Faceless assessment must afford a reasonable opportunity to substantiate a cooperative society’s Section 80P deduction claim.

The petitioner, a co-operative credit society, challenged an assessment order for AY 2024–25 under Section 143(3) read with Section 144B of the Income Tax Act, 1961, which disallowed its claimed deduction of ₹1,83,28,774 under Section 80P.

During the assessment, the petitioner applied under Section 144A.

That application was disposed of on 10 March 2026 on the ground that the faceless assessment procedure under Section 144B provided a multi-layered review mechanism.

The assessment order followed on 11 March 2026.

It found that the petitioner had not produced books of account, member-wise loan details, or evidence establishing its eligibility for the claimed deductions.

The petitioner argued that the timing of the order left it without a reasonable opportunity to place relevant material on record.

Whether the assessment proceedings should be restored to give the petitioner an opportunity to submit documents supporting its claim for exemption under Section 80P.

Whether the petitioner should also have an opportunity to address any computational error in the assessment.

Sections 143(3) and 144B of the Income Tax Act govern assessment, including assessment through the faceless procedure; Section 144A empowers a Joint Commissioner to issue directions for the guidance of the Assessing Officer in a pending assessment.

The petitioner relied on Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut for its Section 80P claim, but the Court did not decide the merits of that claim.

The decision instead turns on the need to provide a reasonable opportunity to place relevant documents before the assessment is completed.

The Court considered the petitioner’s Section 144A application, its disposal by reference to the Section 144B process, and the fact that the assessment order was issued the next day.

In those circumstances, the Court accepted that the petitioner had not received a reasonable opportunity to upload documents bearing on its eligibility for deduction, including evidence concerning the nature of its deposits.

The Court therefore restored the proceedings for consideration on a fuller record, without determining whether the petitioner was substantively entitled to the Section 80P deduction.

The Court quashed the assessment order dated 11 March 2026 and restored the proceedings, directing the first respondent to enable the petitioner to file documents in light of the Court’s observations.

The Court also observed that any computational error should be revisited in light of a rectification order, if any.