INCOME TAX OFFICER WARD 1(2)(1) RAJKOT, RAJKOT vs. THE GONDAL PIPALS CO OP CREDIT SOCIETY LIMITED GONDAL, GONDAL

Brief facts of the case are that the assessee is a Co-operative Society registered under the provisions of the Gujarat Co-operative Societies Act, 1962. The principal object of the Society is to accept deposits from its members and provide credit facilities to them. For Assessment Year 2016-17, the assessee did not file its return of income. Based on information available in the Department’s database indicating that the assessee had entered into significant financial transactions involving cash deposits of Rs. 2,24,98,975/- with Shri Rajkot District Co-operative Bank Ltd., proceedings under section 147 of the Income-tax Act were initiated by issuance of notice under section 148 of the Act. In response to the notice, the assessee failed to file the return of income within the prescribed time. During the assessment proceedings, notices were issued calling for an explanation regarding the substantial cash deposits. Though the assessee furnished certain replies, the Assessing Officer was not satisfied with the explanation and treated the entire cash deposits of Rs.2,24,98,975/- as unexplained. Accordingly, the assessment was completed under

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. Commissioner of Income-tax (Appeals). After examining the material placed on record, the Ld. CIT(A) found that the assessee had furnished complete details, including the list of members, details of cash deposits made by the members, particulars of the seven agents who collected deposits from the members, identity proof of the top ten members in terms of cash deposits; explanatory note regarding the manner of conducting the Society’s business; and confirmation letters along with PAN and proof of identity of all the agents who collected the deposits. Upon considering these evidences, the Ld. CIT(A) held that the Assessing Officer had failed to properly appreciate the material available on record and, relying upon the applicable decision of the Hon’ble Supreme Court, deleted the addition made by the Assessing Officer.

Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal.

At the time of hearing, the Ld. DR submitted that the order of the Ld. CIT(A) is erroneous and liable to be set aside. According to him, the Ld. CIT(A) failed to properly examine the issues. It was contended that the assessee had not filed its return of income under section 139(1) of the Act and, therefore, deduction under section 80P of the Act was not admissible. It was further argued that the assessee had not furnished the requisite audit report and proper books of account and had failed to establish complete identity between the contributors and the participants. According to the Revenue, the Ld. CIT(A) deleted the addition without adequately verifying the genuineness of the deposits and without assigning cogent reasons for disagreeing with the findings of the Assessing Officer.

We have heard the rival submissions and carefully perused the material available on record. We find that the Ld. CIT(A), while deleting the addition, has recorded a categorical finding that the assessee had furnished all the relevant documentary evidence, including the list of members, details of deposits made by members, particulars of the agents collecting such deposits, identity proofs of the major depositors, explanatory note regarding the conduct of its business, confirmation letters, PAN and identity proofs of the agents. We further notice that the Assessing Officer has nowhere discussed why the evidences furnished by the assessee were unacceptable. The assessment order does not contain any meaningful analysis of the documents produced nor does it record any reason for rejecting the assessee’s explanation. The addition has been made in a summary manner without dealing with the evidences placed on record. Such an approach reflects a lack of proper appreciation of the facts and settled principles of law and cannot be sustained. The contentions now advanced by the Revenue regarding non-filing of the audit report, denial of deduction under section 80P of the Act, or failure to establish the

In these circumstances, we find no infirmity in the well-reasoned order passed by the Ld. CIT(A). Accordingly, the same is upheld and the appeal filed by the Revenue in ITA No. 665/Rjt/2025 for Assessment Year 2016-17 is dismissed.

Since the facts and issues involved in ITA No. 666/Rjt/2025 for Assessment Year 2019-20 are identical, our findings recorded in ITA No. 665/Rjt/2025 shall apply mutatis mutandis to that appeal also. Accordingly, the Revenue’s appeal in ITA No. 666/Rjt/2025 is also dismissed.

As regards Cross Objection No. 14/Rjt/2025 arising out of ITA No. 665/Rjt/2025 and Cross Objection No. 15/Rjt/2025 arising out of ITA No. 666/Rjt/2025, the Ld. AR submitted that the assessee does not wish to press the same. Accordingly, both the Cross Objections are dismissed as not pressed.

In the result, both the appeals filed by the Revenue are dismissed and both the Cross Objections filed by the assessee are dismissed as not pressed.