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Facts
The assessee, a Co-operative Credit Society, claimed deduction under Section 80P for the assessment year 2020-21. The Assessing Officer disallowed the deduction, and the CIT(A)/NFAC sustained the disallowance ex-parte due to the assessee's non-response. There was a delay of 184 days in filing the appeal before the Tribunal.
Held
The Tribunal condoned the delay, citing the Supreme Court's decision in Collector, Land Acquisition vs. Mst. Katiji & Ors., prioritizing substantial justice. The appeal was admitted for adjudication, and the issue was restored to the CIT(A)/NFAC for a final opportunity to the assessee to present its case.
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the CIT(A)'s ex-parte order sustaining the disallowance of Section 80P deduction needs to be set aside to grant the assessee an opportunity to be heard.
Sections Cited
80P(2)(a)(i), 56, 57(iii), 143(3), 270A, 80P
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order dated 26.04.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2020-21.
There is a delay of 184 days in filing of this appeal before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay, according to which the order passed by the Ld. CIT(A) / NFAC was delivered to the e-mail of the consultant which went to the Spam folder. The assessee came to know of the order only after receipt of demand notice from the Assessing Officer. Referring to the decision of Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC), the Ld. Counsel for the assessee submitted that the delay should be condoned.
We have heard the rival arguments of both sides on the issue of condonation of delay. We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra) has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. Respectfully following the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra), the delay in filing of the appeal is condoned and the appeal is admitted for adjudication.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in confirming the disallowance made by the Assessing Officer u/s 80P(2)(a)(i) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) amounting to Rs.2,65,25,427/-.
Facts of the case in brief, are that the assessee is a Credit Co-operative Society registered under the Maharashtra State Co-operative Act, 1960. The basic objective of the society is to provide banking, investment and finance facilities to its members and also providing credit facilities to its members. The assessee’s only source of income is from interest on loans advanced to members and some other incidental charges. It filed its return of income on 27.12.2020 declaring Nil income after claiming deduction u/s 80P of the Act to the tune of Rs.2,65,25,427/-. The Assessing Officer completed the assessment u/s 143(3) of the Act on 19.09.2022 wherein he disallowed the deduction claimed by the assessee u/s 80P(2)(a)(i) of the Act of Rs.2,65,25,427/- by observing as under: “7. In view of the above discussion, it is beyond any doubt that the assessee's claim for deduction with respect to interest income earned from deposits held in Cooperative Bank is not found to be allowable deduction under provisions of 80P of the Act. Therefore, the interest income earned by the assessee from co-operative bank of Rs. 2,94,63,557/- is assessed as "Other Income u/s 56 of IT Act.
The assessee has not produced evidences of any expenditure to be expended wholly and exclusively with respect to earning of the interest income from co- operative bank. Only such expenditure which has clear nexus with the income from other sources is eligible for deduction u/s. 57(iii) of the Act. Since, whole deduction u/s 80P(2)(a)(i) of the Act claimed by the assessee is part of interest income which is taxable under the head income from other sources. Therefore, in light of above deduction, the entire deduction of Rs.2,65,25,427/-claimed u/s 80P(2)(a) (i) of the Act is hereby disallowed and the same is added to the total income of the assessee. Penalty notice u/s 270A for under reporting of income is also issued.”
Since the assessee did not respond to the notices issued by the Ld. CIT(A) / NFAC, the Ld. CIT(A) / NFAC in the ex-parte order passed by him sustained the disallowance made by the Assessing Officer u/s 80P(2)(a)(i) of the Act.
Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.
8. After hearing both sides, we find despite number of opportunities granted by the Ld. CIT(A) / NFAC, the assessee did not respond to the statutory notices for which the Ld. CIT(A) / NFAC has passed this ex-parte order. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case before the Ld. CIT(A) / NFAC since the issue stands covered in favour of the assessee by various decisions. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make his submissions, if any, before the Ld. CIT(A) / NFAC on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A) / NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 7th April, 2025.