C-2497 PATCHUR PACCS,TIRUPATTUR V. ITO, WARD-2, VELLORE

ITA 2707/CHNY/2025

AI Insights

The case involves C-2497 Patchur Primary - Agricultural Co-op. Credit Society, which appealed against the order of the Learned Commissioner of Income Tax (Appeals) for the Assessment Year 2020-21. The primary issue was the denial of deduction under section 80P of the Income Tax Act, 1961, and the imposition of a best judgment assessment by the Assessing Officer, which was contested due to alleged non-receipt of notices by the assessee. The Tribunal noted the technical glitches claimed by the assessee and referenced the Supreme Court's decision in TIN Box Co. v. CIT to emphasize the need for a fair opportunity to be heard before the Assessing Officer.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833619 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Appeal Filed On: 30-09-2025
• Other Referred Cases: TIN Box Co. v. CIT [2001] 249 ITR 216 (SC), Thotgar Co-operative Society
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASAN
• Assessee Lawyers: G. GOUDHAMAN
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Co-operative Credit Society

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी एस. आर. रघुनाथा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2707/Chny/2025 िनधा\u000eरण वष\u000e/Assessment Year: 2020-21 C-2497 Patchur Primary- Agricultural Co-op. Credit Society, Patchur, Tirupattur-635 854. [PAN: AABAC 1587 G] v. The ITO, Ward-2, Vellore. (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Mr.G. Goudhaman, CA \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Mr.Shiva Srinivasan, CIT सुनवाईक\u001aतारीख/Date of Hearing : 17.12.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 04.02.2026 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 11.08.2025 for the Assessment Year (hereinafter referred to as \"AY”) 2020-21. Printed from counselvise.com ITA No.2707/Chny/2025 (AY 2020-21) C-2497 Patchur Primary – Agricultural Co-op. Credit Society :: 2 :: 2. The main grievance of the assessee is that the Ld.CIT(A) has passed ex parte order qua assessee, because of which, there is violation of natural justice. According to the assessee, due to technical glitches in the system, notices which were supposed to have been issued by the Ld.CIT(A), has gone into the ‘spam’ account of the assessee and therefore, assessee was in the dark about the ongoing appellate proceedings which led to the passing of impugned order dismissing the appeal of the assessee. Moreover, the Ld.AR also brought to our notice that the AO without giving proper opportunity to the assessee has also passed the ex parte order qua assessee and therefore, relying on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC) prayed for one more opportunity before the AO. 3. Per contra, the Ld.DR doesn’t want us to give one more innings to the assessee. 4. We have heard both the parties and perused the material available on record. We note that the assessee is a Co-operative Credit Society and has filed its RoI on 12.02.2021 for AY 2020-21 declaring total income of ₹ ‘NIL’ and claimed deduction u/s.80P of the Income Tax Act, 1961 (hereinafter referred to as \"the Act”). Later, the case of the assessee was selected for limited scrutiny. According to the AO, he has given notice Printed from counselvise.com ITA No.2707/Chny/2025 (AY 2020-21) C-2497 Patchur Primary – Agricultural Co-op. Credit Society :: 3 :: u/s.143(2) of the Act dated 29.06.2021 & notice u/s.142(1) of the Act dated 20.12.2021 and thereafter issued notice twice and also issued show cause notice dated 16.02.2022 ‘as to why’ best judgment assessment should not be passed u/s.144 of the Act. According to the AO, even an additional show cause notice was issued on 26.08.2022, but the assessee didn’t bother to respond, because of which, he had no other alternative but to pass best-judgment assessment by determining the total income at Rs.12,07,65,821/- in place of ‘NIL’ return filed by the assessee. On appeal before the Ld.CIT(A), the assessee raised several grounds but the Ld.CIT(A) took serious note of the fact that the assessee didn’t bother to present its case and was non-compliant to the notices issued to it. So, he deprecated the conduct of assessee and then cited the decision of the Hon’ble Supreme Court judgment in the case of Thotgar Co-operative Society to confirm the action of the AO. Aggrieved, the assessee is before us. 5. Before us, the main plea of the assessee is that the assessee is a Co-operative Credit Society having primary object to prove credit facilities to its members (for assisting in cultivation and related activities including raring of animals, fish farming, bee raring, silk worm, etc.) was eligible for deduction u/s.80P of the Act. The assessee asserts that its major source of income was from the interest received on advances made to its members and also asserted that it is not carrying out any other business Printed from counselvise.com ITA No.2707/Chny/2025 (AY 2020-21) C-2497 Patchur Primary – Agricultural Co-op. Credit Society :: 4 :: activity. The assessee’s claim of deduction u/s.80P of the Act was denied by both the authorities despite it relied on several judgments of the Hon’ble Supreme Court/jurisdictional High Court/ITAT in support of its case that it qualifies for deduction u/s.80P of the Act. In this regard, it is noted that the assessment order has been passed u/s.144 of the Act [best judgment assessment]. In this regard, it is further noted that the AO has issued notices ‘7’ times, but, assessee didn’t respond which led him to pass ex parte order making the addition of ₹12,07,65,821/- in place of ‘NIL’ return filed by the assessee. The main grievance of the assessee is that it didn’t receive any of the notices issued by the AO and the order has been passed ex parte qua assessee. Technical gliches in system cannot be ruled out. Hence assessee needs to be given one more opportunity, as held by the Hon’ble Supreme Court held in the case of TIN Box Co. (supra) that if assessee didn’t get proper opportunity before the AO, then the assessment need to be restored back to the file of the AO for de novo assessment. It would be gainful to refer to the decision of the Hon’ble Supreme Court in the case of TIN Box Co. (supra), wherein the Hon’ble Supreme Court held as under: 1. It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : \"We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard.\" Printed from counselvise.com ITA No.2707/Chny/2025 (AY 2020-21) C-2497 Patchur Primary – Agricultural Co-op. Credit Society :: 5 :: 2. That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 3. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus: \"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee?\" 4. In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the asses-see. 5. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs. 5. Since the assessee didn’t get proper opportunity before the AO, we set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO for de novo assessment and give one more opportunity to the assessee to present its case to claim deduction u/s.80P of the Act. The assessee is directed to file all relevant documents/written submissions before the AO and the AO to frame assessment in accordance to law after hearing the assessee subject to assessee remitting cost of Rs.5,000/- to the State Legal Aid Authority, Hon’ble Madras High Court within three (3) months of receipt of this order; and produce necessary proof of depositing of the same before the Printed from counselvise.com ITA No.2707/Chny/2025 (AY 2020-21) C-2497 Patchur Primary – Agricultural Co-op. Credit Society :: 6 :: AO, and thereafter the AO to frame assessment in accordance to law after hearing the assessee. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 04th day of February, 2026, in Chennai. Sd/- (एस. आर. रघुनाथा) (S.R.RAGHUNATHA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 04th February, 2026. TLN आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF Printed from counselvise.com "