SRI DURGAMBA PRIMARY AGRICULTURAL CO OPERATIVE SOCIETY LTD,VISAKHAPATNAM vs. INCOME TAX OFFICER, WARD-2(5), VISAKHAPATNAM

PER DUVVURU RL REDDY, Judicial Member :

This appeal filed by the assessee against the order of the Ld. CIT(A)-NFAC, Delhi vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1055147581(1), dated 16/08/2023 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 [the Act], dated 21/12/2022 for the AY 2021-22.

2 2. Brief facts of the case are that the assessee is an

Agricultural Cooperative Society filed its return of income for the

AY 2021-22 wherein the assessee claimed deduction of Rs.

40,53,919/- U/s. 80P of the Act. Subsequently the case was

selected for complete scrutiny for the reason ‘first year of claim of

deduction U/s. 80P’. Thereafter, notices U/s. 143(2) and U/s.

142(1) of the Act were issued to the assessee and in reply the

assessee made submissions stating that the assessee-society

carries on the activity of providing credit facilities to its members

and there is no change in the nature of activities of the society

for the last three years. Further, the assessee submitted that the

assessee procures and transfers the paddy grown by its members

to the Andhra Pradesh Civil Supplies Corporation and in turn the

society earns commission from APCSC. The assessee’s sources of

earnings during the year are the interest earned from

investments with District Cooperative Bank, amount received on

sale of paddy of the members and interest on loans given to its

Member Farmers. The assessee also submitted the computation

of income, P & L Account, balance sheet, objectives and bye-laws

of the assessee-society. On perusal of the submissions of the

assessee, the Ld. AO observed that the assessee has received

interest income of Rs. 1,59,217/- from the District Cooperative

3 Bank, Visakhapatnam and has claimed this as deduction U/s.

80P. The Ld. AO further observed that the assessee has taken

into account interest income earned from its business of

providing credit facilities to its members of Rs. 88,14,601/- and

other income of Rs. 3,88,358/- while calculating the deduction

U/s. 80P of the Act however, the assessee did not submit any

documentary evidence in support of the same. Therefore, the Ld.

AO disallowed the assessee’s claim of deduction U/s. 80P of the

Act amounting to Rs. 40,53,919/-. Accordingly, the Ld. AO

completed the assessment U/s. 143(3) r.w.s 144B of the Act and

passed the assessment order on 21/12/2022 wherein the Ld. AO

made a disallowance of Rs. 40,53,919/- claimed by the assessee

U/s. 80P of the Act. Aggrieved by the order of the Ld. AO, the

assessee carried the matter in appeal before the Ld. CIT(A)-NFAC.

On appeal, the Ld. CIT(A)-NFAC, dismissed the appeal of the

assessee ex-parte as the assessee did not make any submissions

nor comply with the notices issued to the assessee during the

course of hearing of the appeal. Aggrieved by the order of the Ld.

CIT(A)-NFAC, the assessee is in appeal before the Tribunal by

raising the following grounds of appeal:

“1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case.

NFAC has passed ex-parte order without providing proper opportunity to

the assessee of being heard following the principles of natural justice.

The Ld. AR further submitted that the Ld. AO during the assessment

proceedings did not consider the submissions of the assessee and

wrongly disallowed the claim of the assessee made U/s. 80P of the Act as

the assessee has given loans only to its Members and not to any Non-

members. It was also submitted that the income earned by the assessee

on deposits with the DCC Bank Ltd, Visakhapatnam constitutes

operational income from business but not the other income. These issues

were not considered by the Ld. Revenue Authorities and dismissed the

appeal of the assessee. It was therefore pleaded that the matter may be

remitted back to the file of the Ld CIT (A)-NFAC in order to provide one

more opportunity to the assessee of being heard.

of the Ld. AR and argued that proper opportunities had been provided to

5 the assessee however, on the given dates of hearing, neither the assessee

nor its Representative appeared before the Ld. CIT (A)-NFAC. It was

further submitted that the Ld. CIT (A)-NFAC had no other option but to

pass ex-parte order based on the materials available on record. Hence, it

was pleaded that the order passed by the Ld. CIT(A)-NFAC does not call

for any interference.

materials on record. On examining the facts of the case, I find that the

Ld. CIT (A)-NFAC had posted the case on more than two occasions.

However, none appeared on behalf of the assessee before the CIT(A)-

NFAC nor filed any submissions on the given dates of hearing.

Therefore, the Ld. CIT (A)-NFAC was left with no other option except to

adjudicate the appeal ex-parte. In this situation, I do not find much

strength in the arguments advanced by the ld. AR. However, considering

the issues involved in the appeal and the prayer of the Ld. AR, in the

interest of justice, strictly following the principles of natural justice, I

hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to

consider the appeal afresh on merits by providing one more opportunity

to the assessee of being heard. At the same breath, I also hereby caution

the assessee to promptly co-operate before the Ld. CIT (A)-NFAC in the

proceedings failing which the Ld. CIT (A)-NFAC shall be at liberty to pass

6 appropriate order in accordance with law and merits based on the materials on the record. It is ordered accordingly.

Pronounced in the open Court on 29th November, 2023 Sd/- (दु�वू� आर.एल रे�डी) (DUVVURU RL REDDY) �या�यकसद�य/JUDICIAL MEMBER Dated : 29/11/2023 OKK - SPS आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- 1. �नधा�रती/ The Assessee– Sri Durgamba Primary Agricultural Cooperative Society Limited, D.No. 7-143, Anakapalli Road, Sabbavaram Mandalam, Visakhapatnam, Andhra Pradesh – 531035. 2. राज�व/The Revenue –Income Tax Officer, Ward-2(5), O/o. ITO, Infinity Tower, Shankaramatham Road, Santhipuram, Visakhapatnam, Andhra Pradesh – 530016. 3. The Principal Commissioner of Income Tax, 4.आयकर आयु�त (अपील)/ The Commissioner of Income Tax (Appeals), 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �वशाखापटणम/ DR, ITAT, Visakhapatnam 6.गाड� फ़ाईल / Guard file

आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam