INCOME TAX OFFICER WARD-1 TIRUVALLUR, TIRUVALLUR vs. THE MINJUR PRIMARY AGRICULTURAL COOP CREDIT SOCIETY JJ110, TIRUVALLUR

The Revenue raised the following grounds of appeal : “1. The order of the Ld.CIT(A) is contrary to law, facts and circumstances of the case.

Briefly, the facts of the respondent assessee is a Co-operative Society duly registered under The Tamilnadu Co-operative Societies Act, 1983. It is classified as a Primary Agricultural Co-operative Credit Societies. No regular Return of Income under the provisions of section 139(1) of the Income Tax Act, 1961 was filed for the Assessment Year 2018-19 by the respondent assessee society. Based on the information that the respondent assessee society made cash withdrawals from the current account maintained with the bank to the extent of Rs.5,03,79,000/- and also made a cash deposits of Rs.21,50,000/- in the current account maintained with Bank, the Jurisdictional Assessing Officer formed an opinion that income got escaped assessment from tax, accordingly, a notice u/s.148 of the Act issued on 31.03.2022 called upon the society to file Return of Income. The respondent assessee society neither complied with notice u/s.148 of the Act nor the notice, issued u/s.143(2) of the Act. In the circumstances, e- Assessment Unit of the Department(Assessing Officer) had proceeded with framing the best judgment assessment vide order dated 27.03.2023 passed u/s.147 r.w.s 144 read with section 144B of the Income Tax Act, 1961 at a total income of Rs.5,03,79,000/-. While doing so, the Assessing Officer treated the cash withdrawals of Rs.5,03,79,000/- as unexplained money of the appellant as the appellant had failed to explain the sources of the credit out of which withdrawals have been made.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A) contending that the appellant could not respond to the notices issued by the Assessing Officer, as short notice of 2 days were granted to the appellant. It is further submitted that the withdrawals from bank account were out of loan received from Kancheepuram Central Co-operative Bank and therefore no addition is required. The ld.CIT(A) after calling for remand report from the Assessing Officer deleted the addition by holding that the cash withdrawals are made out of the credits received from Kancheepuram Central Co- operative Bank and therefore held that the source of the credits out of which withdrawals are made stands explained, accordingly directed the Assessing Officer to delete the addition.

Being Aggrieved, Revenue is in appeal before us in the present appeal. The ld.CIT-DR submits that the additions were made by the Assessing Officer for inability of the respondent co-operative society to explain the source of credits out of which, Rs.5,03,79,000/- was withdrawn. However, during the course of proceedings before the ld.CIT(A), the respondent assessee filed details of source of the credits found in the bank account. However, the ld.CIT(A) deleted the addition made by the Assessing Officer considering only part of the remand report. Thus, he submits that the ld.CIT(A) ought not have given the relief.

On the other hand, ld.Counsel submits that the credits in the bank account of the appellant were made out of the loan received from Kancheepuram Central Co-operative Bank. The ld.CIT(A) granted the relief only after verification of the remand report submitted by the Assessing Officer.

We heard rival submissions and perused the material available on record. The issue in the present appeal relates whether ld.CIT(A) was justified in deleting the addition made by the Assessing Officer for credits in the bank account. Undoubtedly, the Assessing Officer made addition of the cash withdrawals made from the current account maintained with bank as the appellant has failed to explain the source of the credits out of which cash withdrawals were made. However, during the course of proceedings before the ld.CIT(A), the respondent assessee had explained that the credits in the bank account maintained with bank represents the loans received from Kancheepuram Central Co-operative Bank etc. The ld.CIT(A) had called for remand report from the Assessing Officer. The Assessing Officer after due verification of the statement of the bank account and the withdrawals made, reconciled the credits as well as withdrawals. And accordingly came to conclusion that the withdrawals are made out of the credits received from the known source, accordingly, the ld.CIT(A) deleted the addition based on the remand report of the Assessing Officer. We do not find any illegality or perversity in the findings of the ld.CIT(A), therefore, we do not find any merit in the appeal filed by the Revenue.

In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 22nd July, 2026.