IN THE INCOME TAX APPELLATE TRIBUNAL “B’’BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI,VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.861/Bang/2025 Assessment Year : 2020-21 M/s. Sri Ramaseva Bahusara Kshariya Co-op. Society Ltd.

01, Ramanna Setty Park SPM Road, Doddapete SO Principal CIT Vs.

Shimoga 577 202 Bengaluru-1 Karnataka PAN NO :AAAJS0083P APPELLANT RESPONDENT Appellant by : Sri V. Srinivasan, A.R.

Respondent by : Sri Kiran D., D.R. Date of Hearing : 11.12.2025 Date of Pronouncement : 30.01.2026

O R D E R

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of ld. PCIT, Bengaluru-1 dated 05.02.2025 vide DIN & Order No. ITBA/REV/F/REV5/2024-25/1072922073(1) passed u/s 263 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2020-21.

2. The assessee has raised the following grounds of appeal:

3. The brief facts of the case are that the assessee is a Co- operative society registered under the Karnataka Co-operative Societies Act, 1959. The assessee earns income from lending activities to its members, some interest on reserve funds and on deposits made with other societies/banks out of member’s fund. The assessee society filed its return of income for the assessment year 2020-21 on 28/12/2020, declaring total income of Rs. Nil after claiming deduction under Chapter VIA of Rs.68,66,832/-. Thereafter, the said return was processed u/s 143(1) of the Act on a total income of Rs. 18,00,000/-. Aggrieved by the intimation passed u/s 143(1) of the Act, the assessee preferred an appeal before the ld. CIT(A)/NFAC and the same is still pending for disposal.

3.1 While the position thus remained, the case of the assessee was selected for complete scritiny assessment under CASS for examination/verification on the following issues-

1. High Creditors /Liabilities

2. Investments/Advances/loans

3. Deduction from Total under chapter VI-A

4. Other income reported in Schedule A-OI not credit to P & L account.

Accordingly, the notices u/s 143(2) as well as 142(1) of the Act along with show cause notices were issued from time to time calling for the details. In response to statutory notices, the assessee filed the details as called for on 14/07/2021 & 28/03/2022. The AO after proper examination of the details along with the documentary evidences/written submission/explanations etc. submitted by the assessee, completed the assessment proceedings u/s. 143(3) r.w.s

144B of the Act by observing as follows-

1) During the course of assessment proceedings, the assessee submitted that it is completely eligible to obtain benefits/deductions as stipulated u/s 80P(2)(a)(i) of the Act.

2) In support of its claim the assessee also submitted the latest decision of the Apex Court in the Mavilayi Service C- operative Bank Ltd. & Ors vs. Commissioner of Income Tax &

ANR…

3) In A.Y. 2018-19 also the assessee case was selected for scrutiny for similar issue for section 80P(2)(a)(i) deduction and the assessee claimed was accepted by the department based on the judgement pronounced by the Hon’ble Karnataka High Court in the case of M/s Tumkur Merchants Souharda Credit Co-operative Ltd. vs. ITO (230 Taxmann 309) as the assessee is not engaged in any non-co-operative activities.

4) Submissions/reply/documents/details have been examined vis-à-vis reasons for which case was selected for scrutiny and in light of the same it is held that the activities of the assessee are in accordance with the provisions contained u/s 80P(2)(a)(i) of the Act & therefore deduction claimed by the assessee u/s

80P is allowed & income as per 143(1)(a) is accepted.

The AO with the above observations concluded the completed Scrutiny assessment u/s 143(3) of the Act by holding that the activities of the assessee are in accordance with the provisions contained u/s 80P(2)(a)(i) of the Act & therefore deduction claimed by the assessee u/s 80P is allowed.

3.2 The ld. PCIT, Bengaluru-1 upon calling for the assessment records and