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Facts
The assessee, Yellayapalem Primary Agricultural Cooperative Society Ltd, filed two appeals (ITA Nos. 1826/Hyd/2025 and 1848/Hyd/2025) for Assessment Years 2018-19 and 2015-16, respectively. Both appeals were dismissed by the CIT(A) for non-prosecution due to the assessee's failure to respond to notices. The assessee contended that their written submissions were filed on the very day the order was passed, thus violating principles of natural justice.
Held
The Tribunal acknowledged the assessee's lack of diligence in responding to notices but also noted that submissions were on record. The Tribunal held that denying adjudication on merits would lead to a miscarriage of justice and, in the interest of natural justice, restored both matters to the CIT(A) for fresh adjudication.
Key Issues
Whether the dismissal of appeals for non-prosecution without adjudication on merits violates principles of natural justice, especially when submissions were filed.
Sections Cited
69A, 147, 144, 144B
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Income Tax Appellate Tribunal, Hyderabad ‘A‘ Bench, Hyderabad
Before: Shri Ravish SoodShri Madhusudan Sawdia
आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA Nos.1826 & 1848/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2018-19 & 2015-16) Yellayapalem Primary Vs. Income Tax Officer Agricultural Cooperative Ward – 1 Society Ltd, Nellore Nellore PAN:AAAAY2068F (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri T. Ramprasad, CA राज� व �ारा/Revenue by:: Shri A.P. Babu, Sr. DR सुनवाई की तारीख/Date of hearing: 21/01/2026 घोषणा की तारीख/Pronouncement: 04/02/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:
These two appeals are filed by Yellayapalem Primary Agricultural Cooperative Society Ltd (“the assessee”), feeling aggrieved by the separate orders passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) both dated 19.08.2025 for the A.Ys. 2018-19 and 2015-16. Since both these appeals are related to the same assessee, these are heard
Page 1 of 8 together and one consolidated order is being passed for the sake of brevity.
: 2. The assessee has raised the following grounds of appeal: “
1. The order passed by NFAC is bad in law and on facts.
2. The Impugned addition U/s 69A without considering the information/documents submitted by the appellant is bad in law and on facts.
3. The NFAC failed to appreciate that the appellant is a Primary Agricultural Co-operative Society engaged in providing credit facilities to its members and that the deposits in bank accounts represent funds of members and business receipts of the society, not unexplained money.
4. The appellant craves leave to add, amend, modify or withdraw any grounds of appeal at the time of hearing.”
3. The brief facts of the case are that the assessee had filed an appeal before the Ld. CIT(A) for Assessment Year 2018– 19 against the assessment order passed by the Learned Assessing Officer (“Ld. AO”) under section 147 read with sections 144 and 144B of the Income-tax Act, 1961 (“the Act”) dated 12.02.2024. The Ld. CIT(A) dismissed the appeal for non- prosecution, observing that the assessee had failed to respond to the notices issued during appellate proceedings.
Aggrieved with the order of the Ld. CIT (A), the assessee is in appeal before this Tribunal. The Learned Authorized Representative (“Ld. AR”) submitted that although
Page 2 of 8 the assessee could not respond to the earlier notices issued by the Ld. CIT(A) within time, the assessee did file a written submission on 19.08.2025, which was the very date on which the Ld. CIT(A) passed the impugned order. It was contended that the appellate order has thus been passed without considering the submissions of the assessee, which has resulted in violation of principles of natural justice. It was therefore pleaded that, in the interest of justice, one more opportunity may be granted and the matter may be restored to the file of the Ld. CIT(A) for adjudication on merits.
Per contra, the Learned Departmental Representative (“Ld. DR”) opposed the plea and submitted that the assessee had been non-compliant not only before the Ld. AO but also before the Ld. CIT(A). It was submitted that only one reply was filed by the assessee, and that too on the very date of passing the appellate order. According to the Ld. DR, the assessee had failed to utilize the opportunities already granted and, therefore, does not deserve further indulgence.
We have considered the rival submissions and perused the material available on record. It is evident that the appeal before the Ld. CIT(A) has been dismissed for non- prosecution, without adjudication on merits. We also find that the assessee had filed written submissions before the Ld. CIT(A) on 19.08.2025, which could not be considered as the order was passed on the same day. In our considered view, denial of Page 3 of 8 adjudication on merits, especially when submissions were available on record, would result in miscarriage of justice.
