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Facts
The assessee, a Co-operative Milk Society, initially did not file its income tax return. Upon receiving a notice under Section 148, it filed a return claiming a deduction under Section 80P. The Assessing Officer found discrepancies, estimated income at 8% of turnover, and disallowed certain claims, leading to an addition of Rs.1,11,38,382/-, which the CIT(A) upheld.
Held
The Tribunal observed that the assessee had a reasonable cause (death of accountant) for not submitting documents earlier and that the CIT(A) erred by not admitting additional evidence or seeking a remand report from the AO. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication, instructing the CIT(A) to consider the additional evidence and obtain a remand report.
Key Issues
Whether the CIT(A) was justified in upholding the AO's income estimation and disallowing Section 80P deduction, and whether the CIT(A) erred in refusing to admit additional evidence crucial for determining the assessee's eligibility for Section 80P.
Sections Cited
250, 80P, 148, 145(3), 40A(7), 144
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR
O R D E R
PER DR. B.R.R. KUMAR, VICE-PRESIDENT :
This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 28.01.2025 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2016-17.
The grounds of appeal raised by the Assessee are as follows:- “1.1 The order U/s.250 passed on 28-01-2025 for AY 2016-17 by NFAC [CIT(A)], Delhi. (for short CIT(A) upholding the rejection of books of accounts and estimating income at 8% of the turnover and thereby confirming addition of Rs.1,11,38,382/- and disallowing the same u/s 80P(2) is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in not considering fully and properly the submissions made as well as evidence produced before it. Moreover, the ld. CIT(A) ought to have admitted additional evidence under Rule 46A. Thus, there was gross violation of the principles of natural justice. Indrapura Dudh Utpadak Sahkari Mandli Ltd Vs. ITO Asst. Year : 2016-17 - 2– 3.1 The Id. CIA) has grievously erred in law and or on facts in upholding that (a) there were discrepancies in the books of accounts which were not reconciled. (b) since the revised profit and loss account was not submitted, the deduction u/s 80P was not admissible. (c) estimate of the business income at 8% of the total turnover and thereby confirming the addition at Rs. 1,11,38,382/-. 3.2 That the in the facts and circumstances of the Id. CIT(A), ought not to have upheld (a)there were discrepancies in the books of accounts which were not reconciled (b)since the revised profit and loss account was not submitted, the deduction u/s 80P was not admissible (c) estimate of the business income at 8% of the total turnover and thereby confirming the addition at Rs. 1,11,38,382/-. 3.3 Without prejudice to the above and in the alternative, the CIT(A) ought to have admitted additional evidence as well as allowed the deduction u/s 80P(2)(b).”
3. The brief facts of the case are that the assessee is a Co-Operative Milk Society registered under the Gujarat Co. Op. Societies Act. The assessee is said to have eligible for deduction u/s 80P(2)(b)(1) and 80P(2)(d) of the Act. The assessee-society had not filed its return of income for the year under consideration. The Assessing Officer, on the basis of inside portal under non-filer monitoring system and considering the financial transaction of Rs.68,52,723/-, issued notice u/s 148 of the Act on 31.03.2023. The assessee-society thereafter filed its return of income on 19.04.2023 declaring total income of Rs. Nil, after claiming deduction of Rs.6,94,720/-. The Assessing Officer found certain defects in its submissions, details filled in return of income and in tax audit report and he, therefore, concluded that the book result of the assessee was not correctly arrived at as per provision of Section 145(3) of the Act. The Assessing Officer accordingly estimated the income @ 8% at Rs.1,08,36,147/-, after allowing deduction u/s 80P(2)(c)(ii) of the Act of Rs.50,000/-, and also disallowed interest income of Rs.1,77,235/- under the head income from other sources, along with amount of Rs.1,25,000/- towards claim of gratuity u/s 40A(7) of the Act. The total income of the assessee was thus determined at Rs.1,11,38,382/- vide order dated 26.02.2024. Indrapura Dudh Utpadak Sahkari Mandli Ltd Vs. ITO Asst. Year : 2016-17 - 3–
4. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee by observing as under:- “7. Adjudication: The assessment in this case was completed by the Assessing Officer by estimating the income on the total sales reported in the profit and loss account. Assessing Officer observed that there were discrepancies in the profit admitted in the tax audit report, profit and loss account and in the computation portion. Further appellant could not furnish the details of party-wise sales during the year and hence the Assessing Officer proceeded to estimate the income bf the appellant and denied the benefit of claim of deduction under Sec. 80P of the Act on the ground that the name of the appellant was not found in the list of