Appeal allowed after 75-day delay due to non-service of intimation u/s 143(1), deduction u/s 80P(2)(d) permitted

ITAT Mumbai allowed the appeal, setting aside CIT(A)'s dismissal order. The assessee successfully argued that intimation u/s 143(1) was never served, and they learned of the adverse order only when notice u/s 245 was served in July 2023, resulting in a 75-day delay in filing appeal. ITAT found no mala fide or intentional delay, noting CIT(A) failed to obtain jurisdictional AO's report on non-service. Regarding deduction u/s 80P(2)(d), ITAT found conflicting CPC orders at serial numbers 22 and 27, with deduction allowed at one entry but disallowed at another. Following coordinate bench precedents in Chheda Heights and Chanderlok Co-operative Society cases, ITAT held such adjustments were permissible under section 143(1) prior to AY 2021-22.

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ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

1. Whether the delay in filing the appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] should be condoned.

2. Whether the disallowance of the deduction under Section 80P(2)(d) of the Income Tax Act by the Assessing Officer (AO) was justified.

ISSUE-WISE DETAILED ANALYSIS

1. Condonation of Delay in Filing Appeal

Relevant Legal Framework and Precedents: The legal framework for condonation of delay involves assessing whether there was a reasonable cause for the delay. The principle established by the Jurisdictional High Court in Stride Multitrade Private Limited Vs ACIT suggests that if CIT(A) asks for ground-wise submissions, it implies that the delay has been condoned.

Court's Interpretation and Reasoning: The Tribunal noted that the CIT(A) did not issue a specific show cause notice regarding the delay, which implied that the delay was condoned. The Tribunal emphasized the principle that substantial justice should prevail over technicalities.

Key Evidence and Findings: The assessee argued that the intimation under Section 143(1) was not communicated and only became aware of it upon receiving a demand notice in 2023. The Tribunal found that the CIT(A) failed to obtain a report from the jurisdictional AO or seek a specific submission from the assessee on the delay issue.

Application of Law to Facts: The Tribunal applied the principle from the Stride Multitrade case, concluding that the CIT(A)'s actions implied condonation of delay. The Tribunal also considered an affidavit from the assessee's authorized signatory, supporting the claim of non-receipt of the intimation.

Treatment of Competing Arguments: The Tribunal favored the assessee's argument, noting the lack of evidence from the revenue to counter the claim of non-receipt of the intimation.

Conclusions: The Tribunal set aside the CIT(A)'s dismissal of the appeal due to delay, allowing the appeal to proceed on merits.

2. Disallowance of Deduction under Section 80P(2)(d)

Relevant Legal Framework and Precedents: Section 80P(2)(d) allows certain deductions for cooperative societies. The Tribunal referenced prior decisions, such as Chheda Heights Co-operative Housing Society Vs ITO, which clarified the scope of adjustments under Section 143(1).

Court's Interpretation and Reasoning: The Tribunal found conflicting entries in the CPC's order, where the deduction was both allowed and disallowed. This inconsistency was deemed unsustainable.

Key Evidence and Findings: The Tribunal noted the CPC's order had contradictory entries regarding the deduction, which supported the assessee's claim.

Application of Law to Facts: The Tribunal applied the precedent set in similar cases, determining that the adjustment made by the CPC was outside the permissible scope for the relevant assessment years.

Treatment of Competing Arguments: The Tribunal favored the assessee's position, supported by the cited precedents, over the revenue's argument for disallowance.

Conclusions: The Tribunal allowed the deduction under Section 80P(2)(d), finding the CPC's adjustment unjustified.

SIGNIFICANT HOLDINGS

The Tribunal established several core principles:

- The implied condonation of delay by CIT(A) when ground-wise submissions are requested, aligning with the Stride Multitrade precedent.

- The necessity for CIT(A) to seek specific submissions or reports when contesting delay claims, emphasizing substantial justice over procedural technicalities.

- The unsustainability of conflicting entries in CPC orders, affirming the allowance of deductions under Section 80P(2)(d) when justified by precedent.

Final Determinations on Each Issue:

- The Tribunal allowed the appeals for all assessment years, setting aside the CIT(A)'s dismissal due to delay and affirming the deduction under Section 80P(2)(d).

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