KOLATHUPALAYAM PRIMARY AGRICULTURAL CO OPERATIVE CREDIT SOCIETY,TIRUPUR vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, TIRUPUR , TIRUPUR

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ITA 3899/CHNY/2025Status: DisposedITAT Chennai20 May 2026AY 2018-194 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had reasonable cause for not responding to the AO's notices, especially since the assessment was later set aside by the CIT(A). Therefore, the penalty was deleted.

What were the facts?

The assessee, a Primary Agricultural Co-op. Credit Society, failed to file its return of income and respond to statutory notices. This led to a best judgment assessment and a penalty for non-compliance. The assessee later provided documents to the CIT(A) who set aside the assessment.

What were the issues?

Whether penalty under Section 272A(1)(d) is leviable for non-compliance with notices when the assessment order is subsequently set aside due to reasonable cause.

Which sections of the Income-tax Act were involved?

Section 139(1),Section 144,Section 148,Section 142(1),Section 272A(1)(d),Section 69A,Section 37

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA

Hearing: 25.03.2026Pronounced: 20.05.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Chennai/Delhi, dated 24.10.2025 for the Assessment Year (hereinafter referred to as "AY”) 2018-19 confirming the

ITA No.3899/Chny/2025 (AY 2018-19) Kolathupalayam PACCS :: 2 :: penalty levied u/s.272A(1)(d) of the Income Tax Act, 1961 (hereinafter referred to as "the Act”).

2.

The brief facts of the case are that the assessee is a Primary Agricultural Co-op. Credit Society (PACCS) which didn’t file its return of income (RoI) as per the provisions of Section 139(1) of the Act for AY 2018-19. Based on certain information that there was substantial credits of ₹1,64,13,100/-, the assessment was reopened and the AO is noted to have issued several notices since the assessee didn’t file any responses, the AO passed ‘best judgment assessment’ u/s.144 of the Act determining total income at ₹1,75,13,144/- in place of returned income u/s.148 of the Act [loss of ₹2,14,771/-] by passing the assessment order on 04.01.2024. The AO is noted to have initiated penalty u/s.272A(1)(d) of the Act for non-compliance to the statutory notices u/s.142(1) of the Act dated 10.01.2023 & 08.02.2023 and issued notices to the assessee, pursuant to which, the assessee is noted to have given certain reasons which was not accepted by the AO who levied a penalty of ₹20,000/- i.e. ₹10,000/- for each default. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to confirm the same.

3.

Aggrieved, the assessee is in appeal before this Tribunal.

4.

Having heard both the parties and after perusal of the records, we note that the assessee is a PACCS and filed RoI pursuant to the notice

ITA No.3899/Chny/2025 (AY 2018-19) Kolathupalayam PACCS :: 3 :: issued u/s.148 of the Act showing loss of ₹2,14,771/-. The AO is noted to have finally assessed the income of the assessee at ₹1,75,13,144/- in place of loss of ₹2,14,771/- by passing the assessment order on 04.01.2024 [best judgment assessment]. The assessee is noted to have filed an appeal before the Ld.CIT(A) against the quantum assessment and the Ld.CIT(A) noted that the assessee is in existence for more than 100 years, since it was formed on 12.06.1926. The Ld.CIT(A) noted that the AO has made addition ex parte for unexplained income u/s.69A of the Act of ₹1,66,11,100/- & ₹11,16,815/- on account of variation in respect of disallowance of expenses claimed ‘towards other provisions’ u/s.37 of the Act. The Ld.CIT(A) is noted to have observed that the assessee before him has filed the Audit Report with all its annexure, details of cash book, copy of bank statement maintained with Erode District Central Cooperative Bank, and filed other details. Hence, he was pleased to set aside the assessment order back to the file of the AO for fresh assessment by appellate order dated 09.10.2025. In the light of the aforesaid actions taken by assessee albeit before the Ld.CIT(A), we are of the view that the assessee can’t be said to have deliberately omitted to respond to the notices of the AO on the said two dates. Since the Ld.AR has undertaken to appear diligently and present the relevant documents before the AO during the course of assessment proceedings, we are of the view that there was reasonable cause for non-levy of penalty and hence,

ITA No.3899/Chny/2025 (AY 2018-19) Kolathupalayam PACCS :: 4 :: we direct deletion of the penalty levied by the AO with a direction to the assessee to comply diligently with the directions given by the AO in future. 5. In the result, appeal filed by the assessee is allowed.

Order pronounced on the 20th day of May, 2026, in Chennai. Sd/- Sd/- (एबी टी. वक�) (एस. आर. रघुनाथा) (ABY T. VARKEY) (S.R.RAGHUNATHA) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai, �दनांक/Dated: 20th May, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.06.20 00:02:06 +05'30'

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