Section 80PA Deduction Disallowance Remanded for Fresh Adjudication: ITAT Pune

Saroday Farmer Producer Company Ltd. Vs ITO (ITAT Pune)

The assessee filed an appeal before the ITAT Pune against the order of the CIT(A)/NFAC, Delhi passed under Sections 143(3) read with Sections 144B and 250 of the Income Tax Act for Assessment Year 2023-24. The appeal challenged the ex parte order of the CIT(A), which had sustained the addition made by the Assessing Officer.

The assessee is a Farmer Producer Company Limited registered under the Companies Act, 2013 and engaged in production, harvesting, procurement, grading, pooling, handling, marketing, sale and export of agricultural produce of its members, as well as import of goods or services for their benefit. It filed its return of income for AY 2023-24 on 30.09.2023 declaring nil income after claiming deduction of ₹6,23,954 under Section 80PA of the Income Tax Act. The case was selected for scrutiny under CASS, and the Assessing Officer issued notice under Section 142(1) along with a show cause notice. In response, the assessee furnished documents including the certificate of incorporation, memorandum and articles of association, audit report, CC and OD statements, computation of income, profit and loss account, balance sheet with notes and bank statements. However, according to the Assessing Officer, the assessee failed to substantiate its claim for deduction under Section 80PA with supporting evidence. Consequently, the Assessing Officer disallowed the deduction of ₹6,23,954, assessed the total income at ₹6,23,954 and passed the assessment order under Section 143(3) read with Section 144B on 22.03.2025.

Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). The CIT(A) considered the grounds of appeal, the statement of facts and the findings of the Assessing Officer, and issued notices fixing the appeal for hearing. Since there was no compliance by the assessee despite issuance of notices, the CIT(A), based on the material available on record, confirmed the action of the Assessing Officer and dismissed the appeal.

Before the Tribunal, no one appeared on behalf of the assessee, while the Departmental Representative supported the order of the CIT(A). After considering the submissions and examining the material on record, the Tribunal observed that the CIT(A) had passed the ex parte order after recording that adequate opportunities had been provided and notices had been issued, but there was no compliance. The Tribunal noted that the assessee had challenged the disallowance of deduction under Section 80PA and observed that there could be various reasons for the assessee’s non-appearance or non-compliance which could not be overruled.

Considering the facts and circumstances of the case and the principles of natural justice, the Tribunal held that the assessee should be granted one more opportunity to substantiate its claim with evidence and relevant information. Accordingly, it set aside the order of the CIT(A) and remitted the disputed issue to the file of the Assessing Officer for fresh adjudication. The Tribunal directed that the assessee be provided adequate opportunity of hearing and cooperate by furnishing the necessary information for early disposal of the matter. The appeal was allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT PUNE

The assessee has filed the appeal against the order of CIT(A)/NFAC, Delhi passed u/sec 143(3) r.w.s. 144 and 250 of the Income Tax Act for the Assessment Year 2023-24. The assessee has raised the grounds of appeal challenging the ex parte order of the CIT(A) sustaining the addition made by the Assessing Officer.

2. The brief facts of the case are that, the assessee is a farmer producer company limited registered under the Companies Act 2013 carrying on the business of production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of all agricultural produce of the member or import of goods or service for their benefits. The main object of FPC is to ensure better income for the producers through an organization of their own. The assessee has filed iincome tax return for the A.Y. 2023-24 on 30.09.2023 declaring total income of Rs. NIL after claiming deduction of Rs. 6,23,954/-u/sec 80PA of the Act. Subsequently, the case was selected for scrutiny under CASS and the Assessing Officer issued notice u/sec 142(1) of the Act and the show cause notice. In response to notice, the assessee has filed the copy of certificate of incorporation, memorandum of association, articles of association, audit report, CC and OD statement, computation of income, P/L 86 balance sheet with notes, bank statement, etc. but the assessee could not substantiate the issue of claim of deduction of Rs. 6,23,954/- u/sec 80PA of the Act with the evidences and the A.0 has made a disallowance of Rs. 6,23,954/- and assessed a total income of Rs.6,23,954/- and passed the order u/sec143(3) r.w.s.144Bof the Income Tax Act dated 22.03.2025.

3. Aggrieved by the order, the assessee has filed an appeal with the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statements of facts and finding of the AO and has issued notice of hearings and since there was no compliance by the assessee to the notices, therefore, CIT(A) considering information on record has confirmed the action of the AO and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Hon’ble Tribunal.

4. At the time of hearing, none appeared on behalf of the assessee and the Ld.DR supported the order of CIT(A).

5. Heard the Ld.DR submissions and perused the material on record. Prima facie CIT(A) has passed the order considering the facts that there is no compliance in spite of providing adequate opportunity of hearing and notices were issued. Therefore, CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismiss the appeal ex-parte confirming the action of the Assessing Officer. Whereas the CIT(A) has issued notices on various dates referred at Para 4 of the order but there was no response. Whereas the assessee has raised grounds of appeal challenging the disallowance of deduction u/sec 80PA made by the A.0 and there could be various reasons for non- appearance/ non­compliance which cannot be overruled. Therefore, considering the facts, circumstances, submissions and principles of natural justice, shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) and remit the disputed issue to the file of the Assessing Officer to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of appeal. And the grounds of appeal of the assessee are allowed for statistical purposes.

6. In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 02nd July, 2026.