ALA SAMUDRA MEENUGARARA PRATHAMIKA SEVA SAHAKARI SANGHA N MALPE,UDUPI vs. INCOME TAX OFFICER, WARD-1 & TPS, UDUPI
Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEYAssessment Year: 2016-17
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 14/08/2024 in DIN No.
ITBA/NFAC/S/250/2024-25/1067648984(1) for the assessment year
2016-17. 2. At the outset we note that this matter requires consideration on the application filed by the assessee seeking condonation of delay of 153
days in filing the present appeal before us.
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3. The assessee has filed an affidavit explaining the reasons for delay. It is stated that the order of the ld. CIT(A), NFAC was passed on 14.08.2024. Against this order, the assessee had filed an appeal before the ITAT, Panaji Bench (ITA No. 277/PAN/2024) with a delay of only 13
days. The Panaji Bench, vide order dated 06.03.2025, dismissed the appeal for want of juri iction, holding that juri iction lies with the Bangalore Bench. While doing so, the Hon’ble Panaji Bench granted liberty to the assessee to refile the appeal before the appropriate Bench and also permitted adjustment of fees already paid.
Pursuant to the said direction, the assessee filed the present appeal before this Tribunal on 02.04.2025. However, in the defect memo dated 16.04.2025, the Registry noted that the appeal is barred by limitation by 153 days reckoned from the date of the order of the ld. CIT(A). The explanation of the assessee is that the delay in filing the appeal before this Bench is only because of juri ictional confusion and is not attributable to negligence or deliberate inaction. It has been pointed out that the assessee had already acted promptly and filed the appeal originally before the Panaji Bench with only 13 days’ delay, and the present filing is merely in continuation of those proceedings as per the liberty granted by the Panaji Bench. Accordingly, the ld. AR prayed for the condonation of the delay in filing the appeal and decide the issue on merit of the case.
On the other hand, the ld. DR opposed to condone the delay but left the issue at the discretion of the Bench. Page 3 of 7
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6. We have considered the rival submissions of both the parties and materials placed on record. The explanation offered by the assessee shows that it had pursued the remedy diligently. The fact remains that the assessee had filed the appeal within a short delay of 13 days, though before a wrong forum. The present appeal before this Tribunal is in pursuance of the direction of the Panaji Bench, and therefore the delay is only technical in nature. It is well settled law, as laid down by the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors.
[167 ITR 471 (SC)], that substantial justice must prevail over technicalities and that when a party has acted bona fide, liberal approach should be adopted while considering condonation of delay. In view of the above facts and circumstances, we are satisfied that the assessee has shown sufficient cause for the delay in filing the appeal before this Tribunal. The delay of 153 days, being only on account of juri ictional issues and not on account of any deliberate lapse, is hereby condoned. Hence, we proceed to adjudicate the issue on merit.
The issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowances of claim of deduction under section 80P of the Act by wrongly alleging the violation of mutuality.
The relevant facts are that the assessee is a cooperative society registered under Karnataka Souharda Sahakari Act. The assessee for the year under consideration filed return of income declaring total income at Rs. 47,320/- only. The income was assessed at Rs. 28,39,170/- under section 143(3) of the Act vide order 25th December 2018. Page 4 of 7
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10. Subsequently, an order under section 263 of the Act dated 31st
March 2021 was passed by the learned PCIT on account of wrong allowances of deduction under section 80P of the Act. The learned PCIT observed that the assessee society has admitted nominal member who are not participating in the profit or loss. Hence, the concept of mutuality is missing. Therefore, the assessee society is not eligible for deduction under section 80P of the Act in the absence of element mutuality. Thus, the learned PCIT recommended to disallow the deduction of Rs.
4,39,708/- only.
Likewise, the learned PCIT observed that in the profit and loss account the assessee claimed interest expenses, including an amount of Rs. 25,060/- which was outstanding. Hence, the learned PCIT by invoking the provision of section 43B of the Act recommended to allow the claim in the year in which the same was actually paid.
Accordingly, the set aside assessment proceeding was initiated by the AO and notices under section 142(1) of the Act was issued as on 4th February 2022 and 23rd February 2022 by the faceless assessment unit. But the assessee failed to make reply. Hence the faceless assessment unit in the absence of submission from assessee completed the assessment under section 143(3) r.w.s 263 vide order dated 17th March 2022 as per direction of learned PCIT. Hence, the AO assessed the income at Rs. 33,03,938/- after making disallowances of 80P deduction of Rs. 4,39,708/- and disallowances of interest under section 43B of the Act for Rs. 25060/-. Page 5 of 7
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13. The aggrieved assessee preferred an appeal before the learned
CIT(A)
However, the learned CIT(A) found that the assessee has not filed any submissions in support of grounds of appeal despite being given several opportunities. Accordingly, the learned CIT(A) was of the view that the assessee is not interested in pursuing the appeal. The learned CIT(A) before dismissing the appeal referred the various decision of Hon’ble High Courts and Tribunals where appeal has been dismissed on account of negligence of the assessee.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The learned AR before us requested to set aside the issue to the file of the AO for fresh adjudication as per law and assured for making necessary compliance.
On the other hand, the learned DR before us opposed to set aside the issue to the file of the AO and prayed to confirm the order of the authorities below.
We have carefully considered the rival contentions of both the parties and perused the materials on record. In the present case, the assessment order was passed under section 143(3) read with section 263 of the Act, wherein the Assessing Officer disallowed the claim of deduction under section 80P of the Act as well as interest under section 43B of the Act. It is also seen that the order of the learned CIT(A) was Page 6 of 7
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passed ex-parte without considering any submissions of the assessee.
Thus, both the assessment order as well as the appellate order stand concluded without providing the opportunity of hearing to the assessee.
It is a settled principles of law that no person should be unheard and that the principles of natural justice must be followed at every stage of adjudication. In the present case, the assessee has explained that the failure to respond was not deliberate but occurred due to reasons beyond its control. Furthermore, the ld. AR before us undertakes for necessary compliances on behalf of the assessee.
In these circumstances, we are of the view that the assessee deserves one more opportunity to place its facts, explanations, and evidences before the Assessing Officer.
1 Accordingly, in the interest of justice, we set aside the impugned order of the learned CIT(A) as well as the assessment order passed by the Assessing Officer, and remit the matter back to the file of the Assessing Officer for de-novo assessment. The Assessing Officer is directed to afford due opportunity of being heard to the assessee and decide the issue afresh in accordance with law. The assessee is directed to provide to all the necessary information and evidence. 19. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in court on 26th day of August, 2025 (KESHAV DUBEY) Accountant Member Bangalore Dated, 26th August, 2025
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Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file
By order