Kangazha Service Co-op. Bank Ltd. Vs ITO (ITAT Cochin)
The Income Tax Appellate Tribunal (ITAT) in Cochin has remanded the tax appeal of Kangazha Service Co-operative Bank Ltd. back to the Commissioner of Income Tax (Appeals), or CIT(A), for a fresh hearing on its merits. The decision was made in response to an appeal by the bank, which had contested the CIT(A)’s earlier dismissal of its case without a full review.
The case pertains to the Assessment Year 2018-19, where the bank, a primary agricultural credit society, had filed a tax return declaring nil income. It claimed a deduction of Rs. 1,49,79,478 under Section 80P of the Income Tax Act, 1961. However, the Income Tax Officer (ITO) denied this deduction, stating that the society was engaged in activities outside its original purpose. Consequently, the ITO assessed the bank’s total income at Rs. 1,49,70,478.
The bank filed an appeal with the CIT(A), but its case was dismissed for “non-persecution,” meaning the bank failed to actively pursue the appeal. The CIT(A) did not review the case on its merits. This led the bank to file a new appeal with the ITAT, albeit with a delay of 540 days.
The bank attributed the significant delay to not receiving the CIT(A)’s order physically. It claimed to have only become aware of the outstanding tax demand on January 29, 2024, after receiving an SMS alert. Following this, the bank filed a rectification petition with the CIT(A) and then the appeal with the ITAT.
