Prathamika Krishi Pathina Sahakara Sangha Niyamitha Vs CIT (Appeals) (Karnataka High Court)
Karnataka HC Quashes Income Tax Assessment Because Section 80P(2) Exemption Was Not Properly Considered; Bank Attachment Set Aside Because Cooperative Society Claimed Farmer Deposits Were Exempt; Ex-Parte Income Tax Order Quashed Because Cooperative Society Sought Opportunity to Prove Section 80P(2) Claim; Karnataka HC Sets Aside Tax Demand Because Deposits Were Claimed to Be Farmers’ Funds
The Karnataka High Court examined a challenge to an assessment order and demand notice issued under the Income Tax Act, 1961. The petitioner submitted that it had not participated in the reassessment proceedings initiated under Section 148 because its auditor failed to inform it about the notices and subsequent proceedings. The petitioner contended that the authority wrongly disallowed exemption under Section 80P(2) and treated deposits reflected in bank accounts as unexplained, although those deposits were stated to be deposits made by farmer-members and claimed to be exempt.
The petitioner argued that it possessed material to substantiate its claim for exemption under Section 80P(2) and to respond to the allegations in the show cause notice if an opportunity was granted. The revenue submitted that the petitioner had failed to diligently participate in the proceedings, leading the authority to pass the order based on available records.
