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Facts
The assessee, a credit co-operative society, filed a Nil income return claiming Section 80P deduction, which the CPC disallowed under Section 143(1) without prior notice. Despite filing rectification and revised returns, the disallowance persisted. Due to changes in address/PAN and various unsuccessful attempts to rectify the issue, the assessee filed an appeal to the CIT(A) with a delay of 3742 days, which was dismissed on limitation grounds.
Held
The Tribunal found that the assessee made genuine, continuous efforts to resolve the issue, and the CPC's disallowance without prior notice denied an opportunity to be heard. Recognizing the arguable nature of the deduction claim and to prevent prejudice to the co-operative society, the Tribunal condoned the significant delay, set aside the CIT(A)'s order, and remitted the matter for a fresh decision on merits after hearing the assessee.
Key Issues
Whether the CPC can disallow a Section 80P deduction under Section 143(1) without prior hearing, and if a substantial delay in filing an appeal can be condoned given the assessee's continuous efforts and lack of notice.
Sections Cited
143(1), 80P, 80P(2)(a)(i), 249(3), 234A, 234B, 234C, 154, 139(5), 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the Addl/JCIT(A)-1, Chandigarh dated 19/09/2024 in respect of the A.Y. 2010- 11 and raised the following grounds: “1. The processing of revised return under section 143(1) of the Income Tax Act, 1961 (hereinafter "the Act") in so far as it is against the appellant is opposed to law, equity and weight of evidence, probabilities, facts and circumstances of the case.
2. The appellant denies itself liable to be assessed to a total income of Rs.1,00,73,630/- as against the income returned at Rs. NIL for the impugned assessment year 2010-11 on the facts and circumstances of the case.
The learned Addl.CIT(A) has failed to appreciate that the CPC is not justified in processing the return under section 143(1) of the Act and disallowing the claim of deduction of Rs.1,00,73,630/- under section 8oP of the Act without providing an opportunity of hearing, thereby violating the principles of natural justice under the facts and circumstances of the case.
4. The authorities below have failed to appreciate that the disallowance of deduction under section 80P of the Act is not a permissible adjustment under section 143(1) of the Act under the facts and circumstances of the case.
5. The authorities below have failed to appreciate that the appellant is a credit co-operative society registered under the Karnataka Souharda Society Act, 1997 and is engaged in the business of providing credit facilities to its members, thus, it is lawfully eligible for claim of deduction under section 8oP of the Act.
6. Grounds on dismissal of first appeal on delay: a. The learned Addl.CIT(A) has erred in dismissing the appeal by not condoning the delay in filing the first appeal, on the facts and circumstances of the case. b. The learned Addl.CIT(A) has failed to appreciate that there existed `sufficient cause' for delay in filing the appeal before the first appellate authority and the learned Addl.CIT(A) ought to have condoned the delay by exercising power conferred under section 249(3) of the Act on the facts and circumstances of the case.
7. The authorities below have failed to appreciate that the appellant has surrendered the PAN, on the facts and circumstances of the case.
The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernible from the order and hence deserves to be cancelled on the facts and circumstances of the case.
9. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
10. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.”
The brief facts of the case are that the assessee is a credit co-operative society and filed their return of income declaring Nil income after claiming deduction u/s. 80P(2)(a)(i) of the Act. The CPC processed the return and sent an intimation on 17/03/2011 in which they disallowed the claim of deduction. Before sending the intimation, the assessee was not intimated about the proposal to disallow but the intimation was sent by disallowing the deduction claim made by the assessee. Thereafter the assessee took several steps to get it corrected but all their efforts were not materialised and thereafter the assessee, having no other way, had filed an appeal before the Ld.CIT(A). Because of the various efforts taken by the assessee, there has been occurred the delay of 3742 days. Before the Ld.CIT(A), the assessee had explained the reasons for the said delay but the Ld.CIT(A) had not accepted the said reasons and dismissed the appeal on the ground of limitation. As against the said order, the assessee is in appeal before this Tribunal.
3. At the time of hearing, the Ld.AR filed a paper book in which all the details about the various steps taken by the assessee after the receipt of the intimation u/s. 143(1) were enclosed and prayed that the order of the Ld.CIT(A) is liable to be set aside in order to decide the appeal on merits.
4. The Ld.DR relied on the orders of the lower authorities and submitted that the delay is an abnormal one and therefore the order of the Ld.CIT(A) is in order and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the application for condonation of delay filed by the assessee before the Ld.CIT(A) and for the sake of convenience, the same is extracted as below. “APPLICATION FOR CONDONATION OF DELAY BRIEF HISTORY:
1.
The appellant is a Credit Co-operative Society registered under the Karnataka Souharda Society Act, 1997 and filed its return of income for the assessment year 2010-11 on 26.09.2010 vide acknowledgment No. 160182850260910 declaring income at Rs. NIL after claiming deduction of Rs.1,00,73,630/-under section 8oP(2)(a)(i) of the Act. The CPC vide intimation u/s 143(1) of the Act dated 17.03.2011 disallowed the claim of deduction under section 80P of the Act and assessed the income at Rs.1,00,73,630/-.
