KOTAGIRI COOPERATIVE STORE,NILGIRIS V. ITO, WARD-1, OOTY

ITA 1951/CHNY/2025

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The case involves Kotagiri Cooperative Store, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal was related to the assessment year 2018-19, where the Assessing Officer disallowed the claim of deduction under section 80P(2)(a)(iii) of the Income Tax Act, 1961, leading to a computed total income of \\u20b934.20 lakhs against NIL income declared by the assessee. The CIT(A) upheld this decision, prompting the appeal to the Tribunal. The Tribunal found procedural lapses in the assessment process, including the non-issuance of a mandatory show-cause notice and draft assessment order, and remanded the case for a detailed and reasoned assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773935 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 09-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDHYA RANI KURE
• Assessee Lawyers: N.V. LAKSHMI
• Keywords: Set aside; Business expenditure
• Section: 143(3); 2

Judgement Text

"आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी रȉेश नंदन सहाय, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Ratnesh Nandan Sahay, Accountant Member आयकर अपील सं./I.T.A. No.1951/Chny/2025 िनधाŊरण वषŊ/Assessment Year: 2018-19 Kotagiri Cooperative Store, 1, Kotagiri Post , Kotagiri, The Nilgiris 643 217. [PAN:AAAAK3367P] Vs. The Income Tax Officer, Ward 1, Ooty. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Ms. N.V. Lakshmi, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. Sandhya Rani Kure, JCIT सुनवाई की तारीख/ Date of hearing : 17.09.2025 घोषणा की तारीख /Date of Pronouncement : 26.09.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 12.06.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2018-19. 2. On perusal of the assessment order, we note that the Assessing Officer disallowed the claim of deduction under section 80P(2)(a)(iii) of the Income Tax Act, 1961 [“Act” in short] as not allowable as per the Printed from counselvise.com I.T.A. No.1951/Chny/25 2 provisions of the Income Tax Act vide order dated 02.03.2021 under section 143(3) r.w.s. 143(3A) & 143(3b) of the Act and computed total income of the assessee at ₹.34.20 lakhs against NIL income declared by the assessee. The ld. CIT(A) confirmed the disallowance made by the Assessing Officer and dismissed the appeal of the assessee. 3. Before us, the ld. AR Ms. N.V. Lakshmi, Advocate submits that the ld. CIT(A) merely dismissed the appeal of the assessee on the ground that the assessment was completed on the basis of materials available on record. She vehemently argued that the ld. CIT(A) erroneously confirmed the disallowance claimed under section 80P(2)(a)(iii) of the Act without considering the nature of the assessee’s business activities and statutory position of the assessee as a Co-operative Society running Public Distribution System (PDS) fair price shops. She further argued that the Assessing Officer failed to issue mandatory show-cause notice and draft assessment order as required under CBDT SOP dated 19.11.2020, is in violation of nature justice and prayed to afford an opportunity before the Assessing Officer so that the assessee can substantiate its claim. 4. The ld. DR Ms. Sandhya Rani Kure, JCIT supported the order passed by the ld. CIT(A). Printed from counselvise.com I.T.A. No.1951/Chny/25 3 5. Heard both the parties and perused the material available on record. The assessee has a wholesale Store dealing in PDS and filed its return of income at NIL and claimed deduction under section 80P(2)(a)(iii) of the Act. The return filed by the assessee was selected for limited scrutiny to examine “business expenses”. On perusal of page 6 of the impugned order, we note that the Assessing Officer computed the total income of the assessee at ₹.34.20 lakhs by disallowing the claim of deduction under section 80P(2)(a)(iii) of the Act. On perusal of the assessment order, we note that the Assessing Officer completed the assessment order in just seven lines without discussing anything about the “business expenses” for which, the return filed by the assessee was selected for “Limited Scrutiny”, in fact, the Assessing Officer has not passed speaking order. On perusal of the impugned order, we note that the ld. CIT(A) has not given any findings for non-service of SCN, draft assessment order, etc. Under the above facts and circumstances of the case, we set aside the orders of authorities below and remand the matter to the file of the Assessing Officer for fresh adjudication with a direction to pass speaking order keeping in mind for the purpose for which the case of the assessee has been selected for “Limited Scrutiny” after affording reasonable opportunities of being heard. Thus, the grounds raised by the assessee are allowed for statistical purposes. Printed from counselvise.com I.T.A. No.1951/Chny/25 4 6. Before us, the ld. AR filed petition seeking admission of additional grounds. Since we have remanded the matter to the file of the Assessing Officer for fresh adjudication on the issue for which the ROI was selected for “Limited Scrutiny”, it is open to the assessee to raise its objections before the Assessing Officer. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 26th September, 2025 at Chennai. Sd/- Sd/- (RATNESH NANDAN SAHAY) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 26.09.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. Printed from counselvise.com "