VYAVASAYA SAHAKARA BANK NIYAMITHA IDAKANI,CHIKKAMAGALUR vs. INCOME TAX OFFICER, WARD 1 & TPS , CHIKKAMAGALURU

These three captioned appeals concern the same assessee, namely VYAVASAYA SAHAKARA BANK NIYAMITHA IDAKANI. The common issue in all three appeals arises from the assessee’s change of name, after which it obtained a new Permanent Account Number and filed its returns under the new PAN, while the old PAN continued to remain linked to its bank accounts. The Assessing Officer received information that cash had been deposited in bank accounts linked to the old PAN during the relevant years, although no returns had been filed under that old PAN. The assessments were therefore reopened. As the assessee did not appear before the Assessing Officer, additions were made in respect of the cash deposits reflected in those bank accounts. The appeals filed by the assessee against the reassessment orders were also dismissed. Since the parties argued all three appeals together on these facts, they are disposed of by this common order. ITA No. 2682/Bang/2025:

ITA No. 2682/Bang/2025 is filed by the assessee, a co-operative society, for Assessment Year 2015-16, challenging the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT(A)], dated 26 September 2025, whereby the assessee's appeal against the reassessment order dated 27 March 2022, passed under section 147 read with sections 144 and 144B of the Income-tax Act, 1961, [ The ACT] by the National Faceless Assessment Centre, [ the ld AO] was dismissed. 3. The Assessee has raised the following grounds of appeal:

The order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 26.09.2025, under section 250 of the Income Tax Act, 1961, confirming the assessment order dated 27.03.2022 passed by the Assessing Officer, Ward-2, Chikmagalur, under section 147 r.w.s. 144, is opposed to law, equity, and the facts and circumstances of the case.

The learned CIT(A) has erred in sustaining the addition of 22,00,32,460/- made by the Assessing Officer as unexplained cash deposits under section 69A, without appreciating the appellant's explanation that the said deposits represented cash received from members towards loan repayments and deposits in the normal course of its co-operative Society activities.

The learned CIT(A) failed to appreciate that the assessment proceedings initiated and completed under section 147 r.w.s. 144 in the name of "Vyavasaya Sahakara Bank Niyamitha Idakani" under PAN AAAAV2759A are invalid and void ab initio, since the appellant society had changed its name to "Idakani Primary Agricultural Credit Co-operative Society Niyamitha, Hirebylu" and was functioning under a new PAN AAAAI9111P. The reassessment proceedings under the old and inactive PAN lack legal jurisdiction.

The learned CIT(A) failed to consider that the appellant had already filed a valid return of income for A.Y. 2015-16 under PAN AAAAI9111P on 30.10.2015 vide acknowledgment 873106081301015, and that the same encompassed all transactions of the appellant society. Therefore, there was no concealment or omission on the part of the appellant.

The learned CIT(A) erred in law and on facts in holding that the appellant's explanation regarding the change of PAN and consequent non-receipt of notices was not acceptable, and in failing to recognize that the appellant's non-response was due to the issuance of notices to an obsolete PAN. This has resulted in an ex-parte assessment order passed under section 144, in total violation of the principles of natural justice.

The learned CIT(A) further erred in not allowing the appellant to produce relevant records and evidence under Rule 46A of the Income Tax Rules, 1962, despite sufficient cause being shown for the delay and non-compliance during assessment. The denial of opportunity to submit such evidence has caused grave prejudice to the appellant.

The learned CIT(A) has erred in law and on facts in failing to consider that the Assessing Officer has not brought on record any material evidence to prove that the cash deposits represented unexplained investments or income of the appellant. The AO's conclusions are based merely on presumptions and not on concrete evidence.

The learned CIT(A) erred in not allowing deduction u/s 80P(2)(a)(i) of the Act, though the appellant is a registered co- operative society engaged in providing agricultural credit facilities exclusively to its members, and the income, if any, derived from such activities is fully eligible for deduction under the said section.

The learned CIT(A) failed to appreciate that the assessment order determining total income at ₹2,00,32,460/- and raising a total tax and interest demand of ₹3,59,51,587/ is arbitrary, excessive, and unsustainable in law.

The learned CIT(A) erred in upholding the levy of interest under sections 234A, 234B, and 234C, which are consequential and not leviable in the facts of the case, especially when the assessment itself is bad in law.

The appellant submits that the entire proceedings suffer from legal infirmities and procedural irregularities, including non- service of notices, lack of jurisdiction, violation of section 144B (faceless procedure), and breach of natural justice principles, warranting annulment of the assessment.

Without prejudice to the above grounds, the appellant prays that the Hon'ble Tribunal may consider all facts, documents, and evidence to grant relief by deleting the addition of ₹2,00,32,460/- and cancelling the entire demand of 23,59,51,587/-.

The appellant craves leave to add, alter, amend, or withdraw any of the above grounds at the time of hearing.

Wherefore on the above grounds and on such other grounds the Appellant prays the Appellate Authority to delete the additions as above and may pass such other as the Appellate Authority deems fit.

Briefly stated, the facts show that the assessee, assessed under Permanent Account Number AAAAV2759A, did not file its original return of income for the relevant assessment year. During the year under consideration, it was found that the assessee had deposited cash of ₹2,00,32,460 in Vijaya Bank. Since no return of income had been filed, the source of the said transaction remained unexplained. Accordingly, notice under section 148 of the Act was issued on 27 March 2021 requiring the assessee to furnish its return of income. The assessee did not comply. Thereafter, notice under section 142(1) was issued on 15 November 2021; however, the assessee again failed to respond. In view of this non-compliance, the learned Assessing Officer passed an assessment order dated 27 March 2022, making an addition of ₹2,00,32,460.