2. The appellant after receiving the intimation dt 17.03.2011 filed a rectification return under section 154 of the Act on 21.07.2011 which was in toto similar to the original return dated 26.09.2010, the CPC vide intimation u/s 143(1) dated 03.08.2011 disallowed the claim of deduction under section 80P of the Act and assessed the income at Rs.1,00,73,630/- stating that the "details of deductions (including sub-schedule 8oG et.,) under Chapter VIA not properly filled".
3. The appellant thereafter filed a request on 05.09.2011 under section 154 of the Act requesting to rectify the intimation order dated 03.08.2011. However, the CPC vide order. dated 08.12.2011 rejected the request of the appellant stating that "there is a change in gross total income in the rectification application filed by the assessee. This is not a mistake apparent from record as per section 154 of Income Tax Act 1961, hence the rectification request has been rejected. Assessee is required to file revised return (instead of rectification application).
The appellant thereafter filed a revised return on 26.03.2012 U/s 139(5) of the Act, vide acknowledgment No. 362837590260312 which was a valid return, considering the fact that the original return of income was filed in time and the same claim of deduction of Rs.1,00,73,630/- under section 8oP of the Act, was made. The CPC vide intimation u/s 143(1) dated 23.08.2012 again disallowed the claim of deduction under section 80P of the Act and assessed the income at Rs.1,00,73,630/-.
5. The appellant submits that the CPC after processing the revised return transferred the file to the office of the learned Assistant Commissioner of Income Tax, Circle-1, Tumkur. The appellant approached the learned assessing officer and requested to correct the mistake apparent on record and allow the claim of deduction under section 8oP(2)(a)(i) of the Act.
6. The appellant in pursuance to a reminder to pay the demand raised U/s 143(1), has sought a rectification request before the assessing officer, stating that the appellant was eligible for the deduction under section 8oP of the Act, which has not been acted upon.
The appellant submits that no response to the request was received by the appellant to its knowledge and further, since it had changed its registered office and the registered mail id and it was presumed that the request accepted and the claim of deduction under section 8oP of the Act was allowed fully by the learned assessing officer. The appellant realised that the issue is not yet resolved only when it received a notice for recovery of demand dt 25/11/2022.
8. The appellant has thereafter made enquiries and ascertained the password of the earlier PAN and was shocked to learn that the earlier PAN was still active and notices have been issued for recovery of monies, which was not in the knowledge of the appellant. The appellant had surrendered its PAN:AAAAT7737L under which it has filed the return of income up ft assessment year 2014-15 was no longer logging into the same.
9. The appellant has obtained a new PAN:AADAT6714E and has been filing its return of income under the new PAN from the assessment year 2015-16.
The appellant submits that it has also changed its e- mail id from pavagadaheadoffice@gmail.com to pavagadaho.adm3@gmail.com for administrative reasons and the earlier email id was no longer in use.
The appellant immediately upon being intimated by the assessing officer of demand outstanding in the older PAN and the notice issued vide dt: 25/11/2022, approached the present counsel and sought advice upon the next course of action, considering the delay in challenging the order passed under section 143(1) of the act. 12. The present counsel has sought for information on the original return, the rectification sought and also the revised return and ascertained that the revised return was in effect a proper return, since the original return had been filed in time U/s 139(1) of the act and there was no change in the income, nor the claim of deduction under section 80P of the Act. 13. It was advised by the counsel that rectification could not be sought on the notices issued, nor on the pending request made before the assessing officer, due to passage of time and the only remedy was to challenge the 143(1) intimation passed on the revised return of income, dt: 23.08.2012. 14. The appellant has taken immediate steps to provide all clarifications on the revised address, email id, fresh PAN, etc and steps were taken to file the appeal immediately, thereafter. The appeal has been filed before your Honours on 21.12.2022 though the due date to file appeal before your Honours was 22.09.2012 resulting in a delay of 3,742 days for the reasons mentioned above. 15. The appellant submits that the delay in preferring an appeal was due to reasons beyond its control, considering the peculiar circumstances under which the appellant was ignorant of the pending proceedings and further the change in address has also prevented the appellant in receiving correspondence, if any from the assessing officer. 16. It is humbly prayed that your Honour take a lenient and compassionate view and condone the delay of 3,742 days as per the above calculation in filing the present appeal against the order of the CPC passed under section 143(1) of the Act and hear the same on merits for the advancement of substantial cause of justice.
The appellant places reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT & Another Vs. ISRO Satellite Center, in of 2008 and other batch of appeal order dated 28/10/2011 has condoned the delay of 5 years in filing the appeal before the CIT[A], the relevant observation is at para 28 page 72 of the order.
The appellant places reliance on the decision of the Hon'ble Bangalore Tribunal in the case of Smt. Shakuntala Hegde, Legal Heir of Mr. Ramakrishna Hegde Vs. ACIT, in order dated 25/04/2006 wherein the Hon'ble Tribunal has condoned the delay of 1,331 days i.e. 3 Years, 8 Months and 22 days in filing the appeal by the assessee.