At the same time, we are conscious of the fact that the conduct of the assessee reflects lack of diligence in responding to the notices in time. Therefore, while granting one more opportunity in the interest of justice, we deem it appropriate to balance the equities by imposing costs. Accordingly, we set aside the impugned order and restore the matter to the file of the Ld. CIT(A) with a direction to pass a fresh order on merits, after duly considering the written submissions filed by the assessee on 19.08.2025 and after providing a proper opportunity of being heard to the assessee in accordance with law. The assessee shall be at liberty to file further evidences and submissions in support of his claim before the Ld. CIT(A). However, this relief is granted subject to payment of costs of Rs.5,000/-, which the assessee shall deposit in the Prime Minister’s National Relief Fund within 15 days from the date of receipt of this order, and shall place proof of such payment before the Ld. CIT(A) during the remand proceedings. The assessee is further directed to cooperate fully in the proceedings before the Ld. CIT(A) and shall not seek unnecessary adjournments.
In the result, the appeal of the assessee in is allowed for statistical purposes.
Page 4 of The assessee has raised the following grounds of appeal”
“ 1. The order passed by NFAC is bad in law and on facts.
The Impugned addition U/s 69A without considering the information/documents submitted by the appellant is bad in law and on facts.
The NFAC failed to appreciate that the appellant is a Primary Agricultural Co-operative Society engaged in providing credit facilities to its members and that the deposits in bank accounts represent funds of members and business receipts of the society, not unexplained money.
4. The appellant craves leave to add, amend, modify or withdraw any grounds of appeal at the time of hearing.”
10. The brief facts of the case are that the assessee had filed an appeal before the Ld. CIT(A) for Assessment Year 2015– 16 against the assessment order passed by the Ld. AO under section 147 read with sections 144 and 144B of the Act dated 10.01.2024. However, due to non-compliance with the notices issued by the Ld. CIT(A), the appeal was dismissed for non- prosecution, without adjudication on merits.
Aggrieved with the order of the Ld. CIT (A), the assessee is in appeal before this Tribunal. The Ld. AR submitted that the assessee is a co-operative society registered in the year 1974 under the Andhra Pradesh Co-operative Societies Act, 1964, formed exclusively for the welfare of farmers. The society carries on activities such as selling
Page 5 of 8 fertilizers to its members, providing loans to members, and collection of repayments from members. It was submitted by the Ld. AR that during the year under consideration, the Ld. AO noticed total credits of Rs.90,07,073/- in the bank account of the assessee. Since no details were furnished during the assessment proceedings, the Ld. AO treated the entire bank credits as unexplained under section 69A of the Act and added the same to the income of the assessee. The Ld. AR submitted that the said deposits represented loan collections and transactions with members of the society and are fully explainable. However, due to unavoidable circumstances, the assessee could not place the relevant material before the lower authorities. It was pleaded that the assessee has a very good case on merits and accordingly one more opportunity be granted and the matter be restored to the file of the Ld. CIT(A) for adjudication on merits.
Per contra, the Ld. DR opposed the prayer, submitting that adequate opportunities had already been provided and the assessee failed to avail the same, and therefore no further indulgence should be shown.
We have considered the rival submissions and perused the material available on record. It is evident that the appeal before the Ld. CIT(A) has been dismissed for non- prosecution, without any adjudication on merits. It is also a settled principle that matters should ordinarily be decided on merits rather than on technical grounds, particularly when
Page 6 of 8 substantive additions have been made. We also note that in the assessee’s own case for Assessment Year 2018–19, in this Tribunal has already restored the matter to the file of the Ld. CIT(A) for fresh adjudication on similar issues. Therefore, on the principle of natural justice as well, we are of the view that the present matter also deserves to be restored to the file of the Ld. CIT(A). At the same time, we are conscious that the assessee was not been diligent in complying with the notices earlier. Therefore, while granting one more opportunity in the interest of justice, we deem it appropriate to impose costs. Accordingly, we set aside the impugned order and restore the matter to the file of the Ld. CIT(A) with a direction to adjudicate the appeal afresh on merits, in accordance with law, after providing due opportunity of being heard to the assessee. The assessee shall be at liberty to file all necessary evidences and submissions in support of its claim before the Ld. CIT(A). This relief is granted subject to payment of costs of Rs.5,000/-, which the assessee shall deposit in the Prime Minister’s National Relief Fund within 15 days from the date of receipt of this order, and shall place proof of such payment before the Ld. CIT(A) during the remand proceedings. The assessee is further directed to cooperate in the proceedings and shall not seek unnecessary adjournments.
To sum up, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in the Open Court on 04th February, 2026.
Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 04th February,2026 Vinodan/sps Copy to: S.No Addresses 1 YELLAYAPALEM PRIMARY AGRICULTURAL CO-OPERATIVE SOCIETY LIMITED, 22-6-11 NEAR ANJANEYA SWAMI TEMPL, YELLAYAPALEM VILLAGEVPOST KODAVALUR MANDAL, NELLORE DIST 524366, Andhra Pradesh, India 2 Income Tax Officer Ward 1 Nellore 3 Pr. CIT - Tirupati 4 DR, ITAT Hyderabad Benches 5 Guard File By Order
VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.02.13 RAO 15:23:23 +05'30'