The assessee preferred an appeal before the learned CIT(A), which was dismissed. The assessee explained that it is a co-operative society engaged in providing agricultural credit facilities to its members and is registered under the Karnataka State Co-operative Societies Act, 1959. The reassessment proceedings and the consequential addition were made on account of cash deposits aggregating to ₹2,00,32,460 in its Vijaya Bank account. The assessee submitted that its name had been changed from Vyavasaya Sahakara Bank Niyamitha Idakani to Idakani Primary Agricultural Credit Co- operative Society Niyamitha and that it had obtained a new Permanent Account Number, AAAAI9111P. It further stated that it had filed its return of income under the new PAN, vide acknowledgment dated 30 October 2025. However, the PAN in the bank account was not updated, which went unnoticed by the management. Consequently, notice under section 148 was served on 27 March 2021 by the Income Tax Officer, Ward-2, Chikmagalur, requiring the assessee to file its return. Since the assessee had started using the new PAN and was unaware of communications issued under the old PAN, no response was filed, and the assessment was completed ex parte under section 144 of the Income-tax Act. The assessee’s case was that, owing to the change in name, it had obtained a new PAN, while the old PAN continued in the bank records. The bank therefore reported the cash deposits under the old PAN, although the assessee had discontinued its use and was regularly filing returns under the new PAN. The learned CIT(A), however, dismissed the appeal on the grounds that the assessee had failed to explain the facts and circumstances relating to the cash deposits of ₹2,00,32,460. 6. The learned authorized representative submitted that the only issue in dispute is the explanation for the cash deposit of ₹2,00,32,460 in the assessee’s Vijaya Bank account. He stated that, following a change in the assessee’s name, the assessee inadvertently obtained a new Permanent Account Number, while the old PAN was neither surrendered nor updated with Vijaya Bank. Consequently, the old PAN continued to be reflected in the bank records, and the learned Assessing Officer received information that cash had been deposited under that PAN. The representative submitted that the amount was, in fact, received from the assessee’s members and duly recorded in the society’s books of account. Since the assessee could not appear before the learned Assessing Officer, and the learned CIT(A) did not accept the explanation, he contended that the deposit did not represent any unaccounted income of the assessee. 7. The learned Departmental Representative submitted that the assessee ought to have surrendered the old Permanent Account Number and informed its bankers of the new PAN. He further submitted that a mere change in the name of the assessee society did not require obtaining a new PAN. Since the assessee held two different PANs and failed to explain this position before the lower authorities, the learned lower authorities were justified in making the addition. 8. We have carefully considered the rival submissions and perused the orders of the lower authorities. We find that, consequent to the change in the assessee’s name, the assessee inadvertently obtained a new Permanent Account Number without surrendering the original PAN. The original PAN also continued to remain linked with its bank account. The assessee filed its return of income under the new PAN; however, the cash deposits were reflected in the bank account associated with the old PAN. On that basis, the Assessing Officer was informed that the assessee had deposited ₹2,00,32,640 in its bank account. The assessee’s claim is that there was no unaccounted income, as the amount deposited belonged to it and represented receipts from members of society. The difficulty arose because the assessee held two PANs, filed its return under one PAN, and continued to use another PAN for banking purposes. Consequently, the lower authorities could not verify the accounting of the cash deposits reflected under the old PAN, although the assessee contends that the same receipts were recorded in its books and disclosed in the return filed under the new PAN. This confusion arose only because the assessee did not surrender the old PAN and continued to use both PANs for different purposes.

In view of the above facts, we restore the entire issue to the file of the learned Assessing Officer with a direction to the assessee to surrender one of the Permanent Account Numbers, since holding two PANs is a punishable offence. The assessee shall thereafter demonstrate before the learned Assessing Officer that the cash deposited in its Vijaya Bank account was duly recorded in its books of account and represented amounts received from members of society. The learned Assessing Officer shall examine the claim and, if the cash deposits are found recorded in the assessee society’s books and the bank account is disclosed in its balance sheet, no addition shall be made in the hands of the assessee. However, if the learned Assessing Officer is not satisfied with the correctness of the assessee’s claim, he may pass an order in accordance with law after granting the assessee an opportunity of being heard. 10. In the result, the assessee’s appeal is allowed for statistical purposes. ITA No. 2683/Bang/2025: 11. ITA No. 2683/Bang/2025 is filed by the assessee for Assessment Year 2016- 17 against the appellate order passed by the National Faceless Appeal Centre, Delhi, dated 26 September 2025. By the said order, the appeal filed by the assessee against the assessment order dated 27 March 2022, passed by the National Faceless Assessment Centre under section 147 read with sections 144 and 144B of the Income-tax Act, 1961, making an addition of ₹4,86,85,750, was partly allowed. 12. The facts of this appeal are identical to those for Assessment Year 2015-16. In the present year, the learned Assessing Officer found that the assessee had not filed its return of income under Permanent Account Number AAAAV2759A, though cash deposits of ₹4,86,85,750 were reflected in its Vijaya Bank account. Since the assessee did not file the return or respond to the notices, notice under section 148 of the Act was issued on 27 March 2021. As there was no compliance, the Assessing Officer made an addition of ₹4,86,85,750 and completed the assessment on 27 March 2022 at the same amount.

In the result, all three appeals filed by the assessee are allowed for statistical purposes, subject to the directions stated above.