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Facts
The assessee, registered under the Karnataka Souharda Sahakari Act, 1997, claimed a deduction of Rs. 75,10,689/- under Section 80P for the assessment year 2017-18. The Assessing Officer disallowed this deduction, and the assessee's appeal to the CIT(A) was dismissed due to non-compliance with notices.
Held
The Tribunal noted that the assessee's eligibility for deduction under Section 80P(2)(a)(i) and 80P(2)(d) was supported by a jurisdictional High Court ruling. However, due to the assessee's failure to represent its case before the CIT(A), the Tribunal remitted the issue back to the CIT(A) for fresh consideration.
Key Issues
Whether the assessee, registered under the Karnataka Souharda Sahakari Act, is eligible for deduction under Section 80P, and whether the CIT(A) should grant an opportunity for re-hearing due to non-compliance with notices.
Sections Cited
80P, 143(2), 234A, 234B, 2(19)
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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against order passed by Ld.Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter in short “Ld.CIT(A)”) dated 19.06.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1065812903(1), on the following grounds of appeal: -
“1. On the facts and. in the circumstances of the case, the learned CIT(A), NFAC erred in upholding the additions in the manner in which he did.
Vijaya Pathina Sowthardha Sahakari Niyamitha Page 2 of 6 2. On the facts and in the circumstances of the case, the learned CIT(A), NFAC erred in disallowing the claim of deduction made u/s. 80P of the Act amounting to Rs. 75,10,689/-.
3. On the facts and in the circumstances of the case the learned CIT(A), NFAC failed to provide sufficient opportunity to Appellant to substantiate its claims.
On the facts and in the circumstances of the case the learned CIT(A), NFAC erred in upholding the levy of interest u/s. 234A of the Act amounting to Rs. 46,354/- and interest u/s. 234B of the Act amounting to Rs. 7,41,664/-- 6. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.”
Briefly stated facts of the assessee are that, assessee filed the return of income on 23.09.2017 and claimed deduction under section 80P of Income Tax Act, 1961 (in short “the Act”) of Rs.75,10,689/-. The case was selected for scrutiny under CASS and notice under section 143(2) of the Act was issued to the assessee. Subsequently, other statutory notices were issued to the assessee. The assessee submitted the details as called for. During the impugned assessment year the assessee earned interest of Rs.6,10,572/- on its deposits and claimed deduction under section 80P of the Act. In this connection show cause notice issued to the assessee on 04.11.2019. As per the reply of the show cause notice it was seen that the assessee has filed no objection to the proposed disallowance of deduction under section 80P of the Act on this amount. . AO observed that it is evident that the assessee has no explanation to offer on this issue, thereafter the AO dealt the issue and relying on the judgment of the Vijaya Pathina Sowthardha Sahakari Niyamitha Page 3 of 6 PCIT, Hubballi v. Totagars Co-operative Sale Society [2017], that the deduction under section 80P(2)(d) on such interest received was not allowed.
Further, it was observed that the assessee has claimed deduction under section 80P(2)(a)(i) of Rs.75,10,689/- from the income received and it was observed that the assessee is not eligible for deduction under section 80P of the Act, since it is not covered as per the definition of section 2(19) of the I. T. Act. Assessee is registered under the Karnataka Souharda Sahakari Act, 1997, it was seen that it is registered as “cooperative” but not as “co-operative society”. The cooperative and cooperative society has been defined distinctively in the Karnataka Souharda Sahakar Act, 1997 in section 2(e) and 2(g) respectively. The cooperative society has been defined as “co-operative Society” means “cooperative society” registered under the Cooperative Society Act, 1959, (Karnataka Act 11 of 1959). It is also noted that the Karnataka cooperative society, 1959 also defines cooperative and cooperative society distinctively under section 2. The cooperative is defined as “cooperative means the cooperative registered under the Karnataka Souharda Sahakari Act, 1997 (Karnataka Act, 17 of 2000) and includes the union cooperative and the Federal cooperative. After discussing the issue in detail the Ld. AO did not allow the deduction under section 80P to the assessee.
Vijaya Pathina Sowthardha Sahakari Niyamitha Page 4 of 6 4. Aggrieved from the above order, the assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) issued three notices on different dates which is clear from the table but there was no response from the assessee side. The Ld.CIT(A) on the basis of the documents available before him dismissed the appeal of the assessee.
Aggrieved from the above order the assessee filed an appeal before the Tribunal.
The Ld. Counsel for the assessee, submitted that the assessee did not receive any notice from the Ld.CIT(A) it might be settled in his spum folder. Therefore the notices could not be seen by the assessee and the assessee could not response the notices issued for compliance. The intention of the assessee is not to disregard the notice of the Ld.CIT(A). The assessee responded to the notices of the AO and requested that one more chance may be given to the assessee to represent the case before the Ld.CIT(A).
On the other hand, Ld. Departmental representative relied on the order of the lower authorities and submitted that the notice were sent through the ITBA portal which were delivered to the assessee, inspite of that assessee ignored the Vijaya Pathina Sowthardha Sahakari Niyamitha Page 5 of 6 notices and did not appear before the Ld.CIT(A). The AO has rightly disallowed the deduction under section 80P to the assessee.
Considered the rival submissions, we notice that the assessee is registered under Karnataka Souharda Sahakri Act, 1997. Assessee filed its return of income on 23.09.2017 claiming deduction under section 80P of Rs.75,10,689/-. However, AO has not allowed the deduction under section 80P(2)(d) of the Act on the interest income received. He has not allowed also deduction under section 80P(2)(d)(i) of the Act, to the assessee observing that it does not fall under the definition of cooperative society in terms of section 2(19) of the I.T.Act. However, this issue has been put to rest by the Jurisdictional High court in the case of Sri Matha Vividoddesha Pathina Souharda Sahakari Niyamitha v. UOI [(2024) 134 taxman.com 62]. According to the above judgment the assessee is also eligible for deduction under section 80P(2)(a)(i) of the Act and 80P(2)(d) of the Act. Since the assessee did not represent its case before the Ld.CIT(A), considering the facts and interest of justice, we remit this issue back to the file of Ld.CIT(A) for fresh consideration and decide as per law following the judgment of the Jurisdictional high court noted supra, after providing reasonable opportunity of being heard to the assessee. Assessee is directed to produce the necessary documents to substantiate its case and not to Vijaya Pathina Sowthardha Sahakari Niyamitha Page 6 of 6 seek unnecessary adjournments for early disposal of the case. In case of failure, no second lenience shall be granted to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 08th August, 2025.