MANDPESHWAR CO OP CREDIT SOCIETY LTD ,MUMBAI vs. ITO WARD 42(1)(3), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICAIL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.5072/MUM/2025 (AY: 2011-12) Mandpeshwar Co-op. Credit Society vs. ITO, Ward -42(1)(3), Room 704, Ltd., B-15, Dattani Trade Centre, 7th Floor, Kautilya Bhavan, Chandavarkar Road, Borivali West, Bandra Kurla Complex, Bandra (East), Mumbai-400092. Mumbai - 400 051. PAN/GIR No: AABAM394H (Appellant) (Respondent) Assessee by Mr. Prashant Ghumare Revenue by Shri Annavaram Kosuri (SR AR) Date of Hearing 12.05.2026 Date of Pronouncement 15.06.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the assessee emanates from the order passed under

section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the ADDL./JCIT-2

Visakhapatnam [in short, ‘CIT(A)’], dated 20.06.2025 for the assessment year

(AY) 2011.12.

“1. THE ORDER BAD IN LAW, ILLEGAL AND WITHOUT JURISDICTION

1.1 In the facts and the circumstances of the case, and in law, the appellate order framed by the Additional / Joint Commissioner of Income tax (Appeals) 2, Visakhapatnam, ['Ld. CIT (A)'] is bad in law, illegal and without jurisdiction, as the same is framed in breach of the statutory provisions of the Income-tax Act, 1961 ['the Act'] and the scheme and as otherwise also is not in accordance with the law

1.2 Without prejudice to the generality of the above, the appellate order so passed is bad in law, illegal and void as the same is arbitrary and

ITA No.5072/MUM/2025 Mandpeshwar Co-Op. Credit Society Ltd. perverse and without application of mind to the facts and the legal position.

2.1 In the facts and the circumstances of the case, and in law, the appellate order so framed in bad in law and illegal, as the same is framed in breach of the principles of Natural Justice.

2.2 Without prejudice to the generality of the above ground, in the facts and the circumstances of the case, the Ld. CIT (A) erred in - (i) (!!) not granting proper, sufficient, reasonable and fair opportunity of being heard to the Appellant while passing the appellate order, and not granting an opportunity of personal hearing.

WITHOUT PREJUDICE TO THE ABOVE

3.1 The Income-tax Officer-32(2)(3), Mumbai ('the A.O.') erred in initiating the reassessment proceeding and framing the assessment of the Appellant by invoking the provisions of section 147 r.w.s. 148 of the Act.

3.2 While doing so, the A.O. failed to appreciate that:

(i) The case of the Appellant did not fall within the parameters laid down by section 147 r.w.s. 148, 149 & 151 of the Act; (ii) The necessary preconditions for initiating the reassessment proceeding and completion thereof were not satisfied.

3.3 It is submitted that in the facts and the circumstances of the case, and in law, the reassessment framed is bad in law, illegal and without jurisdiction.

WITHOUT PREJUDICE TO THE ABOVE

4.1 The Ld. CIT (A) erred in confirming the action of the A.O. in passing the rectification order u/s. 154 of the Act.

4.2 The Ld. CIT (A) failed to appreciate that –

ITA No.5072/MUM/2025 Mandpeshwar Co-Op. Credit Society Ltd. (i) Non-consideration of the audited financials of the Appellant by the A.O. was a mistake apparent from record. (ii) Non-granting of the deduction u/s. 80P of the Act was a mistake apparent from record. 4.3 It is submitted that in the facts and the circumstances of the case, and in law, the rectification order passed is bad in law, illegal and without jurisdiction. WITHOUT PREJUDICE TO THE ABOVE 5. ADDITION OF RS. 3,60,21,325/- AS ALLEGED UNEXPLAINED CASH CREDIT 5.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making addition of the amount of Rs. 3,60,21,325/-u/s. 68 of the Act, by treating the cash deposits in the account of the Appellant as alleged unexplained cash credit. 5.2 While doing so, the Ld. CIT (A) erred in --- (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (iii) Ignoring relevant material and considerations. 5.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for. 5.4 Without prejudice to the above, assuming - but not admitting - that some addition was called for, the Ld. CIT (A) failed to appreciate that the computation of the addition made by the A.O. is not in accordance with the law, is arbitrary, and excessive. 6. LIBERTY The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.”

