THE KURNOOL URBAN CO-OP CREDIT SOCIETY LTD,KURNOOL vs. DCIT., CIRCLE-1, KURNOOL

At the outset, there is a delay of 368 days in filing the appeal before the Tribunal. The assessee has filed a petition for condonation of delay which is supported by the affidavit of the Chairman of the assessee society. The learned Authorised Representative of the Assessee has submitted that due to some dispute in the management, an enquiry was instituted against the Ex-Chairman and thereafter the Government has took-over the charge by appointing a committee. Since the entire record of the society was in the custody of the Enquiry Officer therefore, the assessee could not file the appeal within the period of limitation. Thus, the learned Authorised Representative of the Assessee has submitted that only when the assessee received notice u/sec.226(3) of the Income Tax Act [in short "the Act"], 1961 dated 18.08.2025 for recovery and attachment of the bank account of the assessee society, the assessee realized the proceedings pending before the learned CIT(A) and found that the impugned order was already passed. Thus, the learned Authorised Representative of the Assessee has submitted that the delay in filing the appeal is neither intentional nor willful but due to the circumstances as explained by the assessee. He has pleaded that delay of 368 days in filing the appeal be condoned.

On the other hand, the learned DR has opposed to the condonation of delay and submitted that the reasons explained by the assessee are not pertain to the period in question and even if there was an enquiry instituted against the outgoing Chairman of the assessee society, it does not effect the affairs of the society as managed by the subsequent management.

I have considered the rival submissions and perused the contents of the affidavit wherein the assessee has explained the cause of delay. The relevant part of the affidavit is reproduced as under: “In this regard it is humbly submitted that an enquiry was instituted on 17.11.2024 against the elected body headed by its Chairman Sri A. Balaraju whose term expired on 6.2.2024. In his place Sri B. Ramakrishnaiah was appointed with effect from 7.2.24. Sri B. Ramakrishnaiah retired from the service on attaining the age of superannuation and thereafter, the Government appointed the present committee and the present Chairman took over the charge on 6.9.2024. By the time, I took over the charge as the Chairman, the entire records of the Society were in the custody of the Inquiry Officer, Smt. I.D. Sireesha, District Co-operative Audit Officer, Kurnool. The records was in the custody of the Inquiry Officer consequent to the institution of Inquiry against Committee headed by Sri A. Balaraju. The enquiry was concluded only on 31.5.2025. Thereafter the District Co-operative Audit Officer, Kurnool returned the seized records along with enquiry report and the remaining records to the society on 10.6.2025. The pending Income-tax proceedings were not in the knowledge of the District Co-operative Audit Officer. In the mean time, the ACIT, Circle-1, Kurnool issued a notice u/s 226(3) on 8.8.2025 which was served on 18.8.2025, attaching the bank account of the Society. At this stage I have realized that the proceedings are pending and got the records verified thoroughly and started the process of selecting a senior tax consultant for entrusting the further proceedings. I approached the Income Tax counsel on 2.9.2025 and got the appeal prepared and the appeal before the Hon'ble ITAT was filed on 3.9.2025. There is a delay of 368 days in filing the appeal. The delay is for the reasons submitted above which are beyond the control of the assessee society and is not intentional.”

The Assessee has raised the following grounds of appeal:

The learned Authorised Representative of the Assessee has submitted that the Assessing Officer has made an addition on account of cash deposit in the bank account of the assessee with the District Cooperative Bank by invoking the provisions of sec.69A of the Act. He has referred to the cash book of the assessee and submitted that the assessee society was having sufficient opening balance as on 08.11.2016 and therefore, the deposit made during the demonetization period was out of the opening balance of cash available with the assessee society. He has further submitted that the income of the assessee is otherwise exempt u/sec.80P of the Act and therefore, the addition made by the Assessing Officer is highly arbitrary and unjustified. He has referred to the cash book and submitted that the cash available with the assessee as on 08.11.2016 is duly recorded in the books of account of the assessee. He has thus submitted that the orders of the Assessing Officer and the learned CIT(A) were passed ex-parte as there was no proper representation of the assessee before the authorities below due to the disputes and the Management taken-over by the Government appointed committee as well as enquiry instituted against the former Chairman and Members of the assessee society. Thus, he has pleaded that the matter may be remanded to the record of the Assessing Officer for proper verification and examination.

On the other hand, the learned DR has submitted that despite sufficient opportunities given by the Assessing Officer as well as the learned CIT(A), the assessee has not produced any record and details to explain the source of cash deposit in the bank account during the demonetization period. Thus, the Assessing Officer is justified in making the addition u/sec.69A of the Act. He has relied upon the Orders of the authorities below.

I have considered the rival submissions as well as relevant material on record. The Assessing Officer has made the addition of Rs.13,12,450/- u/sec.69A of the Act on account of cash deposit in the bank account of the assessee with District Cooperative Bank. As per the cash book filed by the assessee prima facie it appears that the assessee has shown the cash balance as on 08.11.2016 sufficient to make the deposits in the bank account however, since the assessment order as well as the learned CIT(A) order were passed ex-parte and assessee has explained the reasons for non-representation before the authorities below, therefore, the said record and particulars of the books of account and cash book of the assessee society could not be verified and examined by the authorities below. Accordingly, in the facts and circumstances of the case and in the interest of justice, the impugned order of the learned CIT(A) is set aside, and the matter is remanded to the record of the Assessing Officer for fresh adjudication after verification and examination of the relevant record and details to be filed by the assessee.

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