Kempegowda Credit Co-operative Society Limited Vs ITO (ITAT Bangalore): 125-Day Delay Condoned, ₹3.95 Crore Addition Remanded for Fresh Adjudication

Case Overview

Background and Factual Matrix

Kempegowda Credit Co-operative Society Limited, a registered co-operative credit society operating from J.P. Nagar, Bengaluru, found itself before the Income Tax Appellate Tribunal, Bangalore, facing a dual challenge — first, seeking condonation of a 125-day delay in filing its appeal, and second, contesting additions aggregating to ₹3.95 crore made in an ex parte reassessment order.

The genesis of the delay lay in a period of significant internal turmoil within the society. The Chief Executive Officer had been removed from office on account of mismanagement, and the consequent process of inducting a new CEO took considerable time. During this leadership vacuum, the society's capacity to engage with legal and tax proceedings was severely hampered. It was only after a new CEO assumed charge and the authorised tax consultant accessed the Income Tax portal for routine verification that the urgency of filing a second appeal before the Tribunal was recognised, leading to the filing of the appeal in Form-36 on 28.01.2026.

The Assessing Officer had, in the meantime, passed an ex parte reassessment order dated 30.12.2023 under Section 147 read with Section 144 of the Income Tax Act, 1961, making total additions of ₹3,95,33,893/-. The CIT(A)/NFAC, despite issuing five separate hearing opportunities to the assessee, received no response and accordingly sustained all additions, observing that law assists those who are vigilant and not those who sleep over their rights.

Grounds of Appeal Raised Before the Tribunal

The assessee raised multiple substantive grounds before the ITAT, which can be broadly categorised as follows:

Procedural Grounds

• The CIT(A) erred in dismissing the appeal ex parte without examining the merits, in violation of the principles of natural justice, particularly when substantial additions involving significant tax demand were in dispute.
• The CIT(A) failed to acknowledge that sufficient cause existed for the assessee's non-appearance during appellate proceedings and ought to have extended one final effective opportunity before rendering an ex parte decision.
• The reassessment initiated under Section 147 read with Section 148A was alleged to be mechanical and without valid assumption of jurisdiction, thereby rendering the reassessment order void ab initio.

Substantive Grounds on Additions