PALAS GRAM SEWA SAHKARI SAMITI LIMITED,SIKAR V. ITO, SIKAR

ITA 1017/JPR/2025

AI Insights

The case involves the Palas Gram Sewa Sahakari Samiti Limited, which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2020-21. The primary dispute was the disallowance of a deduction of \\u20b934,49,015 claimed under Section 80P(2)(a)(i) of the Income Tax Act, 1961, which was added back to the income by the AO. The CIT(A) upheld this decision, leading to the present appeal. The Tribunal noted the assessee's failure to substantiate their claim during the lower proceedings but decided to restore the matter to the AO to ensure a fair opportunity for the assessee to present their case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785517 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2020-2021
• Appeal Filed On: 10-07-2025
• Other Referred Cases: Collector, Land & Acquisition vs. Mst. Katiji & Others, Shital Goushala Samiti vs. ITO, Ward-1, Jhunjhunu
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAJENDRA SINGH
• Assessee Lawyers: JITENDRA KUMAR
• Keywords: Condonation of delay; Opportunity of being heard; Reasonable cause; Charitable institution
• Section: 144; 12A

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 1017/JP/2025 fu/kZkj.k o\"kZ@Assessment Year : 2020-21 Palas Gram Sewa Sahkari Samiti Limited, VPO Dhandhan, Teh Fatehpur Shekhawati, Sikar cuke Vs. ITO, Sikar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACAP6596P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Jitendra Kumar, CA jktLo dh vksj ls@ Revenue by : Sh. Gajendra Singh, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 30/09/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 28/10/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM On being aggrieved by the order of the National Faceless Appeal Centre, Delhi [for short CIT(A)] dated 28/05/2024 the above named assessee- appellant preferred the present appeal. The dispute relates to the assessment year 2020-21. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated Printed from counselvise.com 2 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO 24.09.2022 passed under section 144 of the Income Tax Act, [ for short “Act”] by National Faceless Assessment Centre, Delhi [ for short AO]. 2. In this appeal, the assessee has raised following grounds: - 1. That the Ld. Commissioner of Income Tax (Appeals) erred in confirming the assessment order under Section 144 ex parte, without adjudicating on the legal question of whether deduction under Section 80P could exceed the assessee’s Gross Total Income. The CIT(A) failed to examine the contents of the return or consider the legal bar under Section 80A(2), resulting in a mechanically sustained addition of \u000134,49,015/- by disallowing Deduction under section 80P against Gross total income of Rs.21479/- and thereby breaching the principles of reasoned and just appellate adjudication. 2. That on the facts and circumstances of the case, the Learned Assessing Officer erred in disallowing the entire deduction of \u000134,49,015/- claimed under Section 80P(2)(a)(i) of the Income Tax Act, 1961, without appreciating that the Gross Total Income (GTI) of the Appellant was only \u000121,479/-. In view of the express provision of Section 80A(2), the deduction under Chapter VI-A, including Section 80P, cannot exceed the Gross Total Income. The AO’s failure to apply this limitation resulted in an erroneous computation of taxable income, violating the statutory framework. 3. That the assessment made under Section 144 and the appellate order under Section 250 were passed without due consideration of the material available on record, and without giving effect to the legal mandate that deductions under Chapter VI-A, including Section 80P, must be restricted to the extent of GTI. Both authorities erred in treating the claimed deduction as unsubstantiated when, in fact, the deduction to the extent of \u000121,479/- was clearly allowable under law, and no addition beyond this amount was legally tenable. 4. That on the facts and in the circumstances of the case, the Learned Assessing Officer wrongly presumed that the entire amount shown under “deduction claimed” in the ITR was allowable as such. The AO failed to consider that this amount represents a claim by the assessee, which is subject to verification and legal constraints. The disallowance of the full amount without adjusting it against the GTI constitutes an incorrect application of Section 80P read with Section 80A(2) of the Income Tax Act, 1961. 5. The appellant prays for leave to add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal. Printed from counselvise.com 3 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO 3. At the outset of hearing, the Bench observed that there is delay of 344 days in filing of the appeal by the assessee. The assessee filed the condonation petition along with the affidavit to condone the delay. The prayer so made reads as follows: “The humble assessee most respectfully begs to submit as under: 1. That in the aforesaid matter, the ld. CIT(A), NFAC passed the rejection Order on dated 28.05.2024, which was received by the assessee in his registered account on the Income Tax Portal (ITD). Accordingly the appeal was to be filed on or before 27.07.2024 however, the same has been filed on dated 09.07.2025. Thus, the filed was with a delay of 344 days has occurred. Further Challan towards filing the appeal was duly submitted on 08.07.2025. 