly. Needless to mention, no order shall be passed without affording reasonable and adequate opportunity of hearing to the parties. The assessee is directed to appear before the learned CIT(A) / learned Addl./Joint CIT(A) on all dates of hearing as may be fixed without any default. As the matter is being restored to the file of the learned CIT(A) / learned Addl./Joint CIT(A) for de novo adjudication, the grounds raised by the assessee in the present appeal before us do not call for adjudication at this stage. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.

In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open court on 27-Aug-2026. Sd/- Sd/- (PRASHANT MAHARISHI) (SANDEEP SINGH KARHAIL) VICE PRESIDENT JUDICIAL MEMBER Bangalore, Dated, the 27-Aug-2026. *VM* 5 Copy to: