INDRAPURA DUDH UTPADAK SAHKARI MANDALI LTD.,MANSA V. THE ITO, WARD-1, GANDHINAGAR

ITA 625/AHD/2025

AI Insights

The case involves Indrapura Dudh Utpadak Sahkari Mandali Ltd., a cooperative milk society, appealing against the order of the CIT(A) which upheld the Assessing Officer's decision. The Assessing Officer had rejected the books of accounts of the assessee, estimated the income at 8% of the turnover, and confirmed an addition of Rs.1,11,38,382. The CIT(A) dismissed the appeal, citing discrepancies in the financial statements and failure to submit a revised profit and loss account. The Tribunal found that the CIT(A) erred in not admitting additional evidence and not seeking a remand report from the Assessing Officer, leading to the decision to set aside the CIT(A)'s order and restore the matter for fresh evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669137 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.P. SRIVASTAVA
• Assessee Lawyers: SAMIR VORA
• Keywords: Set aside; Business income; Opportunity of being heard; Additional evidence; Reasonable cause; Rejection of books of accounts; Principle of natural justice
• Section: 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER I.T.A. No. 625/Ahd/2025 (Assessment Year: 2016-17) Indrapura Dudh Utpadak Sahkari Mandali Ltd., Post : Indrapura, Tal. Mansa, Indrapura-382 205 [PAN : AAAAI 1035 N] Vs. Income Tax Officer, Ward 1, Gandhinagar (Appellant) .. (Respondent) Assessee by : Shri Samir Vora, AR on behalf of Shri S.N. Divatia, AR Revenue by: Shri B.P. Srivastava, Sr DR Date of Hearing 02.06.2025 Date of Pronouncement 25.06.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as \"CIT(A)\" for short) dated 28.01.2025 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2016-17. 2. The grounds of appeal raised by the Assessee are as follows:- “1.1 The order U/s.250 passed on 28-01-2025 for AY 2016-17 by NFAC [CIT(A)], Delhi. (for short CIT(A) upholding the rejection of books of accounts and estimating income at 8% of the turnover and thereby confirming addition of Rs.1,11,38,382/- and disallowing the same u/s 80P(2) is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in not considering fully and properly the submissions made as well as evidence produced before it. Moreover, the ld. CIT(A) ought to have admitted additional evidence under Rule 46A. Thus, there was gross violation of the principles of natural justice. ITA No. 625/Ahd/2025 Indrapura Dudh Utpadak Sahkari Mandli Ltd Vs. ITO Asst. Year : 2016-17 - 2– 3.1 The Id. CIA) has grievously erred in law and or on facts in upholding that (a) there were discrepancies in the books of accounts which were not reconciled. (b) since the revised profit and loss account was not submitted, the deduction u/s 80P was not admissible. (c) estimate of the business income at 8% of the total turnover and thereby confirming the addition at Rs. 1,11,38,382/-. 3.2 That the in the facts and circumstances of the Id. CIT(A), ought not to have upheld (a)there were discrepancies in the books of accounts which were not reconciled (b)since the revised profit and loss account was not submitted, the deduction u/s 80P was not admissible (c) estimate of the business income at 8% of the total turnover and thereby confirming the addition at Rs. 1,11,38,382/-. 3.3 Without prejudice to the above and in the alternative, the CIT(A) ought to have admitted additional evidence as well as allowed the deduction u/s 80P(2)(b).” 3. The brief facts of the case are that the assessee is a Co-Operative Milk Society registered under the Gujarat Co. Op. Societies Act. The assessee is said to have eligible for deduction u/s 80P(2)(b)(1) and 80P(2)(d) of the Act. The assessee-society had not filed its return of income for the year under consideration. The Assessing Officer, on the basis of inside portal under non-filer monitoring system and considering the financial transaction of Rs.68,52,723/-, issued notice u/s 148 of the Act on 31.03.2023. The assessee-society thereafter filed its return of income on 19.04.2023 declaring total income of Rs. Nil, after claiming deduction of Rs.6,94,720/-. The Assessing Officer found certain defects in its submissions, details filled in return of income and in tax audit report and he, therefore, concluded that the book result of the assessee was not correctly arrived at as per provision of Section 145(3) of the Act. The Assessing Officer accordingly estimated the income @ 8% at Rs.1,08,36,147/-, after allowing deduction u/s 80P(2)(c)(ii) of the Act of Rs.50,000/-, and also disallowed interest income of Rs.1,77,235/- under the head income from other sources, along with amount of Rs.1,25,000/- towards claim of gratuity u/s 40A(7) of the Act. The total income of the assessee was thus determined at Rs.1,11,38,382/- vide order dated 26.02.2024. ITA No. 625/Ahd/2025 Indrapura Dudh Utpadak Sahkari Mandli Ltd Vs. ITO Asst. Year : 2016-17 - 3– 4. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee by observing as under:- “7. Adjudication: The assessment in this case was completed by the Assessing Officer by estimating the income on the total sales reported in the profit and loss account. Assessing Officer observed that there were discrepancies in the profit admitted in the tax audit report, profit and loss account and in the computation portion. Further appellant could not furnish the details of party-wise sales during the year and hence the Assessing Officer proceeded to estimate the income bf the appellant and denied the benefit of claim of deduction under Sec. 80P of the Act on the ground that the name of the appellant was not found in the list of Registrar of Societies. Further, Assessing Officer also proceeded to disallow the provision for gratuity based on the tax audit report. Aggrieved by the estimate of income, appellant filed this appeal and raised the grounds of appeal. At the time of appellate proceedings, appellant submitted that due to sudden demise of the accountant, there were discrepancies in the financial statement in admitting the profit. This discrepancy would be corrected and a revised statement would be submitted and this may be treated as an additional evidence under Rule 46A and the same may be forwarded to the Assessing Officer and as per the amendment, the Commissioner of Income tax can set aside the assessment if it was passed under sec.144 of the Act. In this regard, it is seen from the assessment order, appellant has responded to the notices partially and submitted the details in part. It is not a case of total non- appearance. Hence the question of setting aside the assessment does not arise. If the appellant has submitted any additional evidence, remand report would be called for from the Assessing Officer. At the time of appellate proceedings, appellant submitted the details in connection with registration of society. The submission of the appellant was considered. It was observed that as part of the submission, appellant stated that the appellant was registered under Gujarat State Co-operative Act and furnished the details of registration. In view of the above, the appellant is a Co-operative Society which is eligible for deduction under Sec.80P cannot be disputed. But to claim the benefit of deduction, the appellant ought to have submitted the revised statement of profit and loss account as there were discrepancies in furnishing the correct profit. The appellant submitted that it would be given in due course. But till the date of passing this order, the appellant did not choose to furnish the correct picture of profit and the claim of deduction under various sub heads of Sec.80P of the Act. Since the appellant failed to submit the revised statement of financials, and other additional evidences for giving an opportunity under Rule 46A of the Rules, I am constrained to uphold the addition determined at Rs.1,11,38,382/-.” ITA No. 625/Ahd/2025 Indrapura Dudh Utpadak Sahkari Mandli Ltd Vs. ITO Asst. Year : 2016-17 - 4– 5. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. 6. We have heard the rival contentions and perused the material available on record. It is evident from the record that the assessee had a reasonable cause for not producing the relevant documents during the assessment stage, including the unfortunate death of the accountant. Furthermore, the assessee did attempt to submit the necessary documents before the CIT(A), which go to the root of the matter, particularly regarding the eligibility for deduction u/s 80P of the Act. The Ld. CIT(A), however, has declined to admit the same without seeking a remand report from the Assessing Officer. Therefore, in our considered view, the Ld. CIT(A) should have admitted the additional evidence and adjudicated the matter afresh after obtaining the comments of the Assessing Officer, especially when such evidence was crucial for determining the correct taxable income and assessing eligibility u/s 80P of the Act. In view of the above, we hereby set aside the impugned order of the Ld. CIT(A) and restore the matter to his file for adjudication of the issue de novo, after duly considering the additional evidences submitted by the assessee. The Ld. CIT(A) shall call for a remand report from the Assessing Officer if necessary and shall pass a speaking order after granting adequate opportunity of being heard to the assessee. 7. In the result, the appeal of the assessee is allowed for statistical purposes. The order is pronounced in the open Court on 25.06.2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 25/06/2025 **btk ITA No. 625/Ahd/2025 Indrapura Dudh Utpadak Sahkari Mandli Ltd Vs. ITO Asst. Year : 2016-17 - 5– आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation ……20.06.2025.. 2. Date on which the typed draft is placed before the Dictating Member ……23.06.2025….. 3. Other Member……23.06.2025…………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ……24.06.2025….………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement …25.06.2025…. 6. Date on which the fair order comes back to the Sr.P.S./P.S ……25.06.2025.………………. 7. Date on which the file goes to the Bench Clerk ……25.06.2025. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "