THE NINDANA RATHEE CO-OP L/C SOCIETY LTD.,ROHTAK vs. ITO, WARD-3, ROHTAK

The grievance of the assessee relates to the addition of Rs.13,01,072 made by the Assessing Officer by not allowing deduction under Section 80P(2)(vi) of the Income Tax Act, 1961 (the Act). The assessee is further aggrieved by the addition of Rs.2,44,634/- made by the Assessing Officer by making ad-hoc disallowance of 1%.

Briefly stated the facts of the case are that the assessee filed return of income declaring ‘NIL’ income. The return was selected scrutiny assessment under CASS and accordingly statutory notices were issued and served upon the assessee.

During the course of the scrutiny assessment proceedings the Assessing Officer noticed that the assessee has claimed deduction under Section 80P(2)(vi) of the Act for which the assessee was asked to explain why the same should not be denied as the assessee has not fulfilled the conditions laid down in the said section. Assessee furnished a detailed reply substantiating its claim of deduction which did not find any favour with the Assessing Officer, who denied the claim of deduction and made the addition. The Assessing Officer further disallowed 1% of total material purchased in the absence of bills.

The assessee strongly agitated the matter before the CIT (Appeals), but for some reason could not attend the appellate proceedings and the CIT (Appeals) dismissed the appeal ex-parte.

In my considered opinion, the CIT (Appeals) ought to have given a reasonable opportunity of being heard to the assessee while disposing the appeal ex-parte. I, therefore, deem it fit to restore the appeal to the file of the CIT (Appeals) with a direction to decide the appeal on merits of the case afresh after giving a reasonable opportunity of being heard to the assessee.

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