NEKKALLU PACS LIMITED,GUNTUR vs. INCOME TAX OFFICER, WARD-2(1), GUNTUR

Since the issues involved in ITA Nos. 837/VIZ/2025 & ITA 838/VIZ/2025 are common, appeals are clubbed and a consolidated order is being passed.

For the A.Y. 2015-16, brief facts are, the assessee-society has not filed return of income and hence information was received through ITBA portal under the case type “Non-filers under Multi Year NMS & Priority P1”. On verification of the information, the Learned Assessing Officer (hereinafter in short “Ld.AO”) noticed that the appellant-society has deposited cash of Rs. 1.41 crores in the Savings Bank account. Since the assessee has not filed the return of income, a notice under section 148 of the Act was issued on 29.03.2021. After issuing the required notices of hearing, the Ld.AO called for information relating to cash book, sources for cash deposits made into the bank account and the concern bank statements. Despite giving notices, the appellant did not file the required information. In view of the same, Ld.AO after verifying all copies of bank statements, noticed that the assessee-society deposited cash of Rs. 1.41 crores into the bank accounts maintained with the Guntur District Cooperative Central Bank Limited, Guntur, during the year. It was mentioned by the Ld.AO that the inspite of several notices, opportunities, the assessee could not give explanation / evidences in support of the cash deposits and agricultural income. Since no reply was filed by the assessee-society, the Ld.AO treated all the cash deposits made into the bank account during the demonetization period to the tune of Rs. 1.41 crores as unexplained money under section 69A of the Act.

Aggrieved by the order of Ld.AO, an appeal was filed before Ld.CIT(A). Before the First Appellate Authority, it was contended that the deposits into the savings bank account relate to its agricultural lending operations and that the provisions of section 69A are not appliable. But, no books of accounts, cash books or supporting documents were submitted either before the Ld.AO or before the Ld.CIT(A). Since no information was furnished by the appellant, Ld.CIT(A) confirmed the additions made by the Ld.AO.

Subsequently, the appellant filed an appeal before the ITAT stating that the Ld.CIT(A) is not justified in sustaining the addition of Rs.1.41 crores made by the Ld.AO under section 69A of the Act towards unexplained cash deposits in the bank account. It was stated in the grounds of appeal that the Ld.AO did not allow the deduction claimed under section 80P of the Act.

During the hearing proceedings before the Tribunal, Learned Authorized Representative (hereinafter in short “Ld.AR”) of the appellant has stated that the Co-operative Society is not aware of the Income Tax provisions and hence not provided the required information. The books of account of the Cooperative Society are regularly audited by the State Government and there is no question of having unexplained money to be added under section 69 of the Act. The assessee-society is also not aware of the notices issued on their e-mails. Ld.AR of the appellant has submitted that the entire money belongs to the farmers in the respective areas and the same money is being rotated as loans to the agriculturists who are the Members of the Society. There is no business activity and the money of farmers is being utilized to give loans to other agriculturists who are the Members of the society. The loans were not given to anybody outside the members of the cooperative society. In view of the same, the Ld.AR of the appellant prayed to give one more opportunity to the appellant-society to explain the sources of all cash deposits.

Learned Departmental Representative (hereinafter in short “Ld.DR”) opposed the pleas of ignorance / lack of awareness, cannot be a ground for non-compliance of the notices issued by the Ld.AO/Ld.CIT(A) on various dates. The Ld.DR has opposed the pleas of the Ld.AR of the appellant to give one more opportunity, because the appellant-society did not furnish the required information before the both the authorities below.

After hearing both sides, it is decided that an opportunity should be given to the appellant-society to meet the ends of justice. There is sufficient force in the argument of Ld.AR of the appellant that they are not aware of the procedures and also notices generated by the computer being posted in their e-mails, being the first year of computerized environment. As the books of accounts of this cooperative society are audited by the State government and since no irregularities were found by the audit wing of the State Government, an opportunity is being given to the appellant- society to furnish the required information before the Ld.AO. The Ld.AO is directed to go through the information filed and pass an order accordingly. The Ld.AO is also directed to see whether the conditions for deduction under section 80P of the Act are fulfilled especially when no return of income was filed claiming the deduction. There is also some force in the arguments of Ld.DR that the appellant did not file the replies before the Ld.AO / Ld.CIT(A), and the required information was not submitted before both the Authorities. The Ld.AR of the appellant has also not stated the exact reasons for non-furnishing of required information to complete the assessment and also to claim the deduction under section 80P of the Act. After going through the material on record and hearing both the sides, the Bench decides to give an opportunity to the assessee-society to explain the sources of cash deposits made in the savings bank account. The main reason for giving the opportunity to the appellant-society is that the accounts of the assessee-society are being audited by the State Government. For non-furnishing the required information before the Ld.AO / Ld.CIT(A), the Bench decides to levy cost of Rs.20,000/- (Rupees Twenty Thousand only) and the same is to be paid to “Andhra Pradesh State Legal Services Authority” within one month of the receipt of this order.

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

For the A.Y. 2017-18, facts and circumstances are same, since there are no compliance to the notices issued to explain the sources of cash deposits before the Ld.AO and before Ld.CIT(A), the Authorities have confirmed the cash deposits under section 69A of the Act. As the facts and circumstances are same, the Bench decides to remit the matter back to the file of Ld.AO with a direction to the appellant-society to cooperate with the Department and provide all the information with regard to the cash deposits made into the savings bank account. As mentioned above, since the facts and circumstances are same, this appeal is also remitted back to the file of the Ld.AO for fresh adjudication as mentioned in the order of ITA No. 837/VIZ/2025. Needless to say, that the assessee should be given fresh opportunity before completion of assessment.

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

To sum-up, both the appeals are allowed for statistical purposes.