2023 (1) TMI 858 - AT - Income Tax

Appeal was completed before the CIT(A) ex-parte - Deduction claimed u/s 80P - interest income earned - return was processed under section 143(1) - HELD THAT - On appeal before the CIT(A) the CIT(A) issued various notices on different dates and before enhancing the income of the assessee he also issued notices to the assessee on 12.04.2022 and 3 other occassions for giving opportunity to the assessee but he assessee did not avail any opportunity before the CIT(A). Accordingly the CIT(A) as per section 80AC of the Act not accepted the deduction claimed by the assessee. Since the appeal was completed before the CIT(A) ex-parte therefore in the interest of the justice and considering the submissions of the AR of the assessee this file is remitted back to the CIT(A) for a fresh consideration after giving 3 effective opportunity to the assessee. The assessee is directed to appear before him with cogent materials for substantiating his case and also directed to avoid unnecessary adjournments for early disposal of the case. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Disallowance of deduction under section 80P of the Income Tax Act.
2. Assessment based on filing the return beyond the due date specified under section 139(1).
3. Enhancement of income by the CIT(A) due to non-filing of return within the due date.
4. Failure to respond to notices and reminders issued by the CIT(A).
5. Request for remitting the case back to the CIT(A) for fresh consideration.

Analysis:
1. The appeal was filed against the order of the National Faceless Appeal Centre (NFAC) regarding the disallowance of deduction under section 80P of the Income Tax Act. The assessee, a Co-operative Society, claimed deduction under section 80P(2)(a)(i) for the entire income earned. However, the Assessing Officer (AO) disallowed a portion of the deduction, treating interest and dividend income separately. The CIT(A) upheld the disallowance citing the amended provision of section 80AC, which requires filing the return within the due date specified under section 139(1).

2. The issue of assessment was raised as the assessee filed the return beyond the due date specified under section 139(1). The AO allowed a partial deduction under section 80P(2)(a)(i) and disallowed the rest. The CIT(A) enhanced the income based on the non-compliance with the due date for filing the return, as per the amended provision of section 80AC. The CIT(A) dismissed the appeal and upheld the enhanced income determined by the AO.

3. The CIT(A) issued multiple notices to the assessee for explanation and response, but the assessee failed to provide any submissions. The CIT(A) proceeded ex-parte and enhanced the income based on the non-filing of the return within the due date specified under section 139(1). The CIT(A) relied on the clear language of section 80AC, effective from AY 2018-19, to disallow the deduction claimed under section 80P.

4. The failure of the appellant to respond to the notices and reminders issued by the CIT(A) led to the ex-parte decision enhancing the income. The appellant was given ample opportunities to explain the reasons for the disallowed deduction, but no responses were received. The CIT(A) based the decision on the material available on record due to the appellant's non-compliance.

5. The Tribunal observed the delay in filing the appeal and condoned it after reviewing the reasons provided. The Tribunal remitted the case back to the CIT(A) for fresh consideration, directing the assessee to appear with necessary materials and avoid unnecessary adjournments for an early resolution. The appeal was allowed for statistical purposes, emphasizing the importance of compliance with due dates and procedural requirements.

This detailed analysis highlights the key issues raised in the judgment, including the disallowance of deduction, assessment based on filing dates, non-compliance with notices, and the decision to remit the case back for fresh consideration.