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Facts
Kangazha Service Co-op. Bank Ltd., a primary agricultural credit co-operative society, filed a nil return for AY 2018-19 claiming Section 80P deduction, which the AO denied, assessing income at Rs. 1.49 crore. The CIT(A) dismissed the assessee's appeal for non-prosecution without deciding on merits. The assessee subsequently filed an appeal before the ITAT with a 540-day delay, for which condonation was sought.
Held
The ITAT condoned the 540-day delay, finding sufficient reasonable cause. It held that the CIT(A) erred by dismissing the appeal in limine for non-prosecution, emphasizing that the CIT(A) is duty-bound to decide appeals on merits, even ex-parte, as per Section 250(6). Consequently, the matter was remanded to the CIT(A) for a de novo decision on merits after providing a fresh opportunity of hearing to the assessee.
Key Issues
Whether the delay in filing the appeal before the ITAT should be condoned, and whether the CIT(A) was justified in dismissing the appeal for non-prosecution without addressing its merits, given the legal obligation to decide on merits even in ex-parte proceedings.
Sections Cited
80P, 143(3), 143(3A), 143(3B), 154, 250(6)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
Assessment Year: 2018-19 Kangazha Service Co-op. Bank Ltd. .......... Appellant Kangazha P.O., Kottayam 686541 [PAN: AADAT7325H] vs. The Income Tax Officer, WD-2, Thiruvalla .......... Respondent Appellant by: ------- None ------- Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 13.06.2025 Date of Pronouncement: 15.07.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 03.10.2023 for Assessment Year (AY) 2018-19.
Brief facts of the case are that the appellant is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. It is classified as a primary agricultural credit co-operative society. It is engaged in the business of accepting deposits from members and providing credit facilities to members. The return of Kangazha Service Co-op. Bank Ltd. income for AY 2018-19 was filed on 26.09.2018 declaring Nil income after claiming deduction u/s. 80P of the Income Tax Act, 1961 (the Act) of Rs. 1,49,79,478/-. Against the said return of income, the assessment was completed by the ITO, Ward-2, Thiruvalla (hereinafter called "the AO") vide order dated 23.03.2021 passed u/s. 143(3) r.w.s. 143(3A) & 143(3B) of the Act at a total income of Rs. 1,49,70,478/-. While doing so, the AO denied deduction u/s. 80P by holding that the appellant society is engaged in activities other than the activities for which it was formed.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal for non persecution without entering into the merits.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
At the outset, we find that the present appeal is filed with a delay of 540 days. The appellant society had filed a petition seeking condonation of delay stating that the order passed by the CIT(A) was unnoticed as it was not served through physical mode and it came to know about the order only on 29.01.2024 when the Secretary of the appellant society received SMS alert regarding outstanding demand from the Department. Immediately thereafter appellant filed rectification petition u/s. 154 of the Act before the CIT(A) on 29.01.2024, which is pending disposal. Thus he submits Kangazha Service Co-op. Bank Ltd. that the delay had occurred on account of pursuing alternative remedy. Thus he submitted that the delay in filing the appeal may be condoned. Having regard to the averments made in the affidavit seeking condonation of delay, in the absence of any evidence contrary, we are of the considered opinion that the appellant society is prevented by sufficient reasonable cause in filing the appeal within the prescribed limit. Accordingly, we condone the delay and admit the appeal for adjudication.
When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR.
We find that the learned CIT(A) dismissed the appeal in limine for non prosecution. As contemplated u/s. 250(6) of the Act the CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled position of law that the CIT(A), even while disposing of the appeal exparte, is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. Therefore, in the light of the above legal position we are of the considered view that the matter requires to be remanded to the file of the CIT(A) with the direction to dispose of the appeal de novo on merits after affording reasonable opportunity of hearing to the assessee.
Order pronounced in the open court on 15th July, 2025.