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Facts
The assessee, a co-operative society, claimed nil income for AY 2018-19 under Section 80P, which the AO denied due to late filing. The AO also made additions for substantial loans/advances and other claims. The CIT(A) upheld the 80P disallowance but deleted the other additions, finding the AO's reasons insufficient.
Held
The Tribunal held that the CIT(A) violated Rule 46A of the I.T. Rules and principles of natural justice by accepting additional evidence and deleting additions without affording the AO an opportunity to rebut them. Consequently, the matter was remitted back to the CIT(A) for a de novo disposal with a proper opportunity of hearing to the assessee.
Key Issues
Whether the CIT(A) properly deleted additions by accepting additional evidence without providing the AO an opportunity to rebut them, violating Rule 46A of the Income Tax Rules and principles of natural justice.
Sections Cited
80P, 139(1), 80AC, 143(3), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SOUNDARARAJAN K., JM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SOUNDARARAJAN K., JM ITA No. 673/Coch/2024 Assessment Year: 2018-19 The Income Tax Officer .......... Appellant First Floor, Mahima owers, Temple Bypass Road, Thodupuzha, Idukki 685585 [PAN: AACAM0362Q] vs. Marayoor Service Co-op. Bank Ltd. .......... Respondent Munnar-Udumalpet Road, Marayoor Keezhanthoor, Iddukki 685620 Appellant by: Shri Omanakuttan, Sr. D.R. Respondent by: Shri Ramesh Cherian, Advocate Date of Hearing: 17.03.2025 Date of Pronouncement: 14.05.2025
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the Revenue is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 07.06.2024 for Assessment Year (AY) 2018-19.
Brief facts of the case are that the respondent assessee is a co- operative society engaged in the business of accepting deposits from its members and lending to its members. The return of income for
2 ITA No. 673/Coch/2024 Marayoor Service Co-operative Bank Ltd. AY 2018-19 was filed on 22.03.2019 disclosing Nil Income after claiming deduction u/s. 80P of the Income Tax Act, 1961 (the Act). Against the said return of income, the assessment was completed by the Income Tax Officer, Thodupuzha (hereinafter called "the AO") vide order dated 26.04.2021 passed u/s. 143(3) r.w.s. 144B of the Act at a total income of Rs. 30,84,29,770/-. While doing so, the AO had denied deduction u/s. 80P, as the return of income was not filed with the due date prescribed u/s. 139(1) of the Act placing reliance on section 80AC of the Act. The AO also made addition on loans and advances of Rs. 27,86,07,868/- as the assessee had failed to furnish details of the loans and advances with documentary evidences. The AO also disallowed a sum of Rs. 2,03,26,967/- claimed under the head ‘any other amount allowable’ as the assessee failed to furnish details of the claim.
Being aggrieved, an appeal was filed before the CIT(A), who wide the impugned order upheld the disallowance of claim for deduction u/s. 80P following the decision of the Hon'ble Jurisdictional High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham [2023] 459 ITR 730 (Ker). However the CIT(A) deleted the addition made on account of loans and advances of Rs. 27,86,07,868/- and also addition of Rs. 2,03,26,967/- made on account of disallowance of claim for deduction made in Schedule-BP by holding that no plausible reasons were offered by the AO while making the above additions.
3 ITA No. 673/Coch/2024 Marayoor Service Co-operative Bank Ltd. 4. Being aggrieved, the Revenue is in appeal before us in the present appeal challenging the correctness of the order passed by the CIT(A).
The learned Sr. DR submits that the AO has passed exparte order as the respondent assessee had failed to respond to the hearing notices. The CIT(A) had accepted the additional evidences and had taken into consideration without affording an opportunity to rebut those evidences to the AO. Thus, he submits that the order passed by the CIT(A) was in gross violation of the provision of Rule 46A of the I.T. Rules, 1962 as well as principles of natural justice. Thus, he submits that the matter may be remanded back to the file of the CIT(A).
On the other hand, the learned counsel for the assessee submits that the appellant could not respond to the hearing notices issued by the AO as the hearing notices were issued by the AO during Covid-19 pandemic period. He further submits that the order passed by the CIT(A) is quite reasoned one and requires no interference by this Tribunal.
We have heard the rival contentions and perused the material available on record. The AO was constrained to pass the exparte order as the respondent society had failed to respond to the hearing notices for whatsoever reasons. However, based on the submissions made during the course of hearing before the CIT(A), the CIT(A) had deleted the addition in respect of loans and advances of Rs. 27,86,07,868/- and claim of deduction of Rs. 2,03,26,967/- Schedule-BP. The CIT(A) granted relief in respect of these two items of additions by merely holding that the AO had not gave any plausible explanation while making the additions, without discussing the factual background of each items of addition and
4 ITA No. 673/Coch/2024 Marayoor Service Co-operative Bank Ltd. also without giving an opportunity of rebutting the additional evidence or explanations filed before the CIT(A) to the AO. Thus, the CIT(A) passed the order in gross violation of provisions of rule 46A of I.T. rules, as well as principles of natural justice. Therefore, in order to meet the ends of justice, the matter is remitted back to the file of the CIT(A) for de novo disposal in accordance with law affording reasonable opportunity of hearing to the respondent assessee.
In the result, appeal filed by the Revenue stands partly allowed.
Order pronounced in the open court on 14th May, 2025.
Sd/- Sd/- (SOUNDARARAJAN K.) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Cochin, Dated: 14th May, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order
Assistant Registrar ITAT, Cochin