THE ANKLAV MERCANTILE CO-OP CREDIT SOCIETY LTD.,ANAND vs. DCIT CIRCLE 1(1)(1), VADODARA, VADODARA

The Anklav Mercantile Co. Op. Credit Society Ltd. vs. DCIT Asst.Year –2022-23 - 2– 6. The Ld. CIT9A) has erred in law and on facts not adjudicating deduction claimed U/s 80P of the Act of Rs.16,12,889/- rejected by Ld. A.O. 7. The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.”

3. The brief facts of the case are that the Assessing Officer (AO) passed an ex-parte assessment order under section 144 of the Income Tax Act, 1961 (Act) in the case of the assessee, a Cooperative Credit Society, for the relevant assessment year, computing the total income at ₹8,83,04,780/-. During the course of assessment proceedings, the AO observed that the assessee had incorrectly claimed deduction of ₹16,12,889/- under section 80P of the Act with respect to interest income earned from investments made by the assessee in cooperative banks and other banks, which is not permissible under section 80P(2)(d) of the Act, as the deduction is only available for interest or dividends derived from investments with other cooperative societies and not cooperative banks. Based on judicial precedents including Totgar’s Cooperative Society Ltd. and Madras Cricket Club vs. ITO, the AO held that such interest income falls under the head "income from other sources" and is not eligible for deduction under section 80P of the Act. Accordingly, the said deduction was disallowed and added to the assessee’s income. Further, the AO observed that the assessee had received unsecured loans amounting to ₹8,17,68,248/- during the year but failed to furnish any evidence to establish the genuineness of these loans, despite being provided several opportunities by way of issuance of notices under section 142(1) of the Act. In absence of such proof, such loans were held to be unexplained cash credit under section 68 of the Act and added to the income of the assessee. Further, interest income amounting to ₹33,60,273/- received from Bank of Baroda and The Anklav Mercantile Co. Op. Credit Society Ltd. vs. DCIT Asst.Year –2022-23 - 3– State Bank of India was also subject to tax as "income from other sources" since the assessee failed to submit any documentary evidence for the same. Also, the AO found certain unexplained investments amounting to ₹15,63,368/- in Fixed Deposits held with SBI for which no satisfactory source or supporting documentation was provided, and Assessing Officer thereby made addition under section 69 of the Act. The total income assessed by the Assessing Officer, after making all additions and disallowances, was computed at a sum of ₹8,83,04,780/- and penalty proceedings were also initiated.

4. In appeal, CIT(Appeals) dismissed the appeal filed by the assessee on the ground that it was filed with an inordinate delay of 242 days beyond the prescribed limitation period under section 249(2) of the Income Tax Act, 1961. The assessment order under section 144 read with section 144B was served upon the assessee on 16.03.2024, and as per law, the appeal was required to be filed within 30 days, i.e., by 15.04.2024. However, the appeal was filed much later on 13.12.2024. In Form 35, the assessee admitted the delay and sought condonation on the grounds that the assessee was unaware of the assessment order due to non-communication by their consultant and that the assessee only approached a Chartered Accountant to file the appeal after coming to know about it. However, the CIT(A), after examining the reasons furnished, held that mere non-awareness of the order and failure on the part of the consultant did not constitute "sufficient cause" for condoning such a prolonged delay, especially in the absence of any supporting Affidavit or documentary evidence. CIT(Appeals) was of the view that it was the duty of the assessee to remain vigilant regarding its tax matters and rejected the plea that negligence by the consultant was a The Anklav Mercantile Co. Op. Credit Society Ltd. vs. DCIT Asst.Year –2022-23 - 4– justifiable excuse. In doing so, the CIT(A) relied on the Supreme Court's judgment in Rajneesh Kumar & Anr. vs. Ved Prakash [SLP (Civil) Nos. 935-936 of 2021], where it was held that a litigant cannot absolve themselves of responsibility by shifting the blame entirely on to their legal representative. Accordingly, the CIT(A) held that since no valid or bona fide explanation had been offered to justify the delay, he refused to condone the delay under section 249(3) of the Act. As a result, the appeal was dismissed in limine without adjudicating the matter on merits.

5. The assessee is in appeal before us against the aforesaid passed by CIT(Appeals). After perusing the material placed on record and hearing the submissions of the assessee’s counsel, we find that the assessee has demonstrated sufficient and reasonable cause for the delay in filing of the appeal before the CIT(A), which in our considered view, ought to have been condoned in the interest of justice. It is not in dispute that the assessment order in question was served upon the assessee on 16.03.2024 and the appeal was filed on 13.12.2024. The delay in filing the appeal has been explained by the assessee on the ground that it was unaware of the assessment order due to a failure on the part of its consultant to inform the assessee. Upon coming to know of the order, the assessee promptly engaged a Chartered Accountant and filed the appeal. Along with Form 35, the assessee also submitted that the non- filing of the appeal within the prescribed time was neither deliberate nor intentional but occurred due to a bona fide mistake and lack of communication on the part of the consultant. An important thing to note is that a screenshot has also been placed on record by the assessee showing that no notice of hearing was received from the office of the The Anklav Mercantile Co. Op. Credit Society Ltd. vs. DCIT Asst.Year –2022-23 - 5– CIT(A), which further confirms that the assessee was denied an opportunity of hearing at the appellate stage. We also note that the quantum of additions made in the assessment order is substantial. The assessment framed under section 144 of the Act has resulted in additions exceeding ₹8 crores, including additions under section 68 for unexplained cash credits, disallowance of deduction under section 80P, interest income taxed under the head "income from other sources", and additions under section 69 for unexplained investments. In such circumstances, denying the assessee an opportunity to contest the additions on merits merely on the ground of delay, when a reasonable cause is explained, would be an act of substantial injustice. The principles of natural justice demand that a party should not be denied adjudication on merits especially where high-pitched assessments are involved and the delay has been adequately explained. The Hon'ble Supreme Court in a series of decisions has held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice should be preferred. The explanation offered by the assessee in the present case is not fanciful or frivolous and corroborative screenshot indicating non-receipt of any notice of hearing from the CIT(A)’s office also shows that the assessee deserves to be heard on merits, looking into the instant facts. Therefore, taking into consideration the entirety of facts and circumstances, the material placed on record, and in view of the substantial additions made in the assessment order which call for adjudication on merits, we are of the considered opinion that the learned CIT(A) erred in refusing to condone the delay of 242 days. We hold that the assessee had sufficient cause for not presenting the appeal within the prescribed period and accordingly, we set aside the order of the CIT(A) and direct him to admit the appeal and decide the same afresh on merits after affording reasonable opportunity of hearing to the assessee.

Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 28/07/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,