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Facts
The assessee, a co-operative society, claimed deduction u/s 80P. The AO disallowed the deduction and passed an ex-parte assessment order as the assessee failed to provide details. The CIT(A) also dismissed the appeal ex-parte for non-compliance. The assessee filed an appeal before the ITAT with a delay of 331 days.
Held
The Tribunal condoned the delay in filing the appeal, subject to payment of cost, considering the assessee's meritorious case and the established practice in a subsequent year. The appeal was remanded to the AO for fresh adjudication after providing due opportunity to the assessee.
Key Issues
Whether the delay in filing the appeal can be condoned and whether the matter should be remanded for fresh adjudication on merits, considering the established practice and the assessee's rights.
Sections Cited
80P, 250, 144, 144B, 143(1), 143(2), 142(1), 270A(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
आदेश/ O R D E R
Per B.M. Biyani, AM:
Feeling aggrieved by order of first-appeal dated 08.08.2024 passed by learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre [“CIT(A)”] u/s 250 of Income-tax Act, 1961 [“the Act”] which in turn arises out of assessment-order dated 07.08.2021 passed by National Faceless Assessment Centre, Delhi [“AO”] u/s 144 r.w.s. 144B of the Act for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal on following grounds:
Page 1 of 8 “GROUNDS OF APPEAL WITH CASE LAWS
1. The learned CIT(A) erred in confirming disallowance of deduction u/s 80P(2)(a)(i) amounting to 54,26,486/- Mavilayi Service Co- operative Bank Ltd. v. CIT (2021) 431 ITR 1 (SC) - Citizen Co-op. Society Ltd. v. ACIT (2017) 397 ITR 1 (SC).
2. The assessment framed u/s 144 r.w.s. 144B is bad in law as no reasonable opportunity was granted. Tin Box Company v. CIT (2001) 249 ITR 216 (SC).
3. The CIT(A) erred in dismissing the appeal ex parte for alleged non- compliance without adjudicating merits - CIT v. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom HC).
4. The authorities failed to appreciate that as per By-laws and declaration (Paper Book), the society exclusively provides credit to its members, and deduction u/s 80P is allowable.
5. In AY 2020-21, AO himself allowed deduction u/s 80P(2)(a)(i) (Paper Book). On consistency, relief must be granted.
6. The appellant craves leave to add, alter, amend OR withdraw any ground.”
2. The background facts leading to present appeal as culled out from orders of lower authorities are as under:
(i) The assessee is a co-operative society of employees of Madhya Pradesh
Electricity Board. For AY 2018-19, the assessee filed return of income on 06.10.2018 declaring a total income of Rs. 9,71,250/- after claiming ‘Deduction u/s 80P falling within Chapter VI-A’. Initially, the return so filed was processed u/s 143(1) at a total income of Rs.
