R1059 MARUVATHUR PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LIMITED,PERAMBALUR vs. INCOME TAX OFFICER, PERAMBALUR

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ITA 1994/CHNY/2026Status: DisposedITAT Chennai25 August 2026AY 2019-202013 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay of 98 days in filing its own appeal, finding the reasons provided in the affidavit to be bonafide. The Tribunal held that the CIT(A) should have also condoned the delay and adjudicated the appeal on merits.

What were the facts?

The assessee, a cooperative credit society, appealed against an addition made under Section 69A for unexplained money. The CIT(A) dismissed the appeal due to a delay of 48 days in filing.

What were the issues?

Whether the CIT(A) was justified in refusing to condone the delay in filing the appeal, and whether the matter should be adjudicated on merits.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 144B,Section 80P,Section 139(1),Section 80AC,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES,

Before: SHRI INTURI RAMA RAO & SHRI SS VISWANETHRA RAVI

Pronounced: 25.08.2026

PER INTURI RAMA RAO, ACCOUNTANT MEMBER :

This is an appeal filed by the Assessee directed against the order passed by learned Commissioner of Income Tax(Appeal)[NFAC], dated 10.10.2025 passed u/s.250 of the Income Tax Act, 1961 for the Assessment Year 2019-20. 1

2.

The Assessee raised the following grounds of appeal :

“1. The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming the addition of 6,90,91,220/- made under section 69A of the Income-tax Act, 1961, as unexplained money, without appreciating that the appellant society had maintained proper, complete, and regular books of account, including a cash book forming part of its statutory records, wherein all cash transactions were duly recorded day-wise and member-wise, clearly evidencing the nature and source of cash deposits made into the bank accounts.

2.

The learned authorities failed to appreciate that the appellant is a Primary Agricultural Co-operative Credit Society registered under the provisions of the Tamil Nadu Co-operative Societies Act, 1983, carrying on regulated statutory activities for the benefit of its farmer-members, including acceptance of cash from members in the ordinary course of its functions, and therefore the cash deposits made into the bank accounts are integral to its regular business activities and cannot be treated as unexplained money.

3.

The learned Commissioner of Income-tax (Appeals) erred in sustaining the addition under section 69A without calling for, examining, or verifying the appellant's books of account, cash book, and other statutory records, and the impugned addition has been made purely on presumptions and on the basis of material gathered by the department, without examination of primary evidences maintained by the appellant, rendering the addition arbitrary and unsustainable in law.

4.

The learned authorities failed to consider that during the relevant assessment year the appellant society had maintained its books of account manually and not in a computerized format due to the large volume of data and extensive member-wise transactions, and such non-computerisation was bona fide, permissible in law, and cannot by itself be a ground to draw adverse inference or sustain an addition under section 69A of the Act.

5.

The learned Commissioner of Income-tax (Appeals) failed to appreciate that the appellant society was always ready and willing to produce all books of account, registers, and supporting evidences physically for verification before the Assessing Officer or appellate authority, and the failure of the authorities to call for or examine such records has caused grave prejudice to the appellant.

6.

The learned authorities erred in disposing of the assessment and appellate proceedings substantially on an ex-parte basis, despite partial responses and submissions having been furnished by the appellant society, and without attaching due weight to the evidences maintained by the appellant, thereby resulting in conclusions drawn solely on the basis of departmental material.

7.

The learned Commissioner of Income-tax (Appeals) failed to appreciate that the non-participation of the appellant during certain stages of the assessment and appellate proceedings was due to bona fide and unavoidable circumstances beyond the control of the society and not due to any willful default or deliberate non-compliance, and therefore the ex-parte conclusions drawn are contrary to the principles of natural justice.

8.

The learned Assessing Officer erred both in law and on facts in treating the time deposit amount of 15,00,000/- and income from other sourced amounting to Rs. 10,82,608/- as total taxable income, without appreciating that the appellant is a co-operative society and the said income is eligible for deduction under the relevant provisions of the Income-tax Act, including section 80P, and therefore the addition made is unjustified, arbitrary, and liable to be deleted.

9.

The learned Assessing Officer erred both in law and on facts in treating the cash withdrawals amounting to 52,09,988/- as unexplained or non- genuine, without appreciating that the said withdrawals were made in the ordinary course of the appellant society's activities for disbursement of loans to members and distribution of Pongal gifts to consumers through the fair price ration shop, as per the directions issued by the Government of Tamil Nadu, and that all such transactions were duly recorded in the regular books of account maintained on a day-to-day basis, and therefore the adverse inference drawn is unjustified and liable to be deleted.

10.

The learned Commissioner of Income-tax (Appeals) failed to appreciate that the appellant society is constituted by small and marginal farmers who have invested their hard-earned agricultural income in the Society, that the Society functions entirely out of funds contributed by its own members, and that there is no direct contribution from the Government, and therefore any adverse decision has a direct and serious impact on the livelihood and financial interests of such farmer-members.

11.

The learned authorities failed to appreciate that the non- filing the return of income arose solely on account of lapses and administrative failures committed by the Administrators and staff managing the affairs of the appellant society, who were responsible for statutory compliance, and that such delay was neither intentional nor deliberate on the part of the appellant society or its farmer-members.

12.

The learned Commissioner of Income-tax (Appeals) erred in not appreciating that the farmer-members of the appellant society, who are the ultimate stakeholders, had no role in the day-to-day administration or statutory compliance of the Society and therefore cannot be made to suffer adverse consequences for the lapses committed by the Administrators.

13.

The learned authorities erred in dismissing the condonation of delay in a summary and mechanical manner, without adopting a liberal, pragmatic, and justice-oriented approach, and such dismissal of the condonation petition is not acceptable in a respectable and judicious manner, particularly when refusal results in denial of adjudication on merits.

14.

The learned Commissioner of Income-tax (Appeals) failed to appreciate that refusal to condone the delay forecloses the appellant's statutory rights at the threshold, causes grave prejudice to the appellant society and its farmer-members, and defeats the principles of substantial justice.

15.

The learned Commissioner of Income-tax (Appeals) failed to appreciate that the impugned orders have been passed without proper appreciation of facts, without examination of the appellant's books of account, and without granting a reasonable and effective opportunity to the appellant to adduce evidences in support of its case, and therefore the impugned orders are bad in law and liable to be set aside.

16.

The appellant respectfully prays that the Hon'ble Tribunal may be pleased to set aside the impugned orders, condone the delay in filing the return of income, and restore the entire matter to the file of the Assessing Officer or the learned Commissioner of Income-tax (Appeals), as deemed fit, with a direction to afford a proper and effective opportunity to the appellant to produce all books of account and evidences physically and to adjudicate the issues afresh on merits in accordance with law.

It is therefore the appellant humbly prays that this Hon'ble Tribunal may pass an order to;

1.

Set aside the impugned order and restore the matter to the file of the learned CIT(A) with a direction to condone the delay, grant a fair and effective opportunity of hearing under section 250, and adjudicate the appeal on merits after considering the evidences adduced, and thus render justice.

2.

Grant such other and further reliefs as this Hon'ble Tribunal may deem fit and proper in the circumstances of the case and thereby render justice.”

3.

Briefly, the facts of the case are that the appellant is Co- operative Society duly registered under the Tamilnadu Co- operative Credit Societies Act, 1983. It is formed with the object of lending money to the farmers and accepting deposits from the farmers. It is classified as Primary Agricultural Cooperative Credit Society(PACCS). The appellant cooperative society had not filed return of income under the provisions of section 139 of the Income Tax Act, 1961 for the Assessment Year 2019-20. However, based on the information that the appellant co- operative society made cash deposits of Rs.7,01,79,945/- in the account maintained with bank and also made a time deposits of Rs.15 lakhs and cash withdrawals of Rs.52,09,988/-, the Juri ictional Assessing Officer formed an opinion that income got escaped assessment from tax, accordingly, a notice u/s.148 was issued on 29.03.2023 calling upon the appellant to file Return of Income after duly complying with the procedure laid down u/s.148A of the Act. In response to notice u/s.148 of the Act, the appellant filed return of income in 28.04.2023 disclosing the income at Rs.NIL. Against the said return of income, the assessment was completed by the e-Assessment Unit of the Department(hereinafter called ÁO’) vide order dated 19.02.2024 passed u/s.147 r.w.s 144B of the Income Tax Act at a total income of Rs.7,68,74,054/-. While doing so, the Assessing Officer made addition of Rs.6,90,91,220/- being the deposits in the bank account maintained with Tiruchirapalli District Cooperative Bank Ltd as the appellant failed to offer any explanation as to the source of the cash deposits. Similarly, the Assessing Officer made addition of Rs.10,82,608/- by estimating the profit @8% on the total and credits made in the bank account. The Assessing Officer also brought to tax the interest income earned by the assessee of Rs.52,79,259/- and other income of Rs.14,20,467/- aggregating to Rs.67,00,226/-. The Assessing Officer also denied the claim for deduction u/s.80P as no return of income was filed by the appellant within the due date prescribed u/s.139(1) of the Act placing reliance on the provisions of section 80AC of the Income Tax Act.

