INDIAN CO-OPERATIVE NETWORK FOR WOMEN LIMITED,CHENNAI vs. THE INCOME TAX OFFICER, NON CORPORATE WARD 1(2), CHENNAI

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ITA 3714/CHNY/2026Status: DisposedITAT Chennai12 October 2026AY 2013-146 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's submissions. It noted that the reopening was done after four years from the end of the assessment year, requiring satisfaction of the additional conditions under the first proviso to Section 147, which were not met. Furthermore, the reopening on the same facts and for the same issue examined in the original scrutiny assessment under Section 143(3) amounted to a change of opinion, which the AO cannot undertake. The Tribunal also observed that the Ld. CIT(A)'s order was cryptic, failing to appreciate the legal issues raised by the assessee and not providing reasons for ignoring case laws cited. Consequently, the Ld. CIT(A)'s order was set aside, and the appeals were remitted back to the file of the Ld. CIT(A) with a direction to pass a reasoned order after considering all grounds raised by the assessee.

What were the facts?

The assessee, Indian Co-operative Network for Women Ltd, is in appeal against the orders of the Ld. CIT(A) for Assessment Years (AY) 2013-14 and 2014-15. The assessee had initially filed returns declaring Nil income after claiming a deduction under Section 80P. The original assessment under Section 143(3) accepted the returned income. However, the Assessing Officer (AO) reopened the assessment after four years by issuing a notice under Section 148 on 23.03.2020. A reassessment order was passed on 08.09.2021, making an addition of Rs.46,12,379/-. The assessee objected to the reopening, arguing it was bad in law due to non-satisfaction of conditions under the first proviso to Section 147 and a change of opinion. The Ld. CIT(A) upheld the reopening, stating that income ineligible for deduction had escaped assessment.

What were the issues?

1. Whether the reopening of assessment under Section 147 is valid, considering it was done after four years from the end of the relevant assessment year and the conditions prescribed in the first proviso to Section 147 were not satisfied? 2. Whether the reopening of assessment constitutes an impermissible change of opinion by the AO, given that the original assessment under Section 143(3) examined the same issue (deduction under Section 80P) on the same set of facts? 3. Whether the Ld. CIT(A) passed a reasoned order, adequately adjudicating the legal issues and grounds raised by the assessee? Assessee's contentions: The reopening was bad in law as the conditions under the first proviso to Section 147 were not met, there was no new tangible material, and it amounted to a change of opinion. The Ld. CIT(A)'s order was cryptic and lacked application of mind. Revenue's contentions: The Ld. DR could not counter the submissions made by the Ld. AR.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3),Section 80P,Section 250,Section 56

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S

Hearing: 19.08.2026Pronounced: 12.10.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld. CIT(A)’), Delhi, dated 30.04.2026 for AY 2013-14 and 2014-15 u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

ITA 3714 & 3715 /Chny/2026 (AY 2013-14 & 2014-15) Indian Co-operative Network for Women Ltd :: 2 :: 2. Both sides agree that the issue permeating in both the assessment orders/appeals are identical except difference in figures. Hence, the decision of one appeal will decided the fate of the other. Hence, appeal of the AY 2013-14 is taken as lead case the decision of which will be followed by AY 2014-15.

3.

At the outset, Ld. AR of the assessee assailing the action of the Ld. CIT(A) submitted that in this case for AY 2013-14, the assessee had filed the return of income declaring Nil income after claiming deduction of Rs.57,49,265/- u/s.80P of the Act which was later selected for scrutiny since large deduction was claimed under Chapter VIA and the assessment was completed u/s.143(3) accepting the returned income. However, the AO is noted to have reopened the assessment of the assessee after four (4) years from the end of the relevant assessment year by issuing notice u/s.148 on 23.03.2020. The assessee is noted to have objected to the reopening of the assessment, however the AO is noted to have passed the reassessment order on 08.09.2021 making an addition of Rs.46,12,379/- in place of the returned income of Nil. According to the Ld. AR, the assessee filed an appeal before the Ld. CIT(A) wherein the assessee had challenged the reopening of the assessment on the ground that the conditions prescribed under the first proviso to Section 147 was not satisfied. Hence, the impugned reopening was bad in law, and also that there was no new facts available in the assessment records (no new

ITA 3714 & 3715 /Chny/2026 (AY 2013-14 & 2014-15) Indian Co-operative Network for Women Ltd :: 3 :: tangible material) on the basis of which reopening was resorted to by the AO, hence, it is bad in law; and the original assessment scrutiny was for examining the deduction claimed u/s.80P of the Act and on the very same facts since, the reopening was carried out , it was nothing but change of opinion and hence, the AO who does not have the power to review his own order, the reassessment is bad in law. Further, drawing our attention to the impugned order of the Ld. CIT(A), he showed us that the Ld. CIT(A) has passed cryptic order by not adjudicating the legal issue by simply stating that the submission made by the appellant have been considered, and the AO having discovered that income (interest from banks) was ineligible for deduction has escaped assessment, he justified the reopening resorted to by the AO. Such an action of the Ld. CIT(A) according to Ld AR, without giving reasons shows non-application of mind and hence, vitiates the impugned order of the Ld. CIT(A).

