MORE MAULI CO-OP CREDIT SOCIETY LIMITED MUMBAI,MUMBAI vs. WARD 22(2)(1), MUMBAI
Facts
The assessee, a cooperative credit society, challenged best judgment assessment orders passed under section 144 which disallowed deduction under section 80P(2)(a)(i) for interest earned from co-operative banks. The CIT(A) dismissed the assessee's appeals due to an inordinate delay of 1355 days in filing, without considering the merits of the case. The assessee attributed the delay to its previous tax consultant's failure to inform and advise.
Held
The Tribunal condoned the delay of 1355 days, holding that parties should not suffer due to the negligence of their counsel and that the issue on merits was likely in the assessee's favor. It remanded the matter back to the Assessing Officer for a fresh decision on merits, directing strict compliance from the assessee and imposing a cost of Rs. 10,000 per appeal to be deposited in the Prime Minister Relief Fund.
Key Issues
1. Whether the inordinate delay of 1355 days in filing appeals before the CIT(A) should be condoned. 2. Whether a cooperative credit society is eligible for deduction under section 80P(2)(a)(i) for interest income earned from investments with co-operative banks. 3. Validity of best judgment assessment passed under section 144.
Sections Cited
250, 1961, 80P(2)(a)(i), 80P(2)(d), 80P(4), 144, 143(1), 143(2), 142(1), 143(3A), 143(3B), 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI VIKRAM SINGH YADAV, AM AND
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI
BEFORE SHRI VIKRAM SINGH YADAV, AM AND MS. KAVITHA RAJAGOPAL, JM ITA Nos.5649, 5650 & 5651/Mum/2025 (Assessment Years: 2018-19, 2020-21 & 2020-21)
M/s. More Mauli Co-op Credit Income Tax Officer, Society Limited, Ward 22(2)(1), 7/12, Khimji Nagji Chawl, Mumbai Vs. Senapati Bapat Marg, Lower Parel, Mumbai – 400 013 PAN:AAAAM7752L (Appellant) : (Respondent)
: Shri Viraj Mehta, AR Assessee by Respondent by : Shri Annavaram Kosuri, Sr. AR
Date of Hearing : 29.01.2026 Date of Pronouncement : 30.01.2026
O R D E R Per Kavitha Rajagopal, JM:
The captioned appeals are filed by the assessee, challenging the order of the Learned
Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’ for short], National Faceless appeal
Centre (“NFAC” for short) passed u/s. 250 of the Income Tax Act, 1961 (‘the Act'),
pertaining to the Assessment Years (‘A.Y.’ for short) 2018-19, 2020-21 & 2020-21.
As the facts are identical in these appeals, we hereby pass a consolidated order by taking
the facts of ITA No.5649/M/2025 as the lead case.
The assessee has raised the following grounds of appeal:
“Ground No. 1: Rejection of Condonation of Delay
ITA Nos.5649, 5650 & 5651/Mum/2025 M/s. More Mauli Co-op Credit Society Limited
a. That the National Faceless Appeal Centre (NFAC) erred in law and on facts in refusing to condone the delay of 1,355 days in filing the appeal by the appellant. The appellant submits that the delay occurred due to reasons beyond its control and deserved consideration. The NFAC, however, rejected the condonation application on the ground that it did not find the facts and circumstances of the delay to be reasonable or convincing, and consequently, did not admit the appeal.
b. The appellant respectfully submits that the NFAC ought to have considered the totality of circumstances and, in the interest of justice, condoned the delay to allow the appeal to be adjudicated on its merits. The rejection of condonation has caused undue prejudice to the appellant, denying a fair opportunity of hearing.
Ground No. 2: Disallowance of Deduction u/s 80P(2)(a) (i) of the IT Act, 1961 for Interest on Investments in Co-operative Banks is bad in law
a. The Appellant, a co-operative credit society, submits that the Assessing Officer has erroneously disallowed the deduction u/s 80P(2)(a) (i) of the Income Tax Act, 1961 for the interest earned on investments made with co-operative banks. The Interest earned from these investments qualifies for a deduction under the mentioned provision as it is derived from investments made in other co-operative societies including Co-operative banks which falls under the definition of "Co- operative societies.
