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Facts
The assessee, a Primary Co-operative Agriculture Rural Development Bank Ltd., filed its return claiming deductions under Section 80P. The AO completed the assessment disallowing a significant portion of the claimed deduction. The assessee preferred an appeal before the CIT(A)/NFAC, but the appeal was dismissed due to delay in filing. The assessee has now filed an appeal before the Tribunal.
Held
The Tribunal condoned the delay in filing the appeal before the CIT(A)/NFAC, finding the assessee's explanation for the delay plausible and sufficient. The Tribunal held that substantial justice should be preferred over technicality and remitted the entire issue back to the CIT(A)/NFAC for a decision on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A)/NFAC was justifiable, and if so, should the matter be decided on merits?
Sections Cited
80P, 143(3), 250, 144B
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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
Date of Hearing : 21.08.2025 Date of Pronouncement : 26.08.2025 O R D E R
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 19.3.2025 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1074700647(1) for the assessment year 2021-22 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”).
The assessee has raised the following grounds of appeal:-
Primary Coop. Agriculture Rural Development Bank Ltd., Hosadurga Page 2 of 9 3. Brief facts of the case are that the assessee is a Primary Co- operative Agriculture Rural Development Bank Ltd. The assessee filed its return of income for the assessment year 2021-22 on 4.1.2022 claiming deduction of Rs.1,32,54,484/- u/s 80P(2)(a)(i) of the Act and Rs.50,000/- u/s 80P(2)(c) of the Act. Thus, the total deduction u/s 80P of the Act was claimed to the extent of Rs.1,33,04,484/-. Thereafter, the case was selected for complete scrutiny on the issue of claim of large deduction from total income u/s 80P of the Act. During the course of assessment proceedings, the assessee did not furnish the eligibility of such deduction claimed nor any break up of (i) NPA nor nexus of such (i) operating income & (ii) NPA amounting to Rs. 8,77,515/- & Rs.57,96,000/- respectfully credited to its Profit & Loss Account with the nature of its business activities as specified in the return of income/Tax audit report.
3.1 The ld. AO completed the assessment by holding that the income of Rs.66,73,515/- (Rs.8,77,515/- + Rs.57,96,000/-) has no nexus with the nature of business activity of the assessee society as specified in its return of income/tax audit report and hence AO held that deduction claimed u/s 80P(2)(a)(i) of the Act amounting to Rs.66,73,515/- is not allowable and added to the income of the assessee. The AO thereafter after adjusting the brought forward business loss of Rs.77,02,097/- relating to assessment year 2015- 16 with the current year income of Rs.66,73,515/- and the balance business loss of Rs.10,28,582/- was allowed to be carried forward for future set off. Further, the brought forward business loss of Rs.81,82,260/- relating to the assessment year 2014-15, appearing in the schedule “CFL” of ITR for this year was not allowed for current adjustment since the return was submitted belatedly.
Aggrieved by the order of assessment passed u/s 143(3) r.w.s. 144B of the Act dated 22.12.2022, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
The ld. CIT(A)/NFAC dismissed the appeal of the assessee by not condoning the delay in filing the appeal and accordingly held that there is no basis to interfere with the order passed by AO and also inclined to adjudicate the case on merits.
Aggrieved by the order of ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal.
Before us, the ld. A.R. of the assessee vehemently submitted that the manager of the assessee society was under an honest and Bonafide belief that as the assessment order for the AY 2021-22 was passed without any tax demand being raised and therefore, no further action was required to be taken by the society. Further, the local consultant also did not advise the society to challenge the assessment order by way of an appeal. Subsequently, upon receipt of penalty notices, the assessee society realized that the appropriate action ought to have been taken against the assessment order itself and accordingly the assessee society consulted M/s. MSSV & Co., Chartered Accountants, who advised to file the appeal against the assessment order and for this Bonafide reason there was delay in filing the appeal before the ld. CIT(A)/NFAC and accordingly prayed that the delay in filing the appeal before the ld. CIT(A)/NFAC may be condoned and the case may be remitted back to the file of ld. CIT(A)/NFAC to decide afresh on merits in accordance with law.
The ld. D.R. on the other hand vehemently supported the order of ld CIT(A)/NFAC.
Primary Coop. Agriculture Rural Development Bank Ltd., Hosadurga Page 4 of 9 9. We have heard the rival submissions and perused the materials available on record. It is undisputed fact that ld. CIT(A)/NFAC dismissed the appeal of the assessee by holding that the delay in filing the appeal lacks merit for condonation rendering the appeal inadmissible and non-maintainable as it was filed beyond the stipulated time period without sufficient cause. Before us, the assessee filed an affidavit stating therein the reasons for delay in filing the appeal before the ld. CIT(A)/NFAC, which is reproduced below for ease of reference and record:
9.1 On going through the above affidavit, we take a note of the fact that that the manager of the assessee society was under an honest and Bonafide belief that as the assessment order for the AY Primary Coop. Agriculture Rural Development Bank Ltd., Hosadurga Page 8 of 9 2021-22 was passed without any demand being raised and therefore, no further action is required to be taken by the society. The local consultant also did not advise the society to challenge the assessment order by way of filing an appeal. Subsequently, upon receipt of penalty notices, the assessee society realized that the appropriate action ought to have been taken against the assessment order itself and accordingly the assessee society consulted M/s. MSSV & Co., Chartered Accountants, who advised to file the appeal against the assessment order and for this Bonafide reason there was delay in filing the appeal before the ld. CIT(A)/NFAC.
9.2 Having heard the ld. Counsel for the assessee & the ld. DR, it is perceived that the explanation offered in the above affidavit is plausible and sufficient cause being shown by the assessee, which prevented the assessee society from filing the appeal within the specified period. In our opinion it cannot be said that the assessee is very callous in its approach in filing the appeal before us. Being so, when substantial justice and technical consideration are pitted against each other, the case of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. Moreover, no counter affidavit was filed by the revenue having the claim made by the assessee. It is not the case of the revenue that the belated appeal was filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. Therefore, in our opinion, this is a fit case to condone the delay in filing the appeal before the ld. CIT(A)/NFAC. Accordingly, we hereby condone the delay in filing the appeal before the ld CIT(A)/NFAC and accordingly remit the entire issue in dispute to the file of ld. CIT(A)/NFAC to decide on merits afresh in accordance with law. Needless to say, a reasonable opportunity of being heard Primary Coop. Agriculture Rural Development Bank Ltd., Hosadurga Page 9 of 9 must be granted to the assessee. The assessee is also directed to produce all the relevant documents/details/information/ records/financials/reports in support of its claim. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.