2. Reasonable Cause Exist: 2.1 In this connection, it is humbly submitted that Mr. Manoj Kumar S/o Ramdev Singh aged about 37 year, the Manager of Palas Gram Sewa Sahkari Samiti Limited (hereinafter referred to as \"the appellant\"), having its office at Village “Palas”, District Sikar, Rajasthan duly authorised and competent to file this petition for condonation of delay in filing the appeal under Section 253(5) of the Income Tax Act, 1961. 2.2 That the order under section 250 of the Income Tax Act for the Assessment Year 2020-21 was passed by the Ld. Commissioner of Income-tax (Appeals), NFAC, dated 28.05.2024. As per the statutory provision, the appeal before the Hon’ble ITAT was to be filed on or before 27.07.2024, but the appeal has been filed belatedly on 09.07.2025, resulting in a delay of 347days. 2.3 The delay in filing the appeal was neither deliberate nor intentional but occurred due to genuine and unavoidable circumstances beyond the control of the appellant. The appellant is based in a remote village “Palas” in District Sikar, Rajasthan, where proper legal and income tax consultancy services are not readily available. 2.4 That the appellant, being a grassroots cooperative society, is deeply engaged in the upliftment of rural people and community development activities. Due to lack of exposure to complex income tax laws and procedures, the appellant is dependent on external consultants. Printed from counselvise.com 4 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO 2.5 That the consultant engaged by the appellant had been regularly providing incorrect or misleading information about the status of the appeal and failed to inform the appellant about the time-sensitive nature of filing before ITAT. 2.6 That it was only upon recent legal advice that the appellant became aware of the serious lapse and immediately took corrective steps to file the present appeal before this Hon’ble Tribunal, albeit delayed. 2.7 The appellant has a meritorious case on facts and law and stands to suffer irreparable loss and hardship if the delay is not condoned, and the appeal is not admitted for hearing. 2.8 That this petition is being made in good faith and there is no intention to delay the process of justice. 3. Supporting Case Laws: It is submitted that the Hon’ble Supreme Court in the case of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC) has advocated for a very liberal approach while considering a case for condonation of delay. The following observations of the Hon’ble court are notable: “The legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act, 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression sufficient cause employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub serves the ends of justice-that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But, the message does not appear to have percolated down to all the other Courts in the hierarchy.” We respectfully submit that in the recent case of Shital Goushala Samiti vs. ITO, Ward-1, Jhunjhunu (ITA No. 229/JPR/2024), the Hon'ble Income Tax Appellate Tribunal, Jaipur, condoned a delay of 318 days in filing the appeal. The Tribunal acknowledged that the delay occurred due to a genuine and bonafide confusion regarding the appropriate legal recourse, given the new provisions of law that had come into effect. The Tribunal recognized that the appellant was uncertain whether to file a fresh application under Section 12A of the Income Tax Act or to appeal the adverse order. This uncertainty led to a delay in the filing of the appeal, which the Tribunal deemed excusable. In allowing the condonation of delay, the Tribunal emphasized the importance of providing a fair opportunity to appellants, especially in matters involving charitable trusts seeking registration under the law. Prayer: It is, therefore, humbly prayed that this application may kindly be allowed by condoning the delay, taking a sympathetic view, in the interest of justice. Printed from counselvise.com 5 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO Any other order, which this Hon'ble ITAT deems fit and proper, be also passed in favour of applicant assessee. 4. During the course of hearing, the ld. DR submitted that the reasons advanced in the application are sufficient to condone the delay but at the same time he prayed that Court may decide the issue as deem fit in the interest of justice. 5. We have heard the contention of the parties and perused the materials available on record. The prayer by the assessee for condonation of delay of 344 days has merit because the assessee has a meritorious case on facts and law. If the delay is not condone the assessee shall suffer irreparable loss and hardship and that too at the fault of the consultant and thereby the reasons advanced along with the affidavit are sufficient to condone the delay of 344 days and thereby we condone the delay considering the decision of Hon’ble Supreme Court in the case of Collector, land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC) as the assessee was prevented by sufficient cause. 6. Succinctly, the fact as culled out from the records is that the assessee has e-filed the return of income for the Asst. Year 2020-21 on 13.02.2021 declaring a total income of Rs. Nil after taking claim of Printed from counselvise.com 6 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO deduction u/s. 80P(2)(a)(i) under chapter-VIA amounting of Rs. 34,49,015/- . The case of the assessee was selected for Limited scrutiny through Computer Aided Scrutiny Selection (CASS) to verify the issue of “Deduction from Total Income under Chapter VI-A”. Ld. AO has granted various opportunity to the assessee, but the assessee has not submitted any explanation nor any details and information/ documents in response to the questionnaire/ reminder letters issued from time to time with respect to the reasons of selection of the case. Accordingly, assessment was completed based on information and reason of scrutiny selection and thereby the ld. AO disallowed claim of the assessee u/s 80P(2)(a)(i) amounting of Rs.34,49,015/-. 7. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds raised the relevant finding of the ld. CIT(A), is reiterated here in below: 6. In the instance of the case the appellant failed to make any submissions in support of grounds of appeal, this gives rise to an undisputable conclusion that the assessee has got nothing more to say in this regard. I have gone through the record before me and based on the record. I have decided to adjudicate this issue on the merits of the case. In the instance case, the AO has rightly assessed income of Rs. 34,49,015/-. Since the appellant failed to substantiate appellant’s claim and addition made by the Assessing Officer of Rs. 34,49,015/- after denying deduction u/s 80P(2)(a)(i) of the Act is hereby confirmed. 7. Ground No. 1 of the appeal is dismissed.” Printed from counselvise.com 7 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO 8. Feeling dissatisfied with the finding so recorded in the order of the ld. CIT(A) the assessee has preferred the present appeal before this tribunal on the grounds as reiterated herein above. To support the grounds raised the ld. AR of the assessee filed the following written submissions; 1. That the present appeal has been filed against the order passed by the Ld. Commissioner of Income Tax (Appeal) dated 20.02.2023. 2. That there is delay of 344 days in filing of this appeal as the order was not served physically to appellant. 3. That the present Appeal has been filed on Four grounds of appeal and one general ground of appeal. 4. Firstly, That the Ld. Commissioner of Income Tax (Appeals) erred in confirming the assessment order under Section 144 ex parte, without adjudicating on the legal question of whether deduction under Section 80P could exceed the assessee’s Gross Total Income. The CIT(A) failed to examine the contents of the return or consider the legal bar under Section 80A(2), resulting in a mechanically sustained addition of ₹34,49,015/- by disallowing Deduction under section 80P against Gross total income of Rs.21479/- and thereby breaching the principles of reasoned and just appellate adjudication. 5. Secondly, That on the facts and circumstances of the case, the Learned Assessing Officer erred in disallowing the entire deduction of ₹34,49,015/- claimed under Section 80P(2)(a)(i) of the Income Tax Act, 1961, without appreciating that the Gross Total Income (GTI) of the Appellant was only ₹21,479/-. In view of the express provision of Section 80A(2), the deduction under Chapter VI-A, including Section 80P, cannot exceed the Gross Total Income. The AO’s failure to apply this limitation resulted in an erroneous computation of taxable income, violating the statutory framework. 6. Thirdly That the assessment made under Section 144 and the appellate order under Section 250 were passed without due consideration of the material available on record, and without giving effect to the legal mandate that deductions under Chapter VI- A, including Section 80P, must be restricted to the extent of GTI. Both authorities erred in treating the claimed deduction as unsubstantiated when, in fact, the deduction to the extent of ₹21,479/- was clearly allowable under law, and no addition beyond this amount was legally tenable. 7. Fourth That on the facts and in the circumstances of the case, the Learned Assessing Officer wrongly presumed that the entire amount shown under “deduction claimed” in the ITR was allowable as such. The AO failed to consider that this amount Printed from counselvise.com 8 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO represents a claim by the assessee, which is subject to verification and legal constraints. The disallowance of the full amount without adjusting it against the GTI constitutes an incorrect application of Section 80P read with Section 80A(2) of the Income Tax Act, 1961. GOA 1 to 4 : The Appellant was filed return of income on 13.02.2021 declaring a GTI of ₹21,479/- and claiming deduction of ₹34,49,015/- under Section 80P(2)(a)(i). It is respectfully submitted that while the figure of deduction claimed was disclosed in the ITR, the actual deduction allowable under law is restricted by Section 80A(2) which mandates that the aggregate amount of deductions under Chapter VI-A shall not, in any case, exceed the GTI of the assessee. Consequently, the maximum deduction allowed in the present case of Rs.₹21,479/- as evident from Part B-TI, Point No. 11 of the ITR (pages 70–71 of the Paper Book). This legal position was correctly applied by the Central Processing Centre (CPC) at the stage of intimation under Section 143(1), where deduction under Chapter VI-A was restricted to ₹21,479/-, as evident from Intimation Letter issued under section 143(1) of the Income Tax Act. However, during the assessment proceedings, the case having been selected for limited scrutiny under CASS for verification of deduction under Section 80P, the Learned Assessing Officer erred in passing an ex parte assessment order under Section 144, wherein the entire amount of ₹34,49,015/- was disallowed and added to the income. This action was not only beyond the scope of limited scrutiny but also contrary to the express statutory provisions of Section 80A(2). The Learned CIT(A), while disposing of the appeal, failed to adjudicate the core legal issue of whether deduction under Section 80P could at all exceed the GTI. The CIT(A) mechanically confirmed the addition without examining the computation of income already accepted by CPC and without considering the statutory restriction under Section 80A(2). It is humbly submitted that such confirmation of addition, without addressing the binding legal limitation, renders the appellate order unsustainable in law and violative of the principles of just and reasoned adjudication. It is further submitted that the authorities below misinterpreted the figure of deduction shown in the ITR as an allowable deduction, whereas in law, the figure is only a claim subject to verification and adjustment in accordance with the Act. The correct legal approach would have been to restrict the deduction to ₹21,479/-, which had already been done by CPC, and at best, the disallowance could not have exceeded this figure. The arbitrary disallowance of the entire claim of ₹34,49,015/- has therefore resulted in an unlawful enhancement of taxable income. Printed from counselvise.com 9 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO In view of the foregoing submissions and in light of Section 80P(2)(a)(i) read with Section 80A(2) of the Act, and supported by judicial precedents that deductions under Chapter VI-A cannot exceed the GTI. PRAYER It is most humbly prayed as under: it is most respectfully prayed that Honorable bench grant relief by restricting the disallowance of ₹21749/- or pass any such other order(s) as may be deemed fit in the interest of justice. 9. To support the contention so raised in the written submission reliance was placed on the following evidence / records : Paper Book S. No. Particulars Page No. 1 Copy of Assessment order passed by Learned AO on dated 24.09.2022 5-9 2 Copy of ITR Form for A.Y 2020-21 submitted on dated 13/02/2021. 10-75 3 Copy of the Intimation passed under section 143(1) by CPC 76-81 Paper Book S. No. Particulars Page No. 1 Copy of power of Attorney 1-2 2 Copy of Affidavit in support of condonation of delay 3-4 10. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee being small co- operative society working in village for the benefit of member and they are also villagers and thereby denial of deduction u/s 80P(2)(a)(i) of the Act was merely on account of failure of the assessee and that too on account of the counsel appointed has not represented their case and the assessee needs Printed from counselvise.com 10 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO on more opportunity to present their case before the ld. AO as the facts of the case are sufficient to be eligible to claim the deduction. 11. Per contra, ld. DR has relied upon the finding recorded in the orders of the lower authorities and vehemently argued that the assessee could not appear before ld. AO as well as ld. CIT(A). The reason for selection of the case of the assessee was also to verify the claim made by the assessee u/s. 80P(2)(a)(i) of the Act and therefore, the assessee being non- compliant, the order of lower authorities be sustained and the relief as requested is not required to be given to the assessee. 12. We have heard the rival contentions and perused the material placed on record. The assessee challenged the order of the ld. CIT(A) on four grounds of appeal thereby challenging the denial of deduction of Rs. 34,49,015/- by denying deduction under section 80P against Gross total income of Rs.21,479/- [ page 80 of the paper book ] and thereby not appreciating the fact that deduction cannot be more than what has been to the extent of the Gross total income of the assessee. Record reveals that while filling the ITR [ page 60 of the paper book ] the assessee under the column “Deduction under Chapter section 80P of the Act reported income of Rs. 34,49,015/- and considered that income Printed from counselvise.com 11 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO eligible for deduction u/s 34,49,015/-. Thus, the assessee has considered that amount as eligible but while filling ITR the assessee reported the gross total income at Rs. 21,479/- and claimed deduction u/s. 80P of the Act to the extent of the gross total income. Since the assessee has not clarified these basic detailed ld. AO considered the disallowance of figure at Rs. 34,49,015/- which was considered as eligible but was not claimed by the assessee. Be that it so may because of the fault of the consultant the assessee could not advanced these arguments about the claim of the assessee u/s 80P of the Act and thereby it allowability. The Bench noted that various opportunities were provided to the assessee for settling the issue, but the assessee remained lethargic and unserious in pursuing its case. However, we are of the view that lis between the parties must be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Hence, the matter is restored to the file of the AO to decide it afresh as to the assessee’s eligibility of deduction and chargeability of income by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus, the appeal of the assessee is allowed for statistical purposes. Printed from counselvise.com 12 ITA No. 1017/JP/2025 Palas Gram Sewa Sahakari Samiti Limited vs. ITO 12.1 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law. 13. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 28/10/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 28/10/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Palas Gram Sewa Sahkari Samiti Limited, Sikar 2. izR;FkhZ@ The Respondent- ITO, Sikar 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 1017/JP/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar Printed from counselvise.com "