The Entire Income eartied from such activities is eligible for deduction a/s 80P(2)(8)(1) of the Act. Therefore, the order passed by the Id. Assessing Officer raising the demand is bad in lew and should be deleted
Ground No. 3: Co-operative Banks are Co-operative Societies under the Income Tax Act, 1961
a. Co-operative banks are legally recognized as Co-operative Society under the Co operative Societies Act and are governed by co-operative society rules just like other types of co-operative Societies. Therefore, income derived from Investments made in co-operative banks should qualify for the deduction u/s 80P(2)(a)(1) which allows deduction of interest or dividend Income earned from Co-operative Societies. The appellant does not engage in banking activities with the general public therefore, the exclusion under section 80P(4) does not apply to the appellant.
b. The Entire income earned from investments with co-operative banks is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, the order passed by the Id. Assessing Officer raising the demand is bad in law and should be deleted.
ITA Nos.5649, 5650 & 5651/Mum/2025 M/s. More Mauli Co-op Credit Society Limited
c. Refer to Case Law to the ruling in Principal Commissioner of Income-tax 1 v. Ashwinkumar Arban Co Operative Society Ltd. the High Court of Gujarat held that the interest income derived from investments in co-operative societies is eligible for deduction u/s 80P(2)(d).
Ground No. 4: Order passed u/s 144 of the Act is bad in law
a. The order passed by the Learned Assessing Officer (Ld. AO) under section 144 of the Income-tax Act, 1961 is bad in law and liable to be quashed, as the appellant was not afforded a reasonable and adequate opportunity of being heard before completion of the assessment. In the present case, due to circumstances beyond the control of the appellant, such opportunity could not be effectively availed, resulting in an ex parte assessment order. Therefore, the assessment order suffers from serious procedural infirmities and deserves to be set aside.
Ground No. 5: Levying interest under section 234A, 234B and 234C of the Act is bad in law
a. The Learned assessing officer has erred in levying interest under section 234A, 234B and 234C of the Income Tax Act, 1961 and the same needs to be deleted.
Ground No. 6: Right to Amend Grounds of Appeal
a. The Appellant reserves the right to add, amend, or delete any of the above grounds of appeal.”
Brief facts of the case are that the assessee is a cooperative credit society and had
filed its return of income dated 22.09.2018 declaring total income at Rs.Nil after claiming
exemption u/s 80P(2) of the Act amounting to Rs.63,61,338/- and the same was processed
u/s 143(1) of the Act. The assessee’s case was selected for complete scrutiny under CASS
on the issue of “deductions from total income under chapter VIA,
investments/advances/loans”. Notices u/s. 143(2) and 142(1) of the Act were duly issued
and served upon the assessee. The Learned Assessing Officer (“Ld. AO” for short) passed
the assessment order dated 07.04.2021 u/s 144 r.w.s. 143(3A) & 143(3B) of the Act, being
the best judgment assessment for the reason that the assessee has been non-compliant
throughout the assessment proceeding, thereby determining the total income at
ITA Nos.5649, 5650 & 5651/Mum/2025 M/s. More Mauli Co-op Credit Society Limited
Rs.63,61,340/- after making an addition/disallowance on the said amount u/s 80P(2)(a)(i)
of the Act.
Aggrieved, the assessee was in appeal before the first appellate authority, who vide
order dated 11.07.2024 had dismissed the appeal filed by the assessee on the ground that
the assessee has filed the appeal belatedly after the prescribed period of limitation and the
assessee has failed to substantiate that there was ‘sufficient cause’ for the said delay.
Aggrieved, the assessee is in appeal before us, challenging the order of the Ld.
CIT(A) on the abovementioned grounds.
We have heard the rival submissions and perused the materials available on record.
It is observed that the assessee has been non-compliant during the assessment proceeding
basis which the Ld. AO passed the best judgment assessment and the first appellate
authority had dismissed the appeal in limine without getting into the merits of the case on
the ground that there was a delay of 1355 days in filing the appeal before the first appellate
authority and the assessee has failed to explain that there was ‘sufficient cause’ for the said
delay.