9,88,400/-. Subsequently, the case of assessee was selected for scrutiny and the AO issued notices u/s 143(2)/142(1) which remained uncompiled by assessee. Ultimately, the AO passed ex-parte assessment-order u/s 144 denying the benefit of deduction u/s 80P of Page 2 of 8
Rs. 54,26,486/- and assessing total income at Rs. 64,14,886/-, the relevant para of assessment-order is re-produced below:
“2. Disallowance out of deduction claimed u/s, 80P of the IT Act. 2.1 In the relevant year i.e. A.Y. 2018-19, assessee has claimed deduction u/s 80P of the IT Act of Rs 54,43,636/- in return of income. During the assessment proceedings, vide notice dated 11.12.2020, issued u/s 142(1) of the Act, assessee was asked to provide bifurcation of deduction claimed under various sub-sections of section 80P of the IT Act and eligibility of each deduction alongwith supporting evidences. In response to this notice, assessee has not submitted any reply/details. Thereafter, various reminder notices and Notices u/s 142(1) issued on 11.01.2021, 29.01.2021, 09.02.2021, 16.02.2021, 18.03.2021 and 27.04.2021. Since, the assessee did not file any reply, a notice dated 05.04.2021 issued by NaFAC, Delhi and the same was duly served on 19.04.2021, physically to Shri S.C. Sharma, Manager of the assessee. Vide this notice, it is asked to assessee to submit the details as asked vide notices issued u/s 142(1) within 7 days. However, once again assessee has not submitted any details/reply. Once again a notice u/s 142(1) issued on 27.04.2021 and final opportunity has granted to assessee. In response, assessee has not submitted any details/reply. In this regard, a show cause notice is issued on 28.07.2021 to assessee proposing the disallowance of Rs. 54,43,636/- claimed u/s, 80P with a request to submit its reply by 04.08.2021. However, once again assessee has not submitted any reply in response to show cause notice. Since, the assessee has claimed substantive deduction u/s 80P of the IT Act of Rs. 54,26,486/-, it is primary onus to assessee to justify its claim with supporting evidences, however assessee has failed to do so. Therefore, deduction claimed by assessee u/s 80P of the Act is disallowed and added to the total income. Issue penalty show cause notice u/s 270A(2) of the I. T. Act for under-reporting of income. Further, out of Rs. 54,43,636/- claimed by assessee, CPC has already disallowed a sum of Rs. 17,150/- while processing the ITR u/s 143(1) of the Act. Therefore, disallowable deduction is restricted to Rs. 54,26,486/- (Addition of Rs. 54,26,486/-)” (ii) Aggrieved, the assessee went in first-appeal before CIT(A). However, the assessee did not make any response to the hearing notices issued by CIT(A). Ultimately, the CIT(A) passed order of first-appeal dated
08.08.2024 upholding assessment-order and dismissing assessee’s
Page 3 of 8 appeal, the relevant para of order of first-appeal passed by CIT(A) is re-produced below:
“The undersigned issued notice u/s 250 of the act on three occasions and the appellant did not respond to such hearing notices. Though the appellant has challenged the disallowance of deduction u/s 80P through Grounds of Appeal as mentioned above, the appellant has not provided the details and substantiated such claim of deduction at the appellate stage. It is for the appellant to produce the documentary evidence to disprove the addition made by the AO. The appellant did not respond to statutory notices issued by the AO at the assessment stage. Similarly the appellant did not respond to hearing notices issued at the appellate stage. This shows that the appellant is not interested in prosecuting the appeal. In view of this, I am constrained to uphold the order passed by the AO by disallowing the claim of deduction of Rs. 54,43,636 u/s 80P of the income tax act and dismiss the appeal. Hence the appeal is dismissed.” (iii) Still aggrieved, the assessee has come in present appeal before us.
The registry has informed that the present appeal is filed on 27.09.2025 against the impugned order dated 08.08.2024 after a delay of 331 days and hence time-barred. Ld. AR for assessee submitted that the assessee has filed an application for condonation of delay/affidavit deposed by Shri D.S. Chandrawat, Secretary. Referring to the contents of affidavit and the accompanying medical prescriptions of Dr. K.C. Shrimal, M.S.
(Ortho), Mandsaur, Ld. AR narrated that the delay during the period from 12.08.2024 to 12.10.2024 was on account of serious health condition of the Secretary/ deponent [Para No. 3 of affidavit] and even after recovery, further delay occurred due to unavoidable circumstances beyond the control of assessee-society as averred in affidavit [Para No. 4 of affidavit]. Hence, there was a “sufficient cause” for delay. Ld. AR submitted that there was no lethargy or negligence on the part of assessee in making delay in filing
Page 4 of 8 present appeal. He submitted that the case of assessee is undisputably meritorious because the controversy with regard to the ‘deduction u/s 80P’ has already been settled by CIT(A) in first-appeal of subsequent AY 2020-21 and pursuant to CIT(A)’s order, the AO has also passed “Give Effect Order” dated 28.07.2025 granting deduction u/s 80P to assessee, a copy of AO’s order is placed in case file. Ld. AR narrated that the activity of assessee in AY 2018-19 with which we are concerned and in subsequent AY 2020-21 remained same without any change. Ld. AR also submitted that the assessee is a society of employees and its income is not taxable in view of deduction u/s 80P. Therefore, the delay in filing present appeal must be condoned otherwise the assessee shall be saddled with huge tax liability against the provisions of Act. Relying upon decision of Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387, Ld. AR prayed to condone delay and also decide present appeal in the light of order for subsequent AY 2020-21.
