Primary Agriculture Co-Operative Society Vs CIT (Appeals) (Karnataka High Court)
The Karnataka High Court partly allowed the writ petition filed by a Primary Agricultural Co-operative Society challenging the assessment order dated 13.01.2026 for Assessment Year 2018-19, the consequential demand notice, and the bank attachment order. The assessment was completed under Section 144 of the Income Tax Act after the petitioner did not file its return or respond to the notice issued under Section 148A(b), resulting in an order under Section 148A(d) and a notice under Section 148.
The petitioner contended that it functions as an intermediary institution facilitating agricultural credit to its members using funds sourced from the Hassan District Co-operative Central Bank and does not conduct business with non-members. It submitted that its income would be eligible for deduction under Section 80P and that it had not filed its return because its income was only Rs. 4,18,496. Although an appeal had already been filed before the Commissioner of Income Tax (Appeals), the petitioner approached the High Court due to the assessment proceedings and the freezing of its bank account. It also relied on an earlier High Court decision involving similar facts.
The High Court observed that the Revenue did not contend that the earlier decision had been challenged or that the petitioner’s case was distinguishable. It further noted that if the petitioner established that it functioned only as an intermediary institution providing credit to its members, it could claim deduction under Section 80P. The Court also found that the orders under Section 148A(d) and the assessment order had been passed without the petitioner’s participation, while the petitioner had offered a bona fide explanation for its non-participation.
