SS75 SALEM DIST PUBLIC HEALTH DEPT EMPL COOP THRIFT & CREDIT SOCIETY,SALEM vs. ITO WARD I(1), SALEM

Briefly the facts of the case are that appellant is a Co-operative Society registered under Tamilnadu Co-operative Societies Act, 1983. It is engaged in the business of providing credit facilities to the members and accepting deposits from members. No regular return of income under the provisions of section 139(1) of the Act was filed for the Assessment Year 2019-20. However, based on the information that the appellant society made cash deposit of Rs.1,55,32,456/- and time deposits of Rs.1 crore in bank accounts maintained with Salem District Central Co-operative Bank Ltd, the Assessing Officer formed an opinion that the Jurisdictional Assessing Officer that income got escaped assessment from tax. Accordingly, a notice u/s.148 was issued on 31.03.2023 after duly complying with the procedure laid down u/s.148A of the Act. In response to notice u/s.148, appellant society filed the Return of Income on 08.04.2023 disclosing NIL Income after claiming exemption u/s.80P of the Income Tax Act of Rs.60,10,052/-. Against the said Return of Income, assessment was completed by the e- Assessment Unit of the Department (hereinafter called ‘AO’) vie order dated 04.12.2023 passed u/s.147 r.w.s 144B of the Income Tax Act at a total income of Rs.2,15,42,508/-. While doing so, the Assessing Officer denied the claim for deduction u/s.80P of the Act for the reason that the appellant had not filed the return of income within the due date prescribed u/s.139(1) of the Act placing reliance on the provisions of section 80AC of the Act. The Assessing Officer also made an addition of cash deposit in bank account of Rs.1,55,32,456/- as appellant society failed to furnish explanation as to the source of the cash deposit, despite several opportunities granted to the appellant.

Being aggrieved, an appeal was filed before the ld.CIT(A) who vide impugned order dismissed the appeal.

Being aggrieved, appellant filed an appeal before us in the present appeal. It is submitted before us that the initiation of reassessment proceedings u/s.148 are bad in law in as much as the appellant was not given clear notice of seven days to respond to notice u/s.148A(b) of the Act. It is further submitted that the ld.CIT(A) fell in gross error not setting aside the assessment order to the file of Assessing Officer and ld.CIT(A) also failed to consider the explanation in support of the sources of the cash deposit of Rs.1.55 crores, as the same was deposited out of the money received from its members. Finally, it is submitted that delay in filing return of income was sought to be condoned through writ remedy. The appellant society had filed an application for admission of additional evidence, in support of reasons for non-appearance before the ld.CIT(A), a medical certificate to show that the Chartered Accountant of the appellant society was undergoing a treatment for orthopedic bone related problem.

On the other hand, the ld.Sr.Departmental Representative vehemently opposed the above submission and submits that the appellant had failed to furnish the information sought by the Lower Authorities and the Assessing Officer had rightly denied claim for deduction u/s.80P of the Act placing reliance on the provisions of section 80AC of the Income Tax Act.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the ld.CIT(A) was justified in passing Explanation. At the outset, we find that the Assessing Officer as well as ld.CIT(A) passed ex-parte orders. During the course of proceedings before us the appellant had filed an application explaining the reasons for non-appearance before the Lower Authorities.

In the result, appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 5th May, 2026.