ITA No.5072/MUM/2025 Mandpeshwar Co-Op. Credit Society Ltd. maintained with Zoroastrian Co. Op. Bank Ltd. The assessee did not file any return in response to the notice u/s 148 of the Act. In reply to notice u/s 133(6) of the Act, Zoroastrian Co. Op. Bank Ltd. stated that the total cash deposit by the assessee was Rs.3,60,21,325/-. Thereafter, AO issue various notice u/s 142(1) and show-cause notice calling for the explanation of assessee regarding source of cash deposit along with supporting documents. Since the assessee did not appear nor filed any details, the AO made the assessment to the best of judgment u/s 144 r.w.s. 147 of the Act by adding Rs.12,43,25,98,756/-. 5. Aggrieved by the order of AO, the assessee filed a rectification petition u/s 154 of the Act stating that the Zoroastrian Co. Op. Bank Ltd. itself had stated that cash deposit was Rs.3,60,21,325/-, but addition was made of Rs.12,43,25,98,756/-. The AO passed rectification order u/s 154 of the Act assessing the total income at Rs.3,60,21,325/-. 6. Aggrieved by the above order, the assessee filed appeal before the CIT(A). The CIT(A) has reproduced the submission of the appellant at para 4 of the appellate order. The assessee had also relied on various decisions and submitted that the major source of cash was daily deposit of the members of the Co-op. society of Rs.2,32,37,860/- and DD loan form members of Rs.1,03,07,673/-. It was submitted the profit and loss account was not considered by the AO, which shows income of Rs.4,724/- only. The CIT(A) did not accept the contention of the assessee by stating that the appeal arose from the rectification order of the AO and such claim cannot be entertained. Accordingly, the appeal was dismissed. 7. Aggrieved by the order of CIT(A), the assessee filed the appeal before the

ITA No.5072/MUM/2025 Mandpeshwar Co-Op. Credit Society Ltd. Tribunal. The Ld. AR has filed a paper book containing 234 pages and submitted that the various details were filed before the AO and CIT(A) during the respective proceedings before them. It was submitted that profit of the assessee was only Rs.4,724/- only but assessed income is substantially higher at Rs.3,60,21,325/-. The AO has passed an ex parte order and raised huge demand on the assessee which has no basis. The CIT(A) has also mechanically confirmed the addition without considering merit of the case. He submitted that all the details are available with the assessee. He therefore, requested to set aside the order of CIT(A) and restore the matter to the AO for fresh assessment in the interest of justice. 8. On the other hand, the Ld. Sr. DR supported the order of lower authorities. He, however, submitted that the Tribunal may decide the matter as it thinks fit. 9. We have heard both sides and perused the materials on record. It is undisputed that the assessee did not originally file return of income u/s 139 of the Act. It also did not file any return in response to notice u/s 148 of the Act. The assessee also did not appear before the AO during the reassessment proceedings. Hence, the AO made best judgement assessment u/s 144 of the Act and added the entire deposit made in the bank to the total income. The Hon’ble Supreme Court in case of State of Kerala vs. Velukutty 69 ITR 239 (SC) held that the limits of the power are implicit in the expression "best of his judgment". Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess-work in a "best 5

ITA No.5072/MUM/2025 Mandpeshwar Co-Op. Credit Society Ltd. judgment assessment", it shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case. In the instant

case, the total deposit in the Zoroastrian Co. Op. Bank Ltd. includes daily deposits

from the member and DD loan from members. Hence, the entire deposit cannot be the income of the assessee. Therefore, we are of the considered opinion that

the assessee deserves one more opportunity in the interest of justice to explain

its case on merit. However, we also find that the assessee has not been able to explain satisfactory the reasons for not filing the returns and failure to make

compliance with the notices issued by the lower authorities. In view of these

facts, we set aside the order of CIT(A) and restore the matter to the file of AO for fresh assessment subject to payment of cost of Rs.10,000/- (Rupees Ten Thousand

Only) to the credit of the Prime Minister’s National Relief Fund within 30 days from receipt of this order. Subject to such payment, the AO shall decide the matter

on merits in accordance with law after granting adequate and reasonable

opportunity of being heard of the assessee. The ground is allowed for statistical purpose.

9.1 We make it clear that we have not expressed our opinion on merit of the

case, which the AO shall independently decide as per law.

fresh adjudication, the other grounds become academic in nature and do not

require adjudication.

ITA No.5072/MUM/2025 Mandpeshwar Co-Op. Credit Society Ltd. 11. In the result, the appeal of the assessee is allowed for statistical purpose.

Order is pronounced on 15.06.2026.

Sd/- Sd/- (SANDEEP GOSAIN) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER

*Aniket Chand; Sr. PS MUMBAI Date: 15.06.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File

By Order Assistant Registrar ITAT, MUMBAI