DINESH PALLY JANAKALYAN CO-OPERATIVE CREDIT SOCIETY LIMITED,KOLKATA vs. INCOME TAX OFFICER. ITO WARD 25(1), KOLKATA, KOLKATA

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ITA 134/KOL/2026Status: DisposedITAT Kolkata22 April 2026AY 2017-186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal and set aside the CIT(A)'s ex-parte order. It restored the appeal to the CIT(A) for a fresh adjudication on merits, ensuring the assessee gets a proper opportunity to be heard.

What were the facts?

The assessee, a cooperative credit society, claimed deduction under Section 80P for interest earned on fixed deposits with banks. The Assessing Officer disallowed a portion of this deduction, considering it not allowable as per Section 80P(2)(d). The CIT(A) dismissed the assessee's appeal ex-parte.

What were the issues?

Whether the CIT(A) erred in disposing of the appeal ex-parte without adjudicating on merits, and whether the assessee is entitled to deduction under Section 80P for interest earned on bank deposits.

Which sections of the Income-tax Act were involved?

Section 80P,Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Addl/JCIT(A), Ranchi [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 22.10.2025. 1.1 The Registry has informed that the appeal is barred by limitation by 12 days. The assessee has filed a petition along with an affidavit for condonation of delay explaining the reasons that the Principal Officer of the assessee, who was directly responsible for handling and instructing matters relating to income tax litigation, suffered a sudden cerebral attack and was advised rest and only after recovery from the illness, steps were taken to file the present appeal before the Tribunal. The assessee requested the Bench to condone the delay of 22 days in filing the appeal as the delay was neither intentional nor deliberate. After Dinesh Pally Janakalyan perusing the same, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.

2.

The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. That the learned CIT(A) erred in law and on facts in disposing of the appeal ex-parte without adjudicating the grounds on merits, in gross violation of the principles of natural justice.

2.

That the learned CIT(A) failed to appreciate that an appeal cannot be dismissed for non-prosecution and is statutorily required to be decided on merits as per section 250 of the Income-tax Act, 1961. 3. That the learned CIT(A) passed the order without taking into consideration that the same issue has been conclusively decided in favour of the appellant in the preceding Assessment Year 2016-17. 4. That the order passed by the learned CIT(A) is bad in law, non-speaking, mechanical and unsustainable.

5.

That the learned Assessing Officer erred in completing the assessment u/s 143(3) of the Act without granting adequate opportunity of being heard and without proper appreciation of facts and evidence.

6.

That the authorities below erred in law and on facts in denying deduction u/s 80I of the Income-tax Act, 1961, ignoring the fact that the appellant is a co-operative credit society providing credit facilities to its members.

7.

That the additions made are arbitrary, based on conjectures and surmises, and are liable to be deleted.

8.

That the demand raised is excessive, unjustified and bad in law.

9.

That the impugned order is contrary to and inconsistent with the binding findings of the appellate authority, and hence is bad in law and liable to be set aside.

10.

The appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal at or before the time of hearing.”

3.

Brief facts of the case are that the assessee filed its return of income u/s 139(1) of the Act for AY 2017-18 showing total income of ITA No(s). 134/KOL/2026 Assessment Year(s) 2017-18 Dinesh Pally Janakalyan ₹1,29,195/-. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted that during the year the assessee had earned interest on investment of ₹25,20,693/-, which was actually interest on fixed deposits made with different banks viz., Central Bank of India, State Bank of India, United Bank of India and West Bengal State Cooperative Bank. The assessee had claimed deduction u/s 80P of the Act of ₹37,68,785/-, which included interest of ₹17,68,276/- from banks other than W.B.S.E.B. The Ld. AO further noted that as per sub-section 2(d) of section 80P of the Act, the deduction is not allowable in respect of interest from investment in other than State Cooperative Society. Hence, deduction u/s 80P of ₹17,68,276/- was disallowed and added to the total income of the assessee and the Ld. AO assessed the total income of the assessee at ₹18,97,471/- u/s 143(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. Addl/JCIT(A) who passed an ex parte order confirming the addition made by the Ld. AO and dismissed the appeal of the assessee.

4.

Aggrieved with the order of the Ld. Addl/JCIT(A), the assessee has filed the appeal before the Tribunal.

5.

Rival contentions were heard and the submissions made have been examined.

6.

We note that while the assessment has been made under section 143(3) of the Act, would there is no description of the reply filed by the assessee, even though in the assessment order it is mentioned that in response to the notice u/s 142(1), the assessee complied partially and uploaded some papers and documents including profit & loss account, Balance sheet and Computation of total income etc. The assessee stated Dinesh Pally Janakalyan that it is a cooperative society engaged in the business of taking deposits from its members and extending loan to them. However, the Ld. CIT(A) has mentioned the order being under section 144 of the Act of the Act.

We have considered the facts of the case, the submissions made and the documents filed. The Ld. CIT(A) confirmed the addition by his findings as under: The appellate orders in prior years, including ITA No. 133/CITA-7/Ward- 261/Kol/18- 19 dt. 18.10.2019, have allowed the claim for deduction based on broader interpretations such as "attributable to" but these are now explicitly narrowed by Supreme Court and CBDT clarifications. Deduction on interest received from other than co-operative societies is not permissible under section 80P(2)(d).

7.

The Ld. AR stated that proper representation could not be made before the Ld. AO as well as before the Ld. CIT(A) and requested for one more opportunity of being heard so that proper reply could be filed. The Ld. DR relied upon the order of the Ld. Addl./Joint CIT(A) and requested that the same may be upheld.

8.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Bench was of the view that in the interest of justice and fair play, one more opportunity may be provided to the assessee and the request of the assessee to set aside the case before the Ld. CIT(A) may be allowed so that a proper opportunity of being heard may be provided as the order of the Ld. CIT(A) is a very cryptic order and apparently without considering the submission of the assessee. Hence, after examining the facts of the case and the law, we deem it appropriate to set aside the order of the Ld. CIT(A) and restore the appeal back to him for disposal Dinesh Pally Janakalyan of the grounds of appeal taken by the assessee on merit by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed and an opportunity of being heard may be provided to the Ld. AO, if required. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

9.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 22nd April, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 22.04.2026 Bidhan (Sr. P.S.)

Dinesh Pally Janakalyan Copy of the order forwarded to:

1.

Dinesh Pally Janakalyan Co-Operative Credit Society Limited, Dinesh Pally Purbaputiary, Gangapuri, South 24 Parganas, West Bengal, 700093. 2. ITO, Ward-25(1), Kolkata.

3.

Addl/JCIT(A)-Ranchi.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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