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Facts
The assessee, a primary agricultural credit co-operative society, failed to file its income tax return for AY 2017-18 despite notices. During the demonetization period, it deposited cash of ₹28,14,500. The Assessing Officer assessed income under Section 144, denying the Section 80P deduction claim because no return was filed. The CIT(A) subsequently dismissed the assessee's appeal for non-prosecution due to non-compliance.
Held
The Tribunal set aside the orders of the AO and CIT(A), remanding the matter to the AO for fresh assessment to provide the assessee a reasonable opportunity of being heard. Grounds related to condoning delay in filing the return were not adjudicated, as this power lies with the PCIT. Other grounds were partly allowed for statistical purposes.
Key Issues
Whether the AO and CIT(A) were justified in denying Section 80P deduction and confirming the assessment under Section 144 without providing adequate opportunity to the assessee to file the return and furnish details, especially when the assessee, a co-operative society, claimed reliance on a professional.
Sections Cited
144, 250, 142(1), 80P, 80P(2)(a)(i), 80P(2)(a)(iv), 80P(2)(a)(iii), 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the ADDL/JCIT(A)-3, Mumbai [hereinafter referred to as the Ld. ‘Addl/JCIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 13.01.2025, which has been passed against the assessment order u/s 144 of the Act, dated 16.12.2019. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. The order of the Ld. Commissioner of Appeals is erroneous on the facts and in the law. On the facts and in the circumstances of the case he ought to have provided opportunity for filing the income tax return by providing I.T.A. No.: 496/KOL/2025 Assessment Year: 2017-18 Srirampur Nityananda Samabay Krishi Unnayan Samity Ltd. speed post /telecalling as the Appellant assessee members are layman person and were totally dependent on the Tax Professional who did not provide the detail to them.
The Ld. Commissioner of Appeals had considered the learned assessing officer view and is not justified in treating the Profit as taxable profit to the tune of Rs.7,95,230/- without allowing deduction under section 80P and thereby imposing tax to the tune of Rs.3,93,048/-.
The Ld. Commissioner of Appeals and learned assessing officer must understand that the assessee is a primary agricultural credit co-operative society and having members including agriculture farmers who were in panic and had provided the old currency in exchange of new currency during the said demonetization period to get relieve and it was totally genuine transaction.
The Ld. Commissioner of Appeals and learned assessing officer must understand that the assessee work for the welfare of the society with the motive to serve the poor farmers and not to evade tax so if return not filed due to fault of expert tax professional who did not delivered his duty, then the officer could had provided opportunity and also had considered the deduction under section 80P and not assessing the income as taxable income and imposing tax thereon.
The Ld. Commissioner of Appeals and learned assessing officer is not justified in not affording another opportunity to the appellant to file income tax return and furnish his deduction.
The learned assessing officer must had call upon to assessee by sending speed post to assessee apart from relying on email communication as final reminder, as most of the person in India are not so much educated (including the assessee) and they do not check regular email id or understand important and unimportant emails.
The Hon'ble Tribunal Bench would set aside the order of the Ld. Commissioner of Appeals and learned assessing officer.
Any other ground or grounds as may be urged at the time of hearing along with citation favouring the Appellant case.”
Brief facts of the case are that the assessee claims to be a primary agricultural credit co-operative society and a notice u/s 142(1) of the Act was issued to the assessee calling for the return of income but the assessee failed to furnish the same. On the basis of information relating I.T.A. No.: 496/KOL/2025 Assessment Year: 2017-18 Srirampur Nityananda Samabay Krishi Unnayan Samity Ltd. to ‘Operation Clean Money’, the Department had information that cash of ₹28,14,500/-had been deposited in the bank account bearing No. 141020281878 during the demonetization period. The assessee did not furnish the return of income but in response to the notice issued on 01.10.2019, the Ld. AR, on behalf of the assessee furnished copy of profit and loss account, balance sheet audited by the statutory Auditor showing the net profit of ₹7,95,234/- and a written submission stating that the income arising from the Society’s activities are subject to the deduction u/s 80P(2)(a)(i), 80P(2)(a)(iv) and 80P(2)(a)(iii) of the Act. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted that the assessee is a primary agricultural credit cooperative Society involved in the business of banking for the purpose of development in the rural areas for the benefit of farmers/members as specified under the rules of the West Bengal Co-operative Society Act. On the basis of the statutorily audited profit and loss statement, the net profit was shown at ₹7,95,234/-. Although the assessment was taken up on account of cash of ₹28,14,500/- deposited in the bank account during the demonetisation period, however, the Ld. AO assessed the total income of the assessee that ₹7,95,234/- under section 144 of the Act of the Act by denying the claim of deduction under section 80P of the Act as no return of income was filed.
Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) but as there was no compliance and the issues raised in the grounds of appeal were not responded despite several opportunities granted and the assessee had also failed to file a written submission, the appeal was dismissed on account of non-prosecution I.T.A. No.: 496/KOL/2025 Assessment Year: 2017-18 Srirampur Nityananda Samabay Krishi Unnayan Samity Ltd. of the appeal. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
In the course of the appeal before us, the assessee filed an adjournment application seeking adjournment but the same was withdrawn and the case was heard. The assessee submitted that the Ld. CIT(A) ought to have provided an opportunity for filing the details and was not justified in treating the profit as taxable profit without allowing deduction u/s 80P of the Act. The assessee has also filed the statement of facts which are reproduced as under: “The Appellant assessee is an agricultural credit co-operative Society involved in the business banking for the purpose of development to the rural areas for the benefit of farmer /members as specified under the rules of West Bengal Co-operative Society Act. The Appellant did not file income tax return for the A.Y.- 2017-18 relating to P.Y.- 2016-17 of the Income Tax Act ,1961 (herein referred to as “said Act”) due to the deliberate failure on the part of professional who was given responsibility of the same and the Appellant was unaware of the fact. The Appellant was served with Notice under Clause (i), subsection 1 of section 142 of the said Act which was issued on 14th December 2017, through the notice was instructed to file Income tax return of the said Act. That subsequently again a Notice under subsection 1 of section 142 of the said Act was issued on 01st October 2019 and through it was instructed to provide statutory Audit report along with various other documents in support of the cash deposits of Rs 28,14,500/- made during the demonetisation period in between 9th November,2016 to 30th December,2016. That in response to its support the Appellant had furnished the relevant documents of the Financial statements along with explanation towards its submission through its Authorised Representative that the amount deposited was of the members/Farmers which is shown in the Balance Sheet. I.T.A. No.: 496/KOL/2025 Assessment Year: 2017-18 Srirampur Nityananda Samabay Krishi Unnayan Samity Ltd. That The Appellant also explained that the Income generated to the tune of Rs.795234/- was also eligible for 100% deduction under section 80P(2)(a)(i), 80P(2)(a)(iv) & 80P(2)(a)(iii). That very surprisingly the Proper officer although relied and accepted the explanation but had erred by not considering 100 % deduction under section 80P(2)(a)(i),80P(2)(a)(iv), &80P(2)(a)(iii) and had assessed taxable income to the tune of Rs.795234/- thereby imposing tax to the tune of Rs 3,93,048/- vide its order under section 144 dated 16/12/2019. That being aggrieved by the impugned order the Appellant discussed the matter with a Tax Professional as the Appellant Society’s members were layman on the topic and upon the advise of the Professional the Appellant preferred appeal before the Commissioner of Income Tax and subsequently the case was listed for hearing. That the Appellant were totally dependent upon the Tax Professional but had found by the order of the Commissioner of Income tax Appeal (NFAC) that the Professional had neither appeared before the Learned Authority in hearing nor had filed Income Tax Return by filing condonation of delay under section 119 (2) (b) of the said Act. That due to non appearance the arguments were not properly placed before the learned Commissioner of Income tax Appeal and the appeal was dismissed vide order under section 250 of the said Act dated 13/01/2025. That thereafter the Appellant had discussed the matter with Tax Advocates. That the Hon’ble Tribunal Bench would direct the Appellant to file the income tax return and claim the deduction under section 80P of the said Act by condone the delay under section 119 (2) (b) of the said Act. That the Hon’ble Tribunal Bench would set aside the order of the Ld. Commissioner of Appeals and learned assessing officer. That it is against the said impugned order the Appellant preferred the instant Appeal before the Hon’ble Tribunal with a prayer to allow the Appellant an opportunity to file its belated income tax return such that the Appellant could show the correct income and claim the actual deduction therein.”
We have considered the submission made and in view of the facts of the case, the Bench was of the view that another opportunity needs I.T.A. No.: 496/KOL/2025 Assessment Year: 2017-18 Srirampur Nityananda Samabay Krishi Unnayan Samity Ltd. to be provided to the assessee. Since the assessee did not appear either before the Ld. AO or even before the Ld. CIT(A) and claimed that on the basis of the order of the Rajkot Bench of the Tribunal (citation not given), the return filed after the due date was required to be considered, the order of the Ld. AO as well as Ld. CIT(A) are hereby set aside and the matter is remanded to the Ld. AO for framing the assessment afresh. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Ground Nos. 1, 4 and 5 relating to the filing of the return of income are not being adjudicated as the matter relates to the powers of the Ld. PCIT to condone the delay in filing the return of income as per law on the application filed by the assessee. Accordingly, the other grounds taken by the assessee in its appeal are partly allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 25th August, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 25.08.2025 Bidhan (Sr. P.S.) I.T.A. No.: 496/KOL/2025 Assessment Year: 2017-18 Srirampur Nityananda Samabay Krishi Unnayan Samity Ltd. Copy of the order forwarded to:
Srirampur Nityananda Samabay Krishi Unnayan Samity Ltd., Vill.-Srirampur, P.O.-Srirampur, P.S.-Tamluk, Purba Medinipur, West Bengal, 721651. 2. I.T.O., Ward-27(3), Haldia.
ADDL/JCIT(A)-3, Mumbai.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order