4.

Being aggrieved by the assessment order, the appellant filed an appeal before the Learned CIT(A), who vide impugned order dismissed the appeal without condoning the delay of 48 days. The Learned CIT(A) had refused to condone the delay and dismissed the appeal in limine placing reliance on certain judicial precedents.

5.

Being aggrieved by the order of the Learned CIT(A), the appellant-society preferred an appeal before the Tribunal. At the outset, we find that there is a delay of 98 days in presenting appeal before this Tribunal. The appellant also filed a petition seeking condonation of delay on the ground that The appellant society is managed by elected office bearers who are lay persons with no expertise in income-tax appellate procedures. The society was not aware of the further appellate remedy before the Hon'ble ITAT or the procedure and limitation involved. The appellant was entirely dependent on its statutory auditor/tax consultant for guidance in tax matters. Unfortunately, the auditor concerned was not conversant with the appellate procedure before the ITAT and failed to advise the society regarding the filing of appeal within time. Due to lack of proper professional guidance and support, the appellant society was under the bona fide belief that no further effective remedy was available after the order of the CIT(A).

6.

We have perused the Affidavit and the averments made in the Affidavit. The averments made in the affidavit remain uncontroverted by Learned CIT-DR. The Hon’ble Supreme Court in the case of M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, held that an uncontroverted affidavit shall be taken as an affidavit on fact. In the light of this legal position, we are of the considered opinion that the delay had occurred in filing the appeal on account of Bonafide reasons and the explanation cannot be brushed aside. Therefore, we are of considered opinion that there is a reasonable and sufficient cause for the delay, hence, the delay is condoned. Accordingly, we admit the appeal for adjudication on merits.

7.

When the appeal was called for hearing, no one attended for hearing on behalf of the assessee despite due service of notices.

8.

On the other hand, the Learned Sr.DR relied on the order of Lower Authorities.

9.

We heard Learned Sr.DR and perused the material available on record. The issue that arises for our consideration is whether the Learned CIT(A) justified in refusing to condone the delay of 48 days having regard to the explanation offered before him. From the reading of the para 5.2.3 of the impugned order before us, it is evident that appellant had sought for condonation of delay on the ground that delay was occurred on account of Auditor who had not taken the steps for filing the appeal within the time allowed.

10.

We are of the considered opinion that the averments made in the Affidavit remains uncontroverted by the Learned CIT(A). The Learned CIT(A) had not brought any evidence on record to show that the explanation is not Bonafide. In the circumstances, we are of the considered opinion that the learned CIT(A) ought to have condoned the delay and adjudicated the appeal on merits in accordance with law. Accordingly, we remit the matter back to the file of Learned CIT(A) with a direction to condone the delay of 48 days and adjudicate the issue in appeal on merits in accordance with law after affording an opportunity of being heard to the appellant.

11.

In the result, appeal filed by the Assessee stands partly allowed for statistical purpose. Order pronounced in the open Court on 25th August, 2026. (SS VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; िदनांक / Dated : 25th Aug, 2026 SGR, Sr.PS आदेश क" "ितिलिप अ"ेिषत / Copy of the Order forwarded to : अपीलाथ" / The Appellant.

1.

""यथ" / The Respondent.

2.3.

The CIT Chennai/Madurai/Coimbatore/Salem. 4. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, “सी” ब"च, चे"नई / DR, ITAT Chennai. गाड" फ़ाइल / Guard File.

5.

GANGADHARA RAO SALEELA Date: 2026.09.01 17:39:58 +05'30'

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