Hassan Co Operative Society Limited Vs ITO (ITAT Bangalore)
Bengaluru ITAT: Ex Parte Order Set Aside; Co-operative Society Permitted to Raise Fresh Legal Grounds in Reassessment, Including Section 148A and Section 80P Issues
The Bengaluru Bench of the ITAT held that where the CIT(A) dismissed the appeal ex parte without examining the issues on merits, the assessee should be afforded an opportunity to raise all available legal and factual grounds, including the validity of the reassessment proceedings and the disallowance of deduction under section 80P. The Tribunal observed that, in the interests of justice, the matter required de novo adjudication by the first appellate authority.
In the present case, the assessee, a co-operative society, challenged the reassessment on several legal grounds, including non-issuance of notice under section 148A(b), lack of proper sanction under section 151, validity of reopening beyond three years, and denial of deduction under section 80P(2)(d). The Tribunal found that the legal submissions contained certain contradictions and therefore could not conclusively hold that the reassessment proceedings were invalid. However, since these issues had never been examined by the CIT(A) owing to the ex parte disposal of the appeal, the assessee deserved an opportunity to present all its contentions before the appellate authority.
The Tribunal further observed that if the deduction under section 80P(2)(d) is ultimately denied and the interest income is assessed as “Income from Other Sources”, the assessee would be entitled to deduction of the corresponding cost of funds while computing such income. Accordingly, the Tribunal set aside the order of the CIT(A) and restored the matter for fresh adjudication on all legal and factual issues after granting the assessee a reasonable opportunity of hearing. The appeal was allowed for statistical purposes.
Cases Discussed
- Bijendra Singh vs. ITO (Rajasthan High Court), (2024) 159 taxmann.com 306 (Rajasthan)
- Principal Commissioner of Income-tax, Hubballi vs. Totagars Co-operative Sales Society (Madras HIgh Court), 395 ITR 611
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 28/11/2025 in respect of the A.Y. 2017-18.
