MADURA COATS EMPLOYEES AND PUBLIC SERVICE CO-OP HOUSING SOCIETY LTD.,TIRUNELVELI V. ITO, WARD-4, TIRUNELVELI

ITA 2345/CHNY/2025

AI Insights

The case involves Maduracoats Employees And Public Service Co-op Housing Society Ltd., which appealed against the order of the CIT(A) confirming the assessment under section 147 r.w.s. 144 of the Income Tax Act, 1961 for the Assessment Year 2016-17. The primary contention was the validity of the reassessment process initiated by the Assessing Officer following a notice under section 148. The assessee argued that their response to the notice was not properly acknowledged and that subsequent directions issued by the JCIT were procedurally flawed. The Tribunal agreed with the assessee, noting the lack of a valid notice under section 143(2) and the improper issuance of directions under section 144A, leading to a breach of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783996 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 25-08-2025
• Other Referred Cases: 147 ITR 599 (Cal), 154 ITR 109 (Raj), 226 Taxman 103 (Madras), ITA No.1198/CHNY/2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E.PAVUNA SUNDARI
• Assessee Lawyers: S.SRIDHAR ERODE
• Keywords: Set aside; Opportunity of being heard; Capital Gains; Principle of natural justice; Procedural lapse
• Section: 147; 148

Judgement Text

"आयकर अपीलȣय अͬधकरण,‘ए’ Ûयायपीठ,चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI Įी मनु क ुमार ͬगǐर,ÛयाǓयक सदèय एवं Įी जगदȣश, लेखा सदèय क े सम¢ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 2345/CHNY/2025 िनधाᭅरण वषᭅ/Assessment Year:2016-17 Maduracoats Employees And Public Service Co-op Housing Society Ltd., Ambasamudram, Agasthiyarpatti S.O, Agasthiyarpatti, Tirunelveli – 627428. Vs. The Income Tax Officer, Ward 4, Tirunelveli PAN: AAIAM 5076B (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri S. Sridhar (Erode), Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Ms. E. Pavuna Sundari, CIT सुनवाई कᳱ तारीख/Date of Hearing : 30.10.2025 घोषणा कᳱ तारीख/Date of Pronouncement : 10.11.2025 आदेश / O R D E R PER MANU KUMAR GIRI, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (in short ‘the CIT(A), NFAC / Delhi dated 15.07.2025, passed under section 250 of the Income Tax Act, 1961 for the Assessment Year (in short ‘AY’) 2016-17, confirming the assessment under section 147 r.w.s. 144 of the Act. 2. Facts in Brief of the case are that the assessee society filed its return of income on 04.12.2018 admitting Nil income, which was duly acknowledged Printed from counselvise.com - 2 - ITA. No:2345/Chny/2025 vide Ack. No. 384571811014122018. Subsequently, a notice under section 148 dated 10.02.2020 was issued by the Assessing Officer (AO). In response, the assessee submitted a letter dated 30.08.2021 requesting that the return already filed be treated as compliance to the notice under section 148. 3. During the course of reassessment, the Joint Commissioner of Income Tax (JCIT) issued directions under section 144A dated 24.09.2021 and subsequently issued modified directions dated 29.09.2021 without cancelling the earlier one. The AO, following such directions, completed the assessment under section 147 r.w.s. 144 on 30.09.2021 determining the total income after making additions, including denial of deduction under section 80P and treating certain receipts as undisclosed income. 4. The assessee preferred an appeal before the ld.CIT(A) on 15.12.2021, which was dismissed by order dated 15.07.2025. Now, assessee is in appeal before us. 5. The ld. counsel for the assessee contended that once a letter dated 30.08.2021 was filed requesting the return already filed be treated as compliance to notice under section 148, the AO ought to have accepted the same as a valid return in terms of law. Reliance was placed on 147 ITR 599 (Cal) and 154 ITR 109 (Raj). He further pleaded that the reassessment order passed without issuing a notice under section 143(2) is void and bad in law, following the ratio of the decisions in 226 Taxman 103 (Madras) and ITA No.1198/CHNY/2023 dated 21.08.2024. The ld. counsel futher contended that the directions issued by JCIT under section 144A on 24.09.2021 having not been cancelled, the subsequent direction dated 29.09.2021 is invalid and beyond jurisdiction. Further, the assessee was not furnished a copy of the letter dated 28.09.2021 referred to in the modified direction. He further pleaded that the JCIT exceeded jurisdiction by giving directions on eligibility under section 80P and inclusion of capital gains, which fall within the exclusive Printed from counselvise.com - 3 - ITA. No:2345/Chny/2025 domain of the Assessing Officer. Even during appellate proceedings, repeated requests were made seeking certified copies and clarifications from the AO, which were not acceded to. Hence, he prayed that the assessment may be set aside with a direction to furnish such documents. 6. Per contra, the ld. Departmental Representative (DR) supported the orders of the lower authorities and submitted that the assessee failed to file a valid return in response to notice under section 148 and did not comply with several notices under section 142(1). It was further contended that the assessment has been made following due procedure and directions of the JCIT under section 144A. 7. We have carefully considered the rival submissions and perused the material available on record. It is evident from the sequence of events that the assessee had filed its original return on 04.12.2018 declaring Nil income. Upon issuance of notice under section 148, the assessee, vide letter dated 30.08.2021, requested to treat the earlier return as compliance. In our considered view, once the assessee intimated the AO that the original return may be treated as the return filed in response to notice under section 148, such compliance is deemed sufficient in terms of judicial precedents (Calcutta High Court and Rajasthan High Court decisions cited supra). The AO’s rejection of the same as invalid return is not sustainable in law. Further, the record indicates that two sets of directions u/s. 144A were issued by the JCIT; one on 24.09.2021 and another on 29.09.2021 styled as modified directions. The second direction, issued without cancelling the earlier one, has led to procedural irregularity. Moreover, the assessee was not provided a copy of the letter dated 28.09.2021 forming the basis of the modified direction. This clearly shows breach of natural justice. The ld.CIT(A) has not properly appreciated the repeated submissions and responses of the assessee and Printed from counselvise.com - 4 - ITA. No:2345/Chny/2025 dismissed the appeal primarily on the ground of non-compliance, ignoring that multiple communications were filed on record. 8. Having regard to the facts and the procedural lapses, particularly non- service of certain documents and non-issuance of valid notice under section 143(2), we are of the view that the assessment framed under section 147 r.w.s. 144 cannot be sustained in its present form. Accordingly, we set aside the impugned order of the ld.CIT(A) as well as the assessment order passed by the Assessing Officer (AO) and restore the matter to the file of the Assessing Officer for fresh assessment (i.e; denovo) after affording adequate opportunity of being heard to the assessee. The Assessing Officer shall also furnish copies of the relevant correspondence and consider the assessee’s submissions in accordance with law. All legal issues if any, are kept open. 9. In the Result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in open Court on the 10th day of November 2025, in Chennai. Sd/- (जगदीश) (JAGADISH) लेखा सदèय/ACCOUNTANT MEMBER Sd/- (मनु क ुमार िगįर) (MANU KUMAR GIRI) ÛयाǓयक सदèय/JUDICIAL MEMBER चेÛनई/Chennai, Ǒदनांक/Dated: 10th November, 2025. RSR, Sr.PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/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 "