Per contra, Ld. DR for revenue strongly opposed assessee’s prayer. He submitted that the assessee is able to explain only part delay during the period 12.08.2024 to 12.10.2024 on account of health issue of Secretary but not the full length of delay. He submitted that the assessee has failed to explain ‘sufficient cause’ for inordinate delay of 331 days. Further, he submitted that the assessee neither participated in assessment-proceeding nor in first-appeal, therefore both of the lower authorities have passed ex- parte orders. Therefore, in such circumstance, the assessee does not deserve
Page 5 of 8 any passionate consideration. Ld. DR also filed a bunch of various case-laws wherein the appellate forums have rejected request for condonation of delay.
So far as the merit of case is concerned, Ld. DR submitted that the section 80P has several clauses/sub-clauses for giving deduction to different types of activities/incomes and in present case, the assessee has not filed the details/documents of activities/incomes to the lower authorities or even to the ITAT. Therefore, it is not possible to give deduction to assessee even if the same had been allowed in subsequent AY 2020-21. With this submission, Ld. DR requested that the assessee’s request for condonation must be rejected and so also the present appeal must be dismissed.
We have considered rival submissions of both sides and perused the case record. After a careful consideration, we find that the assessee has filed present appeal on 27.09.2025 against impugned order dated 08.08.2024 passed by Ld. CIT(A), hence there is a delay of 331 days as calculated by registry and accepted by assessee. However, the Secretary of assessee has filed an affidavit stating that he was suffering from serious health issue during the period 12.08.2024 to 12.10.2024. The medical prescriptions of doctor are also filed in support of affidavit. Further, it is also stated that even after recovery, there were genuine and unavoidable circumstances beyond the control of society which contributed to continued delay. It is also a case that the assessee is a society of employees and unlike commercial entity it does not have sufficient or efficient manpower to deal statutory compliances. Therefore, the explanation advanced by assessee deserves a Page 6 of 8 liberal consideration. At the same time, we also find that the assessee has a meritorious case because the controversy relates to the allowability of deduction u/s 80P and this controversy has already been settled in favour of assessee in subsequent AY 2020-21 by order of first-appeal passed by CIT(A) and effect having been given by AO. The Hon’ble Supreme Court has observed in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. Therefore, taking into account the guidance given by Hon’ble Supreme Court, we take a liberal view and condone delay subject to payment of cost by assessee as mentioned in subsequent para of this order.
On merit of case, while we agree with the claim of assessee that the identical deduction u/s 80P has already been allowed in subsequent AY 2020-21, we also find a sufficient merit in Ld. DR’s submission that there is a necessity to verify the types of activities/incomes earned by assessee during current year from the touchstone of various clauses/sub-clauses of section 80P. Therefore, in this situation, we find it most appropriate to remand this matter back to the file of AO for a fresh adjudication, subject to payment of cost by assessee as mentioned in subsequent para of this order. Needless to mention that the AO shall give necessary opportunities to assessee and pass a judicious order without being influenced by his earlier order. The assessee shall is also directed to represent its case adequately
Page 7 of 8 before AO failing which the AO shall be at liberty to pass order in accordance with law. Ordered accordingly.
In order to offset the revenue’s resources consumed in dealing assessee’s case, we direct the assessee to pay a cost of Rs. 10,000/- to Income-tax Department through appropriate challan and submit proof to AO during the proceeding of fresh adjudication.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 11/11/2025