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Facts
The assessee, a primary agriculture credit co-operative society, faced an ex-parte assessment under Section 144 due to non-compliance with notices, resulting in significant additions including unexplained investments and disallowed bad debts. The assessee attributed its inability to submit documents to ongoing proceedings against its erstwhile office bearers for misappropriation of funds and a change in management. There was also a 204-day delay in filing the appeal.
Held
The Tribunal condoned the delay after finding sufficient cause, subject to a cost payment of Rs. 10,000. It set aside the CIT(A)'s order and remanded the matter to the Assessing Officer to provide the assessee a fresh opportunity to produce all relevant details and supporting evidence for proper verification and re-adjudication, in the interest of justice.
Key Issues
Condonation of delay; validity of ex-parte assessment and additions made without evidence; denial of natural justice due to lack of opportunity to present evidence.
Sections Cited
80P, 144, 69, 36(1)(vii), 36(2), 272A(1)(d), 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the Assessee is directed against the order dated 13.03.2024 of Learned CIT(A)-National
2 ITA.No.1346/Hyd./2024 Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2017-2018.
At the outset, there is a delay of 204 days in filing the present appeal. The assessee has filed petition for condonation of delay which is supported by the Affidavit of the Secretary of the Assessee Co-Operative Society. The learned Authorised Representative of the Assessee submitted that the assessee is a primary agriculture credit co-operative society registered under the Andhra Pradesh Cooperative Act and it’s income is also exempt from tax u/sec.80P of the Income Tax Act, 1961 [in short "the Act"]. He has pointed-out that for the financial year 2016-2017 which is relevant to the assessment year under consideration, the assessee has incurred losses and did not file it’s return of income. The Assessing Officer framed the assessment u/sec.144 of the Act when there was no compliance on behalf of the assessee to the notices issued by the Assessing Officer. He has further submitted that even before the learned CIT(A) the assessee could not produce any relevant record and documents as the office bearers of 3 ITA.No.1346/Hyd./2024 the assessee-society were facing multiple proceedings before the Authorities of Cooperative Department of the State Government since 2017 onwards and, therefore, the assessee society was completely depending on the Authorised Representative who has not taken appropriate steps in compliance to the notices issues by the Assessing Officer as well as by the learned CIT(A). He has further submitted that due the proceedings initiated for mismanagement of the affairs of the assessee society against the erstwhile office bearers by the Cooperative Department of the State Government, the assessee society was not aware about the status and passing of the impugned order by the learned CIT(A). He has referred to the orders passed by the Cooperative Department of the State Government against the President, Managing Director, Supervisor and Ex-Cashier of the assessee society for irregularities of managing the funds of the members of the society and submitted that due to these developments and various proceedings initiated against the office bearers, supervisor and cashier of the assessee society, it could not 4 ITA.No.1346/Hyd./2024 participate in the proceedings before the Assessing Officer as well as before the learned CIT(A). Therefore, there is a delay of 204 days in filing the present appeal before the Tribunal. Thus, The learned Authorised Representative of the Assessee submitted that the Assessing Officer has made the addition without verifying the relevant record which shows that the assessee has incurred losses during the year and, therefore, there was no income assessable to tax for the year under consideration.
On the other hand, Learned DR for the Revenue submitted that the assessee has not explained any cogent reasons to explain the delay of 204 days in filing the present appeal before the Tribunal. The assessee has conveniently shifted the lapses to the Authorised Representative which is also very vague without any details and particulars of the Authorised Representative who has not taken appropriate steps as alleged by the assessee. Thus, the Learned DR has vehemently opposed to the condonation of the delay.
We have considered the rival submissions and carefully perused the cause of delay explained by the 5 ITA.No.1346/Hyd./2024 assessee in the application for condonation of delay as well as in the affidavit. We have also gone through the relevant record filed by the assessee regarding the proceedings initiated by the Cooperative Department of the State Government against the office bearers of the assessee society regarding the misappropriation of the funds of the members and other transactions with farmers. These proceedings were initiated in the year 2017 and going on up-to the year 2023. Vide communication dated 04.04.2023 the Divisional Cooperative Officer of Cooperative Department of the Government of Andhra Pradesh has sent the relevant record regarding the permission accorded by the District Collector and Magistrate for filing of criminal complaints against the three persons viz., Smt. Mylari Usha Rani, Managing Director, Sri Kapuluru Vijaya Kumar, Supervisor/Field Officer and Sri Poluru Kumar, Ex-Cashier of the assessee society. These office bearers of the assessee society were facing various proceedings including criminal proceedings for misappropriation of the funds of the society. Therefore, in the facts and circumstances of the case, we are 6 ITA.No.1346/Hyd./2024 taking a liberal view for considering the ‘sufficient cause’ for delay of 204 days in filing the present appeal and accordingly condone the said delay, subject to payment of cost of Rs.10,000/- (Rs.Ten Thousand Only) to be paid to the Prime Minister’s National Relief Fund within a period of 30 days from the date of this order.
