BLUE RIDGE UNIT B TOWER 9 TO 14,PUNE vs. ITO, WARD-2(4),PUNE, PUNE

ORDER

PER DR. DIPAK P. RIPOTE, AM:

1. Erroneous Non-Consideration by the Ld. CIT(A) of the Order Upholding Section 80P Deduction for AY 2018-19.

1.1 BECAUSE the Ld. CIT(A) failed to adjudicate the appeal on merits and restricted the decision solely to the delay condonation issue, thereby ignoring the assessee's entitlement already allowed under Section 80P for AY 2018-19.

1.2 BECAUSE the Ld. CIT(A) rejected the delay condonation petition without giving due weight to the genuine reasons for delay, which warranted indulgence in the interest of justice.

1.3 BECAUSE such approach disregarded the orders of the CIT(A), NFAC, Delhi dated 03.03.2025 and the consequential order giving effect thereto dated 20.05.2025, which had already upheld the assessee's entitlement to Section 80P deduction for AY 2018-19, resulting in undue prejudice to the assessee and defeating the principle of adjudication on merits.

2.1 BECAUSE the Ld. CIT(A) has erred in disallowing the deduction of without Rs.71,254/- being interest income earned from deposits placed with Co-operative Banks, appreciating that under Section 80P(2)(d) read with Explanation 4 to Section 80P(4) of the Income-tax Act, 1961, any income received by a co-operative society from another co-operative society is expressly exempt.

2.2 BECAUSE the Appellant, being a Co-operative Housing Society 2 registered under the Maharashtra Co-operative Societies Act, had are invested its statutory reserves in Co-operative Banks which recognized , 2386 & 2387/PUN/2025 [A] – (03 Appeals) as co-operative societies under Section 7(1) of the Banking Regulation Act, 1949, and therefore the interest earned on such deposits is fully eligible for exemption.

2.3 BECAUSE the CIT(A) erred in disallowing the claimed deduction by misconstruing the provisions of the Act. The Appellant bank's income is indisputably from a co-operative bank and cannot be excluded from the benefit granted to co-operative housing societies under Section 80P.

3.2 BECAUSE this interpretation runs counter to the legislative purpose of Section 80P, which is to encourage inter-cooperative society business and income sharing. The exclusion clause protects banks from claiming exemption but does not deny income earned by housing societies from such banks.

4. Erroneous distinction between credit co-operative society and co- operative society:

4.1 BECAUSE the learned CIT(A) has failed to distinguish between credit co-operative society and co-operative society. The Appellant, being a housing society. primarily conducts maintenance and allied activities for members and deposits statutory reserves with cooperative banks, which is fundamentally different from the functioning of a credit co-operative society. Hence, the income is allowed as a deduction from taxation.

5.2 BECAUSE the pendency of such proceedings, along with the complaint before the ICAI, demonstrates that the burden of non- cooperation was entirely beyond the Appellant's control, thereby justifying relief both on facts and in equity.

6. Violation of Principles of Natural Justice and non-consideration of critical evidence:

6.1 BECAUSE the CIT(A) failed to provide a fair hearing on merit basis instead dismissed the appeal without considering substantial legal and factual questions raised. warranting intervention by this Hon'ble Tribunal.

7.1 BECAUSE there was no malafide intention, concealment of income, or furnishing of inaccurate particulars by the Appellant. The claim for deduction was made in good faith, supported by judicial pronouncements and an honest interpretation of the law.

7.2 Penalty proceedings initiated are therefore baseless, proceed without justification, and offend principles of natural justice and fairness. The same deserves to be quashed.

8.1 BECAUSE the delay in filing the Appeal occurred due to unavoidable circumstances beyond the control of the Appellant, arising from fraudulent acts committed by the former treasurer which caused financial disruption, non-cooperation, and compelled the society to initiate civil and criminal proceedings, thereby affecting timely compliance with income tax proceedings. 4 8.2 BECAUSE the tax consultant engaged by the Appellant also failed in professional responsibilities, with a complaint pending before , 2386 & 2387/PUN/2025 [A] – (03 Appeals) the ICAI Disciplinary Committee, and hence the delay is bona fide and deserves to be condoned in the interest of substantial justice, in line with the settled principle that procedural delays should not defeat adjudication on merits.” Findings & Analysis : 2. We have heard both the parties and perused the records. In this case, Assessee is a Co-operative Housing Society. Assessee filed its Return of Income for A.Y.2015-16 on 29.09.2015 declaring income at Rs.2,31,530/-. Assessee has claimed deduction u/s.80P of the Act. A notice u/s.148 was issued on 31.03.2021. Assessee filed Return of Income in response to notice u/s.148 on 29.04.2021 declaring total income at Rs.2,31,530/- and claiming deduction u/s.80P of Rs.1,21,254/-. Assessing Officer disallowed assessee’s claim of deduction of Rs.71,254/- which was interest received from Co-operative Bank. Aggrieved by the assessment order, Assessee filed an appeal before ld.CIT(A). There was a delay in filing appeal before the ld.CIT(A). It was submitted before ld.CIT(A) that Assessee’s Tax Consultant was not available due to the ill health of his father. However, ld.CIT(A) dismissed the appeal on account of delay stating that no evidence has been filed.

