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Facts
The assessee, a co-operative society, filed a nil return for AY 2020-21. The Assessing Officer disallowed deductions under Section 80P(2)(a)(i) and other heads, and added increased unsecured loans as unexplained cash credit under Section 68, leading to a total assessed income of Rs. 1,97,91,233. The CIT(A) upheld this assessment, noting the assessee's failure to provide submissions or evidence despite being given opportunities.
Held
The Tribunal observed that the assessee was not afforded adequate opportunity of being heard by the lower authorities. Consequently, the entire matter in dispute is remitted back to the Assessing Officer for fresh consideration in accordance with the law. The assessee is directed to cooperate by submitting all necessary documents and information.
Key Issues
Whether the disallowance of deduction under Section 80P(2)(a)(i) and addition of unexplained cash credit under Section 68 were valid, considering the alleged denial of reasonable opportunity of being heard to the assessee by the lower authorities.
Sections Cited
250, 80P(2)(a)(i), 143(2), 142(1), 68, 115BBE, 143(3), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH:COCHIN
Before: SHRI INTURI RAMA RAO & SHRI KESHAV DUBEY
ITA No.593/Coch/2024 KSEB Employees Co Op Society, Kallarkutty, Idukki
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH:COCHIN BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.593/Coch/2024 Assessment Year: 2020-21 KSEB Employees Co-op. Society Kallarkutty Kallarkutty PO Assessment Unit Vs. Idukki 685 562 NFAC Kerala Delhi PAN NO : AACAK8820H APPELLANT RESPONDENT Appellant by : Shri Mathew Joseph, A.R. Respondent by : Smt. Leena Lal, Sr. D.R. Date of Hearing : 20.02.2025 Date of Pronouncement : 02.04.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 30.4.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1064480180(1) for the AY 2020- 21 passed u/s. 250 of the Income Tax Act,1961 (in short “the Act”).
The assessee has raised the following grounds of appeal:
ITA No.593/Coch/2024 KSEB Employees Co Op Society, Kallarkutty, Idukki Page 2 of 5
ITA No.593/Coch/2024 KSEB Employees Co Op Society, Kallarkutty, Idukki Page 3 of 5
Brief facts of the case are that the assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969 lending money to members of the Society as per the byelaws of the society. The assessee filed its return of income for the AY 2020-21 on 17.2.2021 declaring total income of Rs. Nil. Thereafter, the case was selected for scrutiny through CASS and accordingly, notices u/s. 143(2) as well as 142(1) of the Act along with the questionnaires was issued to the assessee. The AO observed that assessee only filed a tiny reply and did not provide required submission / details in support of his claims during the entire proceedings. Further the draft assessment order was served on the assessee with the show cause notice dated 24.08.2022. The assessee replied on 31.08.2022 and after consideration of the same, the AO disallowed the amount of Rs. 46,67,440/- u/s 80P(2)(a)(i) of the Act and also disallowed the amount of Rs. 23,13,641/- under the head any other allowable deduction. Further, the AO has also added increased unsecured loans amounting to Rs. 1,28,10,152/- (Rs. 4,80,63,221 – Rs. 3,52,53,069) as unexplained credit u/s 68 of the Act and brought to tax as per provision of section 115BBE of the Act and assessed u/s. 143(3) / 144B of the Act on a total income of Rs. 1,97,91,233/-
Aggrieved by the assessment completed u/s. 143(3) r.w.s. 144B of the Act dated 20.09.2022, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
5 The ld. CIT(A)/NFAC dismissed the appeal of the assessee on the ground that in spite of providing adequate opportunities to make submission in support of the appeal, the assessee did not reply. Further, the assessee has not submitted any evidence / proof of nature of business or details of deductions or increase in
ITA No.593/Coch/2024 KSEB Employees Co Op Society, Kallarkutty, Idukki Page 4 of 5 unsecured loans. Further, the ld. CIT(A)/NFAC observed that the fact remains that the AO made the addition as the assessee failed to discharge the primary onus of establishing its eligibility to claim the deductions. In absence of such explanation and supporting evidence, the ld. CIT(A)/NFAC believed that the action of the AO cannot be faulted and accordingly, total addition of Rs. 1,97,91,233/- is upheld.
Aggrieved by the order of ld. CIT(A)/NFAC dated 30.04.2024, the assessee has filed the present appeal before this Tribunal.
Before us, the ld. AR of the assessee vehemently submitted that the assessee is a co-operative society and lending money to its members of the Society as per the byelaws of the society. The authorities below without providing a reasonable opportunity of being heard have passed an order which is in gross violation of the principle of natural justice. Further, ld. AR of the assessee submitted that the assessee being a co-operative society engaged in lending money to its members are eligible to claim deduction u/s 80P(2)(a)(i) of the Act as well as any other allowable deduction as claimed. The ld. AR of the assessee also submitted that the authority below erred in adding unsecured loan as cash credit u/s. 68 of the Act without appreciating the fact that these are the deposits made by the members of the society only.
The ld. DR on the other hand supported the order of the authority below.
We have heard the rival submissions and perused the material on record. It is an undisputed fact that the assessee could not represent its case before both the authorities below. Being so, we are of the considered opinion that since the order passed by the
ITA No.593/Coch/2024 KSEB Employees Co Op Society, Kallarkutty, Idukki Page 5 of 5 authorities below are without affording adequate opportunity of being heard to the assessee, we remit the entire issue in dispute to the file of AO for fresh consideration in accordance with the law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to cooperate with the proceeding before the Revenue authorities and shall not take unnecessary adjournments. The assessee is also directed to submit all the necessary documents / records / information as required by the AO for the proper adjudication of the case. We make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 02nd April, 2025
Sd/- Sd/- (Inturi Rama Rao) (Keshav Dubey) Accountant Member Judicial Member Bangalore, Dated: 2nd April, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order
Asst. Registrar, ITAT, Cochin.