The appellant places reliance on the decision of the Hon'ble High Court of Madras in the case of Commissioner of Income-tax Vs. K.S.P.Shanmugavel Nadar (1987) 3o Taxmann 133 (Madras).
The appellant places reliance on the decision of the Hon'ble Tribunal in the case of M/s. Midas Polymer Compounds Pvt Ltd Vs. ACIT in dated 25.06.2018.
The appellant places reliance on the decision of the Hon'ble High Court of Bombay in the case of Anatek Services Pvt Ltd Vs. Asst.Commissioner of Income-tax-10(1) in of 2018 dated 11.02.2022.
It is humbly submitted that if this application for condonation of delay in filing the appeal is not allowed, the Appellant would be put to great hardship and irreparable injury per contra no hardship or injury would be caused to the Respondent if this application of Condonation of delay is allowed. Reliance is placed on the decision of the Hon'ble Apex Court in the case of Collector, Land Acquisition Vs. MST.Katiji and Others (1987) 167 ITR 471 and also in the case of Concord of India Insurance Co. Ltd., Vs Smt. Nirmala Devi and Others 118 ITR 507. Further the Appellant relies on another decision of the Hon'ble Apex Court in the case of Radha Krishna Rai Vs. Allahabad Bank & Others [2000] 9 Supreme Court Cases 733 and Commissioner of Income-tax Vs. West Bengal Infrastructure Development Finance Corporation limited (2011) 334 ITR 269 (SC).
The appellant craves leave of your Honours to file additional submission at the time of hearing of this appeal. It is humbly prayed that your Honours is empowered to condone delay under section 249(3) of the Act and it is requested before your Honours to take a lenient and compassionate view and condone the delay of 3,742 days in filing the present appeal and hear the same on merits for the advancement of substantial cause of justice.”
7. In the said application, the assessee had narrated the circumstances, how the delay has been occurred. In the said delay condonation application, the assessee submitted that they have filed a rectification petition on 21/07/2011 as against the intimation dated 17/03/2011 which was not accepted by the CPC vide order dated 03/08/2011. Thereafter on 05/09/2011, a petition u/s. 154 was again filed before the CPC for which the CPC directed the assessee to file a revised return instead of filing a rectification petition u/s. 154 of the Act. Pursuant to the directions of the CPC, the assessee also filed a revised return on 26/03/2012 but unfortunately the CPC again disallowed the claim of deduction vide their intimation dated 23/08/2012. Later on, the file was transferred to the ACIT, Circle – 1, Tumkur and the assessee again approached the AO to correct the said mistake which is apparent on the face of the record. Thereafter, the assessee had not received any communication from the authorities but assessee came to know about the status of the petition only when he received a recovery notice on 25/11/2022. Then the assessee came to know that the earlier PAN was still active and notices were sent to the said PAN. Thereafter the assessee surrendered the old PAN in which they had filed their return of income upto the year 2014-15. From the assessment year 2015-16, the assessee filed their return of income in the new PAN. While obtaining the new PAN, the assessee also changed their email ID and thereafter the assessee met the counsel and took his advice. The counsel also after going through the various records furnished by the assessee, had advised the assessee to file the appeal before the Ld.CIT(A) and the appeal was finally filed on 21/12/2022. We have also perused the documents field in support of the delay condonation petition.
8. On going through the documents filed by the assessee, we find that the assessee had not slept after the receipt of the intimation issued u/s. 143(1) of the Act. The assessee had took several steps to correct the intimation but unfortunately all his efforts were met with unsuccessful and therefore finally the assessee filed the appeal before the Ld.CIT(A) in order to correct the intimation issued u/s. 143(1) of the Act. We noticed that the CPC had not issued any prior notice before disallowing the claim of deduction made u/s. 80P(2)(a)(i) of the Act, otherwise the assessee could have explained the facts in detail. Unfortunately, because of the various steps taken by the assessee against the said intimation, the assessee had also spent a lot of time for which the assessee could not be find fault with. The assessee, before both the authorities, had no effective opportunity to defend their case on merits. We have also gone through the issue involved in the present appeal and we are satisfied that it is an arguable issue and therefore the assessee should be granted an opportunity to put forth their case before the Ld.CIT(A), otherwise great prejudice would be caused to the assessee, being a co-operative society. Further, the rigid rule that the everyday delay should be explained could also not apply to the present facts of the case since the assessee had bonfidely pursued the remedies before the authorities. In such circumstances, we have satisfied ourselves that the assessee had properly explained the reasons for the said delay and in such circumstances, the Ld.CIT(A) ought to have condoned the said delay and decide the appeal on merits. We therefore set aside the order of the Ld.CIT(A) and condone the delay in filing the appeal before the Ld.CIT(A) and remit the issue to the file of the Ld.CIT(A) with the direction to decide the issue afresh on merits, after hearing the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 30th April, 2025.