The assessee has raised the following grounds of appeal :
1. “The Hon'ble CIT(A) erred in upholding the Ld. AC's order, which is bad in law and against the principles of equity and natural justice.
2. The Hon'ble CIT(A) had erred in affirming the order of the Ld. AO based on both the facts and legal framework of the case, without conducting a thorough examination of the factual and documentary evidence submitted by the Appellant.
3. Based on the facts and circumstances of the case and in law, the Hon'ble CIT(A) had erred by not providing the Appellant an "opportunity of being heard, thus violating the principles of natural justice.
7 ITA.No.1346/Hyd./2024 4. The Hon'ble CIT(A) erred in treating the deposit of Specified Bank Notes (SBNs) as an unexplained investment us 69 of the Act.
5. The Hon'ble CIT(A) had incorrectly held that the Appellant was ineligible to claim a deduction for bad and doubtful debts under section 36(1)(vii) and 36(2), due to alleged non-compliance with the relevant conditions.
The Ld. CIT(A) has erred in upholding the order passed by AO and imputing interest u/s 272A(1)(d).
7. The Appellant respectfully seeks leave to submit additional factual and legal arguments during the proceedings before Your Honours. In light of the above, it is humbly prayed that the matter be remanded to the Learned CIT(A) to allow the Appellant to furnish information related to bad debts incurred and cash sales during the demonetisation period. This will provide the Appellant a fair opportunity to present in- depth factual evidence to clarify the matter. The Appellant has consistently been compliant, and the present issue has arisen solely due to a misinterpretation of the facts, with no malafide intentions.”
8 ITA.No.1346/Hyd./2024 6. The learned Authorised Representative of the Assessee has submitted that due to multiple proceedings initiated and pending against the erstwhile office bearers of the society, the assessee could not file the relevant details, records and books of accounts. He has further submitted that the books of accounts of the assessee society for the year under consideration are in the process of getting audited afresh by the new management of the assessee society and, therefore, pleaded that the matter may be remanded to the record of the Assessing Officer for fresh adjudication after verification and examination of the relevant record to be filed by the assessee.
On the other hand, the Learned DR for the Revenue has fairly submitted that the assessment order was passed ex-parte due to non-participation of the assessee society and non-filing of any details and supporting evidences. The learned CIT(A) has also dismissed the appeal of the assessee when no evidence was filed by the assessee society.
9 ITA.No.1346/Hyd./2024 8. We have considered the rival submissions as well as relevant material on record. We find that the assessment was framed u/sec.144 of the Act when there was no compliance on behalf of the assessee to the various notices issued. The Assessing Officer has assessed the total income of the assessee at Rs.3,65,41,555/- and also taxed the same u/sec.115BBE of the Act @ 60%. The Assessing Officer has made these additions by disallowing the claim of bad debts for want of necessary details and also regarding the borrowings from other entities to the tune of Rs.3,32,01,034/-. The Assessing Officer after applying the telescope theory has made addition of Rs.5,16,30,631/- and thereafter after allowing the loss declared by the assessee of Rs.1,67,97,076/- finally assessed the total income of the assessee at Rs.3,65,41,555/- . Thus, the addition was made by the Assessing Officer for want of relevant details and record. The learned CIT(A) has confirmed the said addition on the ground that the assessee has failed to produce any supporting evidences. Accordingly, in the facts and circumstances of the case and in the interest of justice, we
10 ITA.No.1346/Hyd./2024 allow the assessee a further opportunity to produce all relevant details and supporting evidences for verification and examination before the Assessing Officer. Hence, the impugned order of the learned CIT(A) is set-aside and the matter is remanded to the record of the Assessing Officer for fresh adjudication after verification and examination of the relevant record, details and supporting evidences to be filed by the assessee.
In the result, appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open Court on 12.11.2025.