Before us, the Learned Authorized Representative (“Ld. AR” for short) for the
assessee contended that the assessee being a co-operative credit society had earned interest
income out of the investments made by it with co-operative banks and had claimed
deduction u/s 80P(2)(a)(i) of the Act. Further, the Ld. AR contended that the assessment
order dated 07.04.2021 was delivered to the assessee on the same date through Income Tax
ITA Nos.5649, 5650 & 5651/Mum/2025 M/s. More Mauli Co-op Credit Society Limited
online portal and as the assessee had engaged a tax consultant who had the access to the
portal failed to inform the same to the assessee. Further, the Ld. AR contended that the
assessee’s erstwhile tax consultant had also not advised the assessee as to the subsequent
course of action and as a result the assessee’s refunds were adjusted for the outstanding
demands. The Ld. AR stated that it was brought to the knowledge of the assessee only
when the entire refund for A.Y. 2024-25 was adjusted against the said demand on
25.11.2024, after which the assessee had replaced another chartered accountant to look into
the tax matters of the assessee. It was only after that the assessee was advised to file an
appeal before the Commissioner of Appeals, by which time the appeal was barred by
limitation by 1355 days. The Ld. AR stated that the assessee had also filed an application
along with an affidavit for condoning the said delay and the Ld. CIT(A) dismissed the same
in limine stating that there is no ‘sufficient cause’ for the delay. The Ld. AR prayed that
the assessee be given one more opportunity to present its case before the lower authorities
for the reason that the issue on the merits is already covered in favour of the assessee by
the decision of the Hon’ble Apex Court, High Courts and the co-ordinate Benches of the
Tribunal.
The Learned Departmental Representative (“Ld. DR” for short), on the other hand,
vehemently opposed to setting aside this issue to the lower authorities for the reason that
the assessee has been non-complaint throughout the assessment proceeding and had also
filed the appeal before the appellate authority with an inordinate delay beyond the period
of limitation. The Ld. DR relied on the order of the lower authorities.
ITA Nos.5649, 5650 & 5651/Mum/2025 M/s. More Mauli Co-op Credit Society Limited
In the above factual matrix of the case, it is observed that the assessee has been non-
compliant and hence the Ld. AO passed best judgment assessment against which the
assessee preferred an appeal before the first appellate authority with a delay of 1355 days,
which was not condoned by the Ld. CIT(A) citing that the assessee did not have ‘sufficient
cause’ for the said delay and further it has been held that the assessee was negligent in not
filing the appeal within the period of limitation. The Ld. DR pointed out the recalcitrant
attitude of the assessee before the Ld. AO as well. Having considered the contentions, we
are conscious of the fact that the assessee has preferred the first appeal with an inordinate
delay, which according to the assessee is not attributable to the assessee who would
anyways be benefited from filing the appeal, as the issue on the merits seems to be covered
in favour of the assessee by the decisions of various Forums. We are also conscious of the
fact that the assessee cannot be punished for the negligent act of the counsels engaged by
it for adjudicating the matter before the lower authorities as there are several decisions of
the higher forums which has held that the parties cannot suffer for the act of the counsels.
By adhering to the principles of natural justice and in the interest of justice dispensation,
we deem it fit to extend the assessee with one more opportunity to present its case before
the Ld. AO by imposing a cost of Rs.10,000/- for each of the appeal, which the assessee
will have to deposit in the Prime Minister Relief Fund within one month from the date of
receipt of this order and furnish the receipt of the same to the Ld. AO. We direct the
assessee to strictly comply with the proceeding before the Ld. AO and the Ld. AO is also
directed to decide the issue on the merits and in accordance with law based on the
ITA Nos.5649, 5650 & 5651/Mum/2025 M/s. More Mauli Co-op Credit Society Limited
submission of the assessee. We have not given our view on any of the issues on the merits
of the case which has to be decided denovo by the Ld. AO.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
The finding given in this appeal i.e. ITA No.5649/M/2025 will apply mutatis
mutandis to ITA No.5650 & 5651/M/2025 as well. Accordingly, all the three appeals filed
by the assessee are hereby allowed for statistical purposes.
Order pronounced in the open court on 30.01.2026
Sd/- Sd/- (VIKRAM SINGH YADAV) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai; Dated: 30.01.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai
