Loading judgment…
Facts
The assessee, a cooperative society, filed its return claiming deduction u/s 80P. The AO passed an ex-parte assessment order disallowing the deduction due to non-compliance. The PCIT initiated revision proceedings u/s 263, holding the assessment order erroneous and prejudicial to revenue for lack of proper inquiry.
Held
The Tribunal found that the appeal was filed beyond the limitation period and the grounds for condonation of delay were not convincing. The assessee's claim of health issues affecting the delay was contradicted by the timeline.
Key Issues
Whether the appeal is to be dismissed on grounds of limitation due to insufficient reasons for condonation of delay, and whether the PCIT rightly invoked revisionary jurisdiction.
Sections Cited
263, 144, 144B, 80P, 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 revision-order dated 09.03.2024 passed by learned PCIT, Indore-1 [“PCIT”] u/s 263 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 “1. That the learned PCIT, Indore-1 grossly erred in law and on facts in assuming revisionary jurisdiction u/s 263 of the Act, without satisfying the mandatory twin conditions that the assessment order was (i) erroneous and (ii) prejudicial to the interest of the Revenue.
2. That the order passed u/s 263 is illegal, arbitrary, unjustified, and deserves to be quashed as the AO had completed the assessment u/s 144 r.w.s. 144B after due consideration of the records and material available, and merely because the PCIT holds a different view does not empower revision u/s 263.
3. That the learned PCIT failed to appreciate that the appellant is a co- operative society entitled to deduction u/s 80P of the Income Tax Act, 1961, and even otherwise, the disallowance of provisions of 8,50,000/- has no revenue effect in view of the full deduction u/s 80P, and hence the order cannot be said to be prejudicial to the interest of the Revenue.
4. That the learned PCIT erred in ignoring the binding judicial precedents.”
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 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) Subsequently, the Ld. PCIT examined the record of assessment- proceeding and viewed that the assessment-order passed by AO was erroneous in so far it was prejudicial to the interest of revenue which attracted revisionary-jurisdiction u/s 263. Accordingly, the PCIT issued show-cause notice dated 22.01.2024 identifying following issue for conducting revision:
Page 3 of 8 “4 On perusal of case records, it is observed that the assessee had debited a total of Rs. 8,50,000/- in P&L a/c under the head of provisions, details of which are as under: Sr. No. Particulars Amount (Rs.) 1 Provision for Income Tax 4,00,000/- 2 Provisions for Uphaar Protsahan Rashi 3,00,000/- 3 Provision for Employee Gratuity 50,000/- 4 Provisions for Audit Fees 50,000/- 5 Provisions for Karamchari Kalyaan Kosh 50,000/- However, the aforesaid amounts totalling to Rs. 8,50,000/- were not an allowable/admissible expenditure because these are merely a provision, not an incurred expenditure and was debited only provisionally, not on the basis of actual one. Hence, the said amount of Rs. 8,50,000/- debited under the head of provisions, liable to added to the total income of the assessee for AY 2018-19.
5. During the course of assessment proceedings, you have neither furnished any details nor explained the issues involved with relevant documentary evidence with regard to issues narrated above. It appears that submission and details available on records was not enough to verify the reasons for Selection of scrutiny under CASS. The Assessing Officer has not at all verified these issues and relevant facts involved therein while completing the assessment without any application of mind, without conducting proper inquiries and due verification. As such, the assessment is erroneous in the sense that it is prejudicial to the interest of revenue. You are therefore, required to show cause why provisions of section 263 be not invoked in your case for the reasons mentioned above, as the order of NFAC dated 07/08/2021 for A.Y 2018-19 is erroneous in so far as it is prejudicial to the interest of revenue.” (iii) During revision proceeding, initially the assessee did not respond but when the Ld. PCIT issued notice granting “Final & Last Opportunity”,
the assessee made submission which is re-produced in Para 5 of revision-order. However, Ld. PCIT rejected assessee’s submission and passed revision-order dated 09.03.2024 u/s 263; the concluding para of PCIT’s order is re-produced below:
“13. Therefore, in view of the above discussion, I am of the considered opinion that the assessment order dated 07/08/2021 for A.Y. 2018-19 is erroneous in so far as it is also prejudicial to the interest of revenue on account of passing of the assessment order without making required inquiries and Page 4 of 8 verification, which should have been made. Accordingly, I am satisfied that provisions of section 263 of Income Tax Act 1961 are required to be invoked. Therefore, the assessment for A.Y. 2018-19 framed on 07/08/2021 is hereby set-aside to the file of AO to re-examine the issue and to make de-novo assessment, indicated in the preceding discussion, u/s 263 and passing an order as per the law after making necessary verification, inquiries and investigations. It would be not out of place to mention that the AO shall re- examine only the issue which has been indicated for further investigation in the preceding discussion, after according due opportunities of being heard to the assessee.” (iv) Aggrieved, the assessee has come in present appeal before us.
The registry has informed that the present appeal is filed on 03.10.2025 against the impugned order dated 09.03.2024 after a delay of 490 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 contents of affidavit and the accompanying medical prescriptions of Dr. K.C. Shrimal, M.S. (Ortho), Mandsaur, Ld. AR narrated that the part of the delay covering 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 present appeal. He submitted that the case of assessee is meritorious as well.
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.
Per contra, Ld. DR for revenue strongly opposed assessee’s prayer. He submitted that the present appeal has been filed against impugned order dated 09.03.2024 and the health issue of Secretary started much later from 12.08.2024. Therefore, the very reason of bad health given by assessee is not correct and must fail. Ld. DR went ahead to submit that the assessment-order was passed by AO u/s 144 due to complete failure of assessee in complying with notices u/s 143(2)/142(1). Therefore, when the assessee did not participate in assessment-proceeding, there occurred error against revenue in the assessment-order passed by AO which necessitated the PCIT to take up revisionary action. Hence, the PCIT has rightly invoked revisionary jurisdiction u/s 263. Therefore, the assessee does not have any merit in challenging the revision-order passed by PCIT. With this submission, Ld. DR requested that the assessee’s request for condonation of delay and so also this appeal must be rejected.
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 03.10.2025 against impugned revision-order dated 09.03.2024 passed by PCIT u/s 263. In Form No. 36, the assessee has mentioned/accepted ‘date of service’ of impugned order as ‘12.03.2024’.
Therefore, as per statutory provision, the assessee was required to file present appeal within 60 days which expired on ‘11.05.2024’. The assessee is claiming that its Secretary suffered from serious health issue during the period 12.08.2024 onwards. Thus, the Ld. DR is very right in contending
Page 6 of 8 that the health issue started much later and the reasoning of health issue given by assessee is not correct. The Ld. DR is also right in claiming that the assessment-order was passed by AO u/s 144 due to failure of assessee in complying with notices u/s 143(2)/142(1). Therefore, when the assessee did not participate in assessment-proceeding, there occurred error in assessment-order passed by AO which is against the interest of revenue and which the PCIT has found. Therefore, the PCIT has rightly invoked revisionary jurisdiction u/s 263. Hence, prima facie the case of assessee cannot be said to be meritorious also. Therefore, we are in complete agreement with the submissions made by Ld. DR for revenue. In the result, we reject condonation request of assessee and consequently this appeal filed by assessee is also dismissed. Since we have rejected condonation request itself, we are not required to go into the grounds raised by assessee. The same are left undecided at this stage.
Resultantly, this appeal is dismissed.
Order pronounced in open court on 11/11/2025