KSEB EMPLOYEES CO OP SOCIETY,KALLARKUTTY vs. ITO,WARD 1 & TPS, THODUPUZHA

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:

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.

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 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.