Continuous Non-compliance of Taxpayer: ITAT Remits S.80P matter with final Opportunity [Read Order]

The Visakhapatnam Bench Income Tax Appellate Tribunal (ITAT) remitted the matter to the Commissioner of Income Tax (Appeals) [CIT(A)] to provide one final opportunity to the assessee to substantiate its claim under Section 80P of the Income Tax Act, noting the assessee's continuous non-compliance with hearing notices in both the original and first appellate proceedings.

The Payakaraopeta Women's Mutually Aided Coop Thrift & Credit Society Limited (assessee), a cooperative society registered under the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1965, had filed its return of income for the Assessment Year (AY) 2010-11 declaring NIL income after claiming a full deduction of Rs. 47,94,183 under Section 80P of the Act.

The Assessing Officer (AO) disallowed a part of this deduction, specifically for interest on Fixed Deposits Rs. 22,15,164, Bank Balance Rs. 6,20,450, and loan given to staff Rs. 5,35,735.

The AO passed the order under Section 143(3) of the Act dated 22/11/2012. Aggrieved by the AO’s order, the assessee first appealed to the CIT(A), who upheld the AO's decision and dismissed the appeal ex-parte due to the assessee's failure to appear or file details.

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The assessee appealed to ITAT, which, vide its order dated 09/10/2017, set aside the CIT(A)'s order and remitted the matter back for a fresh decision after affording an opportunity of being heard to the assessee.

However, even in the second round, the assessee failed to comply with the hearing notices issued by the CIT(A) under Section 250 of the Act on various occasions. Consequently, the CIT(A) once again dismissed the appeal ex-parte on 24/03/2025.

Aggrieved by the CIT(A)’s order, the assessee filed a present appeal before ITAT. The assessee’s counsel argued that the CIT(A) had passed the ex-parte order without providing a proper opportunity and pleaded for the matter to be remitted back to the CIT(A) for one final opportunity.

The two-member bench, comprising S. Balakrishnan (Accountant Member) and Sandeep Singh Karhail (Judicial Member), noted the CIT(A) was left with no option but to adjudicate the appeal ex-parte given the assessee’s repeated non-appearance.

The Tribunal directed the CIT(A) to adjudicate the matter within 90 days and at the same time cautioned the assessee to cooperate in the proceedings, failing which the CIT(A) would be at liberty to pass an appropriate order on merits based on the record.

The Tribunal remitted the matter back to the CIT(A) "in the interest of justice" for a final opportunity. The appeal of the assessee was allowed for statistical purposes.

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