3. Aggrieved by the order of the ld.CIT(A), Assessee has filed appeal before this Tribunal. It is noticed that there is a delay of 5 filing appeal before this Tribunal. The Secretary of the Assessee , 2386 & 2387/PUN/2025 [A] – (03 Appeals) Society has filed an Affidavit requesting for condonation of delay. The reason mentioned in the Affidavit as under: “5. The delay in filing is bona fide and arose from the following circumstances beyond the control of the Appellant: a. The former treasurer of the Appellant society indulged in fraudulent activities resulting in grave financial loss and disrupting proper compliance which only came in the knowledge of the Appellant upon Audit of financial statements. This severely hindered the Appellant's ability to collate records and prepare the Appeal within time. b. The tax consultant, who handled the Appellant's tax matters, was abroad and unavailable for a substantial period during the relevant timeline, further causing unavoidable delay Subsequent to the CIT(A) order, civil and criminal proceedings were initiated against the tax consultant, of which the Appellant became aware only recently, necessitating renewed legal interventions and delaying Appeal preparations. Details of civil & criminal proceedings against tax consultants are annexed hereto and marked as "Annexure B". d. A Forensic Audit Report of the transactions of the Appellant for the period from 1st April 2019 to 30th September 2024 was conducted, and the report was handed over to the Appellant on 31st March 2025. Upon perusal of the said audit report, it was revealed that there were several unauthorized transactions, instances of grave negligence on the part of the former CA, and multiple lapses in the handover process. These matters are further evidenced by the police complaint filed against the former CA, a complaint submitted to the ICAI, and a complaint filed before the Consumer Forum, all of which contributed to the delay 6 Copies of the police complaint, ICAI complaint, and Consumer Forum complaint are annexed hereto and marked as "Annexure C", , 2386 & 2387/PUN/2025 [A] – (03 Appeals) e. The appointment of a new CA took place in May 2025 by the newly constituted Managing Committee of the Society. Upon perusal of the Income Tax Portal by the newly appointed CA, the Appellant came to know about the demands raised against various Assessment Years and further discovered that the order of the CIT (A) had already been passed, with no subsequent action taken in respect thereof. Immediately thereafter, the preparation of the present Appeal commenced diligently. A copy of the letter evidencing the appointment of the new CA is annexed hereto and marked as "Annexure D".

7. It is respectfully submitted that the Appellant has exercised utmost due diligence and has a genuine and substantial case on merits for the subject Appeal. It is admitted for adjudication rather than dismissed on technical grounds of delay.”

5. It was pleaded before us that ld.CIT(A) for A.Y.2018-19 on identical facts has allowed assessee’s appeal. Assessee has filed copy of the order passed by ld.CIT(A) for A.Y.2018-19 dated 03.03.2025. 7 , 2386 & 2387/PUN/2025 [A] – (03 Appeals) 6. It is observed that there was a delay of 4 months 14 days in filing appeal before ld.CIT(A). It is also noted that there was a valid reason for delay in filing appeal before the ld.CIT(A). Substantial justice is more important than procedural delay. Assessee is not going to gain anything by delaying the filing of appeal. Accordingly, we direct the ld.CIT(A) to condone the delay. In these facts and circumstances of the case, we set-aside the order of ld.CIT(A) to ld.CIT(A) for denovo adjudication. The ld.CIT(A) shall grant opportunity to the Assessee. The Assessee shall file necessary documents before the ld.CIT(A). Accordingly, grounds of appeal

raised by the Assessee are allowed for statistical purpose. and 8. Since we have set-aside the Lead Appeal in to ld.CIT(A) for denovo adjudication, therefore, our order therein passed shall apply mutatis mutandis to both these appeals also. Accordingly, Grounds of appeal raised by the Assessee in both the appeals are allowed for statistical purpose.

, 2386 & 2387/PUN/2025 [A] – (03 Appeals) 9. To sum up, three appeals of the assessee in and are allowed for statistical purpose. Order pronounced in the open Court on 12 December, 2025.