4.

The Ld. DR could not counter the aforesaid submissions made by the Ld. AR of the assessee.

5.

Hence, after going through the original assessment order, re- assessment order, and the impugned order of the Ld. CIT(A), we find force in the submission of the Ld. AR that even though the reopening of the assessment order was challenged on various grounds inter alia i) for non-satisfaction of the conditions prescribed in the first proviso to section

ITA 3714 & 3715 /Chny/2026 (AY 2013-14 & 2014-15) Indian Co-operative Network for Women Ltd :: 4 :: 147 of the Act i.e. since reopening has been resorted to of an assessment framed u/s.143(3) after four (4) years from the end of the relevant assessment year, additional condition precedent as prescribed under the first proviso to Section 147 needs to be satisfied before successfully reopening the assessment of an assessee ii) no new tangible material available in the assessment record of the assessee to reopen the assessment. iii) The return of income filed by the assessee was selected for scrutiny for examining the deduction claimed by the assessee under Chapter VIA and after having examined the same, the AO has framed assessment under 143(3) accepting the returned income of the assessee. Hence, reopening the very same assessment on the same set of facts for examining the same issue tantamount to ‘change of opinion’ or Review of the his own order, which power AO doesn’t enjoy. The Ld. CIT(A) is noted to have passed the order by holding as under : -

5.6 During the appellate proceedings, the appellant has submitted that the case was reopened u/s 147 based on the same facts already examined in the original assessment u/s 143(3), which constitutes an impermissible change of opinion per CIT v. Kelvinator of India. They contended that the funds invested in banks were operational funds ready for use by members, making the interest attributable to the business of providing credit facilities. The appellant argued that the Totagars ruling applied specifically to sale societies with surplus marketing funds, whereas their society only deals with credit facilities for members. The appellant claimed the AO incorrectly added Rs. 46,12,379/-, whereas the actual interest earned was Rs. 34,62,253/-.

5.7 The submissions made by the appellant have been considered. The reopening is held valid as the AO discovered that income (interest from

ITA 3714 & 3715 /Chny/2026 (AY 2013-14 & 2014-15) Indian Co-operative Network for Women Ltd :: 5 :: banks) which was ineligible for deduction had escaped assessment. The character of interest income does not change based on whether it is earned from a Scheduled Bank or a Co-operative Bank. To qualify u/s 80P(2)(a)(i), there must be a direct and proximate connection between the income and the business of providing credit to members. Investing surplus funds in a bank is not part of the society's core business of providing credit to its members. Therefore, such interest is rightly categorized under "Income from Other Sources" u/s 56 and is ineligible for 80P deduction.

6.

Mere reading of the impugned order would reveal that the Ld. CIT(A) has not appreciated the legal issue raised by the assessee and has not given the reasons for ignoring the case law cited by the assessee Kelvinator of India wherein the Hon’ble Supreme Court endorsed the Full Bench decision of the Hon’ble Delhi High Court in CIT vs. Kelvinator of India Ltd. [320 ITR 561] and other case laws on other legal issues. Moreover, the impugned order is cryptic and neither dealt with the legal issue nor the merit of the additions made by the AO in a judicious manner. Hence, the impugned action of the Ld. CIT(A) cannot be countenanced. The Ld. CIT(A) ought to have passed reasoned order against which legal issue has been raised by the assessee along with grounds on merit. Hence, the impugned order is set aside back to the file of Ld. CIT(A) with a direction to consider the grounds of appeal raised by the assessee and pass reasoned order after hearing the assessee.

7.

In the result, appeals of the assessee are allowed for statistical order.

ITA 3714 & 3715 /Chny/2026 (AY 2013-14 & 2014-15) Indian Co-operative Network for Women Ltd :: 6 :: Order pronounced on the 12th day of October 2026, in Chennai.

Sd/- Sd/- (प�ावती .एस) (एबी टी. वक�) (PADMAVATHY. S) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 12th October, 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 YASHVIR Digitally signed by YASHVIR SINGH SINGH Date: 2026.10.16 11:51:46 +05'30'

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