SHREE DEVAL URBAN CREDIT CO-OPERATIVE SOCIETY NIYAMIT,BAGALKOT vs. THE INCOME TAX OFFICER, WARD- 1 & TPS, BAGALKOT

This appeal filed by the assessee is directed against the ex-parte order of CIT(A)-Belgavi, dated 07.03.2019 for Assessment Year 2015-16.

2.1 The assessee, a Co-operative Society providing credit facilities to its members as well as non-members, filed its return of income for Assessment Year 2015-16 on 31.03.2017 declaring NIL income after claiming deduction of Rs.20,41,198/- under section 80P(2)(a)(i) of the Income Tax Act, 1961 (in short ‘the Act’). The case was taken up for scrutiny and the assessment completed under section 143(3) of the Act vide order dated 28.11.2017 wherein the assessee’s income was determined at Rs.19,91,200/- in view of the Assessing Officer (AO) disallowing the assessee’s claim of deduction under section 80P(2)(a)(i) of the Act. On appeal, the CIT(A), Belgavi dismissed the assessee’s appeal ex-parte, in limine, for non- prosecution, following, inter alia, the decision of the ITAT, Delhi Bench in the case of Multiplan India Ltd., 38 ITD 302 (Del-Trib) and the Hon’ble Madhya Pradesh High Court in the case of Estate of Late Tukojirao Holkar Vs. CIT 233 ITR 480 (M.P.).

4. Ground Nos.2 a) & b)

4.1 At the outset, the learned AR for the assessee urged ground Nos.2 a) & b) (supra); wherein the assessee assails the action of the CIT(A) in dismissing the assessee’s appeal ex-parte, in limine, vide the impugned order dated 07.03.2019; without affording the assessee reasonable opportunity of being heard which is in violation of the principles of natural justice. It is contended that the impugned order dated 07.03.2019 is bad in law for the reason that the notice dated 28.02.2019 issued by the CIT(A) posting the appeal for hearing on 06.03.2019 was received by the appellant by email on 18.03.2019; long after the impugned order was passed on 07.03.2019 and it is for this reason that the assessee / learned AR could not attend the hearing fixed for 06.03.2019. It is submitted that on these grounds alone, the ex-parte order of the CIT(A) dated 07.03.2019 for Assessment Year 2015-16 is liable to be set aside as the assessee had reasonable cause for non-appearance for the hearing fixed for 06.03.2019. It is prayed that in the light of the above facts, the impugned order of CIT(A) be set aside and the appeal be restored to his file for consideration and adjudication on merits of the grounds raised before him.

4.2 Per contra, the learned DR for Revenue supported the order of the CIT(A).

4.3.1 I have heard and considered the rival contentions / submissions and carefully perused the material on record. On a perusal of the impugned order of the CIT(A) dated 07.03.2019 for Assessment Year 2015-16, it is evident that the order has been passed, ex-parte, dismissing the assessee’s appeal for non-prosecution, in limine, without either hearing the assessee in the matter or considering and adjudicating the grounds raised on merits. It is also observed from the impugned order that the CIT(A) states that the case on hand was posted for hearing on 25.01.2019, 04.02.2019, 27.02.2019 and 06.03.2019 and since the assessee did not comply, the order was passed ex-parte. From the details filed by the assessee in the course of hearings, it is ascertained that while the assessee did not attend the first three hearings; the notice fixed for hearing on 06.03.2019 was emailed to the assessee only on 18.03.2019, much after the impugned order was passed on 07.03.2019. Copy of which has been placed on record (2 pages). Therefore, in my view, the assessee had sufficient and reasonable cause for non-appearance for the hearing on 06.03.2019, due to impossibility of compliance. It is also unlikely that the assessee would not attend the hearings deliberately or with malafide intentions as it is fastened with tax demand of Rs.9,24,410/-.

4.3.2 In the factual matrix, as discussed above, I am of the considered view that the assessee was prevented by reasonable and sufficient cause from not attending the hearing fixed for 06.03.2019 and further the impugned order has not been adjudicated on merits. Since the ultimate object of assessment / appellate proceedings is to bring to tax the correct income of the assessee, I am of the view that in the interest of substantial justice, the impugned ex-parte order of the CIT(A) dated 07.03.2019 is to be set aside and restore the matter to the file of the CIT(A) for examination, consideration and adjudication on merits. Needless to add, the CIT(A) shall afford the assessee reasonable opportunities of being heard and to file details / submissions required, which shall be duly considered before deciding the issues raised in the grounds of appeal. Consequently, ground Nos.2 a) & b) of assessee’s appeal are allowed.

5. In view of the above finding, setting aside the impugned order of CIT(A) dated 07.03.2019 for Assessment Year 2015-16 for adjudication, the other grounds raised on merits (supra) do not call for adjudication.

Order pronounced in the open court on this 3rd day of July, 2019.