THE EROD COOP PRIMARY AGRICULTURAL RURAL DEVELOPMENT BANK LTD.,ERODE vs. ITO, WARD-1(1), ERODE

This appeal by the assessee is arising out of the order dated 29.07.2025, passed by the Learned Commissioner of Income Tax (Appeal)-2, Surat (in short “ld.CIT(A)”) for the assessment year (A.Y) 2020-21 against the order u/s.143(1) of the Income Tax Act, 1961 (hereinafter the ‘Act’) passed by the CPC, Bengaluru dated 23.12.2021.

Brief facts of the case are that the assessee is a Co-operative Primary Agricultural Rural Development Bank and has filed its return of income for A.Y.2020-21 on 22.10.2020, declaring NIL income after claiming deductions u/s.80P(2)(a)(i) and 80P(2)(d) and refund. While doing so, the assessee reduced release of reserve credited in the P and L Account of Rs.2,42,851/- from the total income. The CPC, Bengaluru, while processing the return of income u/s.143(1), denied the claim of deduction u/s.80P(2)(d) of Rs.7,67,542/- being interest from the investments made in the co-operative bank and added the release of reserve of Rs.2,42,851/- and determined the total income at Rs.10,10,390/- by issuing intimation dated 23.12.2021. As the above constituted mistakes apparent from record, the assessee, instead of filing appeal before the ld.CIT(A) against the above intimation dated 23.12.2021, filed a petition u/s.154 of the Act on 28.11.2022, which was rejected by the CPC and passed an order u/s.154 of the Act dated 10.01.2023 by confirming the addition made u/s.143(1) of the Act.

Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A)-2, Surat on 28.01.2023.

At the outset, we observed that ld.CIT(A) dismissed the appeal filed by the assessee as ‘not maintainable’ due to delay in filing of appeal by 371 days. Before the ld.CIT(A) the assessee explained that the delay upto 29.05.2022, working out to 127 days, was covered by COVID-19 and by the decision of the Hon’ble SC dated 10.01.2022 and the balance of 244 days was due to the fact of filing of petition u/s.154 of the Act, which permitted four years and the hopeful waiting time for the outcome of the petition filed u/s.154 of the Act, as the assessee does not stand to gain by filing the appeal belatedly. Further, the disallowances by the CPC, Bengaluru, are not permissible under the garb of Sec.143(1), the delay be condoned, appeal be admitted and considered in the interest of justice. However, the ld.CIT(A) rejected the claim of the assessee by passing an order dated 29.07.2025. Aggrieved by the impugned order of the Ld.CIT(A), the assessee is in appeal before us.

The ld.AR submitted that the Ld.CIT(A) erred in violating the principles of natural justice by dismissing the appeal on the ground that the delay in filing was not explained sufficiently, without show-causing the assessee to justify the delay, rather seeking to furnish submissions on merits in all the hearing notices issued. Further, the ld.AR submitted the assessee had explained that a substantive period of delay was covered by COVID pandemic. Therefore, ld.AR prayed for one more opportunity to be provided to the assessee to represent his case before the ld.CIT(A) in the interest of natural justice. Further, the ld.AR assured the bench that he will undertake to represent on behalf of the assessee before the ld.CIT(A), in case one more opportunity is provided.

Per contra, the ld.DR submitted that the appeal was to be filed before the ld.CIT(A) by the assessee within 30 days of the service, but the assessee has filed an appeal with delay of more than 350 days. The assessee has been negligent in filing an appeal within the time limit and hence prayed for confirming the order of the ld.CIT(A).

We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the CPC issued an intimation u/s.143(1) by rejecting the deductions claimed u/s.80P of the Act. The assessee was pursuant alternate remedy of rectification u/s.154 of the Act. Since the rectification application was rejected by the CPC, the assessee filed an appeal before the ld.CIT(A) with a delay of 371 days, out of which 127 days were due to pandemic COVID- 19.

Therefore, in the present facts and circumstances of the case and to meet the ends of justice, we deem it fit to provide one more opportunity for the assessee. Therefore, we condone the delay in filing the appeal before ld.CIT(A) as the assessee had a sufficient cause in filing the appeal belatedly and hence we set aside the order of the ld.CIT(A) and remit the matter back to the file to ld.CIT(A) to adjudicate the matter afresh in accordance to law, after providing reasonable opportunity to the assessee. Needless to say, assessee to be diligent and file written submissions and relevant documents if advised so.

In the result, appeal filed by the assessee is allowed for statistical purposes.