PANANKATTOOR PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY,AYYAMPALAYAM vs. INCOME TAX OFFICER WARD 2 (1), ERODE

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ITA 3698/CHNY/2025Status: DisposedITAT Chennai17 September 2026AY 2011-126 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal and, in the interest of justice, restored the issue of unexplained cash deposits to the Assessing Officer (AO). The assessee was directed to provide necessary evidence to explain the source of the deposits.

What were the facts?

The assessee, Panankattoor P A Co-op Bank Ltd, appealed against an addition of Rs. 20,43,524/- as unexplained money under Section 69A. The First Appellate Authority (FAA) had confirmed this addition, stating the assessee failed to provide evidence for the source of cash deposits.

What were the issues?

Whether the FAA was justified in confirming the addition of cash deposits as unexplained money under Section 69A without properly appreciating the assessee's submissions and evidence.

Which sections of the Income-tax Act were involved?

Section 69A,Section 250,Section 254

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO

Hearing: 17.09.2026Pronounced: 17.09.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 07.08.2025 passed under section 250 r.w.s. 254 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2011-12.

- 2 - ITA No. 3698/CHNY/2025 Panankattoor P A Co-op Bank Ltd 2. There is a delay of 35 days in filing the present appeal before the Tribunal. The assessee has filed a petition seeking condonation of delay, supported by an affidavit of the Secretary of assessee’s Society stating therein the reasons for the belated filing of the appeal. On perusal of the reasons stated, we are of the view that no latches can be attributed to the assessee as there is sufficient cause for belated filing of this appeal. Hence, we condone the delay of 35 days and proceed to dispose off the appeal on merits.

3.

Brief facts of the case are as follows:- This is a second round of appeal before the ITAT. The ITAT on the earlier occasion in ITA No. 190/Chny/2024 (Order dated 17.04.2024) had restored the matter to the First Appellate Authority (FAA), since the order of the FAA was exparte. Subsequent to the remand, the FAA partly allowed the appeal of the assessee.

4.

The solitary issue that is raised before the Tribunal is whether the FAA is justified in confirming the addition u/s.69A of the Act of Rs.20,43,524/- as unexplained money. The FAA had confirmed the addition made by the AO u/s.69A of the Act by observing as under: “6. So far as addition in respect of cash deposited in the bank account is concerned, it is apparent that appellant had not given any evidence to support it's claim that the cash deposited in appellant's bank

- 3 - ITA No. 3698/CHNY/2025 Panankattoor P A Co-op Bank Ltd

account belonged to its members. It has simply relied upon two decisions where facts of the case were totally different; in those cases the fact that cash deposited was belonging to the members was not in dispute. In present case in absence of evidence to suggest that impugned cash belong to the members, AO's action of treating the same as unexplained money can't be faulted. Section 69A is a deeming provision and its mischief can be avoided only if assessee offers a satisfactory explanation about the nature and source of acquisition of the money which is not recorded in the books. In present case it is definitely getting attracted. This addition by AO is confirmed.”

5.

Aggrieved, the assessee is in appeal before us raising the followings grounds of appeal: “A. The Learned CIT(A) has confirmed the addition of Rs. 2,04,35,524/- as unexplained cash deposits under Section 69A, which is erroneous and unsustainable in law.

B. The Learned CIT(A) erred in confirming the addition of 20,43,524/- u/s 69A by treating the cash deposited in the appellant-society's bank accounts as unexplained money, without properly appreciating the submissions, books of accounts, membership registers, and the nature of the assessee-society's business. The addition is unjustified, arbitrary, and liable to be deleted.

C The appellant has clearly explained that the cash deposits represent collections from its members towards repayment of loans, pigmy deposits, and other regular business transactions, which were duly recorded in the books of account.

D. The Learned CIT(A) has placed reliance on the absence of documentary evidence to support the claim that the cash belonged to members.

- 4 - ITA No. 3698/CHNY/2025 Panankattoor P A Co-op Bank Ltd

E. The Learned CIT(A) has failed to considered that the principle laid down in Sri Bhageeratha Pattinsa Sahakara Sangha Niyamitha v. ITO (ITA No. 646, Bang 2021) clearly establishes that where cash deposits represent collection of money in the normal course of business and are recorded in books of account, they cannot be treated as unexplained deposits under Section 69A.

F. The Appellant states that Without prejudice to the above, the Ld. CIT(A) failed to appreciate that even if the cash deposits are treated as income, such income arises from the business activity of the Co- operative Society.

G. The Learned CIT(A) Ought to have appreciated that since the business income of the Appellant is eligible for deduction u/s 80P(2)(a)(i) as per his own finding, the addition made u/s 69A, which stems from the same business activity, should also be eligible for the said deduction.”

6.

The Ld.AR submits that assessee society has evidence to show that all the alleged cash deposits is of loan repayment deposits by the members/debtors of the assessee’s society. Hence, there was adequate source for the cash deposits made by the assessee’s society. The Ld.AR had submitted assessee society was unable to upload the relevant details during the course of proceedings before the FAA. The Ld.AR had produced a cash book maintained by assessee’s society before the Tribunal and stated that assessee society would be able to explain the source of cash deposits. It was stated that the amounts were repayments of loans advanced by the assessee to its members. Therefore, it was prayed in the interest of justice assessee society may be provided with one more

- 5 - ITA No. 3698/CHNY/2025 Panankattoor P A Co-op Bank Ltd opportunity before the Jurisdictional AO to explain the source of cash deposits.

7.

The Ld.DR did not have any serious objection, if the matter is remitted back to the AO to examine the source of cash deposits.

8.

We have heard rival submissions and perused the materials on record. The FAA had confirmed the addition made u/s. 69A of the Act because assessee had not produced any evidence in support of its claim that cash deposits are from explained sources. The assessee had relied on certain decisions which does not automatically prove/explain the source of the impugned cash deposits. The assessee before the Tribunal had produced the cash book maintained by assessee society, where there is a narration as regards, cash receipts, cash deposits etc, made on various dates in assessee’s bank account. The burden to prove the source of cash deposits is on the assessee’s society. In the interest of justice and equity, we are of the view that one more opportunity should be provided to the assessee to explain the source of cash deposits. For this purpose, we restore the issue that is raised before us to the AO. The assessee is directed to co- operate with the revenue and furnish the necessary evidences in support

- 6 - ITA No. 3698/CHNY/2025 Panankattoor P A Co-op Bank Ltd of its claim. The AO is directed to afford reasonable opportunity of hearing to the assessee. It is ordered accordingly.

9.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 17th September, 2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (इंटूर� रामा राव) (GEORGE GEORGE K) (INTURI RAMA RAO) उपा�य� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai, �दनांक/Dated, the 17th September, 2026 JPV, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT- Chennai/Madurai/Salem/Coimbatore 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF.

PRASANNA Digitally signed by PRASANNA VANI JETTY VANI JETTY Date: 2026.09.18 03:08:02 +05'30'

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