Loading judgment…
Facts
The assessee, a Primary Agricultural Credit Society (PACS), challenged the disallowance of a deduction claimed under section 80P(2)(d) and contingencies expenses by the Assessing Officer, which was confirmed by the CIT(A). The assessee contended that the deduction was wrongly reported due to a clerical error and should have been claimed under section 80P(2)(a)(i), while the disallowances were primarily due to the non-furnishing of supporting documents and the CIT(A)'s refusal to admit additional evidence under Rule 46A.
Held
The Tribunal noted that neither the AO nor the CIT(A) examined the assessee's eligibility for deduction on merits, and disallowances were made solely due to non-submission of documents without proper examination. The matter was remanded back to the AO for de-novo adjudication, granting the assessee a fresh opportunity to submit relevant documents and allowing the AO to verify the claims, including the correct section of deduction and eligibility under 80P(2)(a)(i), on merits.
Key Issues
Key legal issues included the disallowance of deduction u/s 80P(2)(d) and contingencies expenses due to non-submission of documents, the assessee's claim of a technical error in section selection (80P(2)(d) instead of 80P(2)(a)(i)), and the CIT(A)'s refusal to admit additional evidence under Rule 46A.
Sections Cited
80P(2)(d), 80P(2)(a)(i), Rule 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN
Before: HON’BLE SHRI INTURI RAMA RAO & SHRI HON’BLE MANU KUMAR GIRI
Year: 2020-21 The Oorakam Service Cooperative The Income Tax Officer, Bank Limited Vs. Ward-2(1), Oorakam P.O., Thrissur. Malappuram 676519 Kerala [PAN: AADAT8574A] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri Raghunathan, Advocate ��यथ� क� ओर से /Respondent by : Smt. Leena Lal, Snr A.R सुनवाई क� तार�ख/Date of Hearing : 06.11.2025 घोषणा क� तार�ख /Date of Pronouncement : 28.11.2025 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member):
The captioned appeal filed by the assessee is directed against order of the Ld. Commissioner of Income Tax (Appeal)/NFAC, Delhi [‘CIT(A)’ in short] dated 18.08.2025 for Assessment Year 2020-21.
:- 2 -:
2. The assessee has raised multiple grounds challenging the order of the CIT(A), primarily relating to disallowance of deduction u/s 80P(2)(d) of the Income Tax Act, 1961, rejection of assessee’s contention that the deduction was wrongly reported under section 80P(2)(d) instead of 80P(2)(a)(i) due to a computer/clerical error, disallowance of contingencies expenses amounting to Rs. 28,79,142/- and CIT(A)’s refusal to admit additional evidence under Rule 46A and confirming additions solely on the basis that supporting documents were not produced during assessment.
Facts in Brief are that the assessee is a Primary Agricultural Credit Society (PACS) registered under the Kerala Co-operative Societies Act, 1969. During assessment proceedings, the Assessing Officer (AO) disallowed deduction claimed u/s 80P(2)(d) amounting to Rs.43,69,836/-, contingencies expenses of Rs.28,79,142/- on the ground that the assessee failed to furnish supporting documents.
Before the CIT(A), the assessee contended that the claim under section 80P(2)(d) was a technical error, and the correct claim was under 80P(2)(a)(i), which is available to PACS, however, the :- 3 -: ld.CIT(A) held that no additional evidence was produced as per Rule 46A, and confirmed the AO’s order.
We have carefully considered the rival submissions and examined the records. The assessee is a PACS, and eligibility for deduction u/s 80P(2)(a)(i) depends upon verification of its activities, membership structure, and income head. The AO disallowed the claim solely because the assessee did not produce documents. The CIT(A) also dismissed the claim only because no evidence was admitted under Rule 46A. However, neither the AO nor the CIT(A) has examined the assessee’s eligibility on merits. Further, the assessee’s plea regarding wrong section being selected by the computer system requires verification of facts and supporting documents. In the interest of justice, the matter requires fresh examination.
The AO also made disallowance of Contingencies Expense solely for non-submission of documents. The ld.CIT(A) confirmed the addition again for the same reason. Since the assessee claims
:- 4 -: that the documents are available and can be produced, this issue also requires fresh verification.
We find that both disallowances were made without proper examination of evidence. The assessee deserves one more opportunity to present the required documents, and the AO must verify the claim on merits.
In view of the above, and without expressing any opinion on the merits of the claims, we deem it appropriate to set aside the issues to the file of the Assessing Officer and the matter is remanded to the Assessing Officer for de-novo adjudication.
Needless to say, the AO shall provide adequate opportunity to the assessee to file all relevant documents, including those related to its PACS status, income details, and correct section of deduction and examine the assessee’s claim of deduction under 80P(2)(a)(i) and its eligibility on merits, irrespective of the earlier technical error. The AO also will re-examine the disallowance of contingencies expenses after considering the evidence to be filed by the assessee and pass a speaking order in accordance with law.
:- 5 -:
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 28th day of November, 2025 at Cochin.