THE PERUNDURAI PRIMARY AGRICULTURAL CO OPERATIVE BANK LIMITED,ERODE vs. THE INCOME TAX OFFICER, WARD 2(1) ERODE , ERODE

The issue of claim u/s.80P(2)(a)(i) are in & 2137/Chny/2024 for assessment years 2016-2017 & 2020-21, hence will take the facts and grounds from for assessment year 2016-2017 for adjudication and will decide the issue, which is applied to the other appeal No. 2020-21 also.

Brief facts of the case are that the assessee is a primary agricultural co-operative credit society Ltd., registered under the Tamilnadu Co-operative Societies Act, 1983. The assessee filed its return of income for the A.Y.2016-17 on 13.04.2017 admitting Nil income after claiming deduction u/s. 80P(2)(a)(i) of the Act of Rs.14,42,924/-. The return of income was processed u/s 143(1) of the Act. The case was selected for scrutiny under CASS under "limited scrutiny category' for the reasons that whether deduction under Chapter VIA has been claimed correctly and also with regards to Investments /advances/loans. The ld. Assessing Officer vide notice u/s 142(1) of the Act, dated 12/10/2018 directed the assessee to file details to explain their eligibility to claim the deduction u/s 80P(2)(a)(i) of the Act. The assessee furnished the statement of computation, Profit and loss account, Form No.3CB etc and failed to substantiate its claim to deduction u/s 8OP of the Act. Therefore, the deduction claimed u/s.8OP(2)(a)(i) amounting to Rs. 14,42,924/- was disallowed by the AO and the same was treated as income of the society. Aggrieved, the assessee preferred an appeal before the ld. CIT(A).

The appeal was filed before the ld. CIT(A) with a delay of 1603 days as the assessment order u/s.143(3)of the Act, dated 24.12.2018 was served on the appellant on 24.12.2018 and the appeal was e-filed by the assessee on 14.06.2023 which is 1603 days after the expiry of 30 days period allowed for filing the appeal before the CIT(A) by the Act. The ld. CIT(A) before proceeding to decide merits of the appeal, has adjudicated the condonation of delay of 1603 days. In the condonation of delay assessee submitted that it is a Primary Agricultural Co-operative credit Society and the Society is under the obligation to get the books of accounts audited. The statutory Auditor of the Society is the Tamil Nadu Co-operative Audit Department, Erode headed by Assistant Director of Co-operative Audit. Total number of days delay 1581 on which 716 days delay comes within the ambit of exclusion provided by the Hon’ble Supreme Court in view of Covid Pandemic-19 and the Hon’ble Supreme Court in Misc. Application No.665 of 2021 vide order dated 23.03.2020 had given directions that delay is to be condoned during the period from 15.03.2020 to 14.03.2021 and finally condoned delay upto 28.02.2022 in Misc. ApplicationNo.21 of 2022 vide order dated 10.01. 2022. Hence effectively counted only 865 days delay in filing the appeal. The Appellant submitted that the society was not having any qualified Accountant to look after the proceedings. Only the Secretary was trained to look after the Taxation matters of the Co-operative Societies Act. The Society identified the pending proceedings and immediately filed the Appeal and hence requested to condone the delay in filing the appeal. According to the ld.CIT(A), assessee has merely mentioned that the delay was due to Covid Pandemic-19 and there is no qualified Accountant to look after the proceedings. As per the ld.CIT(A) it is settled position of law that the assessee is duty bound to explain each day’s delay after the last date of limitation. Since there was no proper explanation and reasons of delay have not been demonstrated, the ld. CIT(A) dismissed the appeal in limine but also decided to adjudicate the appeal on merits.

At the time of appellate proceedings, the assessee filed written submissions alongwith certain documents which is essentially an additional evidence not submitted before the ld. Assessing Officer. The assessee while filing form No.35, row no.12, against "whether any documentary evidence other then the evidence produced during the course of proceedings before Income-tax Authority has been filed in terms of Rule 46A" the assessee has clearly mentioned "No'. The ld. CIT(A) was of the view that the additional evidence filed by the assessee is not admissible and hence he has not admitted the same. Further, the ld. CIT(A) was of the opinion that the ld. Assessing Officer has passed well reasoned and speaking order, hence no interfere is required on the claim of deduction u/s. 80P(2)(a) (i) amounting to Rs. 14,42,924/- and he confirmed the action of the ld. Assessing Officer and dismissed the appeal of the assessee on both counts. Aggrieved, assessee preferred an appeal before the Tribunal.

Before us, the ld.Authorized Representative for the assessee reiterated the submissions made before the ld.CIT(A) and prayed to condone the delay and remit the appeal back to the file of the CIT(A) for fresh adjudication. In reply, the ld.Addl. CIT-DR stated that the cause deliberated by the ld.AR does not seem to be supported by any evidence and also it is a make believe story and hence, it should not be accepted.

After hearing rival contentions and going through the fact that the delay is of 1603 days and the assessee claims that it is a Primary Agricultural Co- operative credit Society and the staffs are not well trained in income tax matters hence there was a lapse on the part of the assessee to file the appeal on time. We are of the view that the reasons stated by the assessee seems convincing and in order to advance substantial justice, we are inclined to condone the delay before the CIT(A)-NFAC and the order of the CIT(A)-NFAC is remit back to his file subject to payment of cost of Rs.5000/- which shall be deposited by the assessee within 30 days from the date of receipt of this order to ‘Tamil Nadu State Legal Services Authority’ at Hon’ble High Court of Madras. The proof of the same will be furnished by the Assessee before ld. CIT(A), whose shall be at liberty to proceed with the disposal of the appeal on merits denovo. The assessee is directed to substantiate its case forthwith without any fail, failing which Ld. CIT(A) shall be at liberty to proceed with the disposal of the appeal as per law. The appeal of the assessee is allowed for statistical purpose. This order is equally apply mutatis mutandis to 2020-21 and similar cost of Rs.5,000/- for this year also accordingly to be paid by the assessee within 30 days from the date of receipt of this order to ‘Tamil Nadu State Legal Services Authority’ at Hon’ble High Court of Madras. The proof of the same will be furnished by the Assessee before ld. CIT(A), whose shall be at liberty to proceed with the disposal of the appeal on merits denovo.

Now, we take up for assessment year 2020-2021 for adjudication:- We note that penalty is levied by the AO u/s.270A of the Act and confirmed by CIT(A) on account of disallowance of deduction u/s.80P of the Act. Since, in quantum appeal we have remitted the issue of claim u/s 80P(2)(a)(i) back to the file of the ld.CIT(A) to decide the appeal on merits hence this appeal is also remitted back to the ld.CIT(A) for fresh adjudication on merits after considering the findings in quantum appeal.

In the result, the appeals filed by the assessee in and 2137/Chny/2024 and for assessment years 2016-17 and 2020-2021 are allowed for statistical purpose.