KOKRAJHAR SUB DIVISIONAL WHOLESALE CONSUMERS CO OP SOCIETY LTD,KOKRAJHAR vs. ITO, WARD -1, BONGAIGAON, BONGAIGAON

The assessee is in appeal before the Tribunal raising the following grounds of appeal:

Brief facts of the case are that the assessee is a Co-operative Society which had failed to file its income tax return u/s 139 of the Act for the AY 2015-16. Information related to the assessee for AY 2015-16 was received through the Insight Portal. As per the asset details available on the Insight Portal/ITBA 360 Degree, it was found that the assessee had deposited cash amounting to ₹19,46,39,000/- in Assam Gramin Vikash Bank, Kokrajhar Branch. Upon verification of the bank account details, it was observed that the assessee had entered into cash transactions amounting to ₹7,18,42,000/- during the financial year. Accordingly, the case was reopened u/s 147 of the Act by issuing a notice u/s 148 of the Act dated 30.03.2022. Subsequently, several notices u/s 142(1) and 143(2) of the Act were issued to the assessee. However, the assessee failed to furnish any reply or to file supporting Kokrajhar Sub Divisional Wholesale documents. A final show cause notice dated 08.02.2023 was issued to the assessee, despite which the assessee did not submit any reply or documentary evidence. Further, a personal hearing via video conferencing was offered to the appellant on 15.02.2023 in response to which the assessee filed its reply belatedly on 13.10.2023. Subsequently, the Assessing Officer (hereinafter referred to as Ld. 'AO') passed the assessment order u/s 147 r.w.s. 144B of the Act determining the total income at ₹7,27,61,780/- after making an addition of ₹7,18,42,000/- as unexplained money u/s 69A of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, vide order dated 17.10.2025 dismissed the appeal of the assessee as per his findings as under: “5.1 Ground no. 1: The Learned AO erred in making proposed variation in income. The Order passed being Erroneous, Arbitrary and lack law of natural justice as laid down in APEX Court Ruling in KISHINCHAND CHELLARAM VS CIT CASE (1980) [125 ITR 713(SC)]. 5.1.1 This ground is not tenable. The AO had credible information from a government portal (Insight) indicating substantial cash deposits. The reopening was based on a prima facie belief of income escaping assessment, supported by evidence. As laid down in Raymond Woollen Mills Ltd. v. ITO (236 ITR 34, SC), the sufficiency of reasons is not to be judged at the initiation stage; what matters is the existence of a reason to believe. Further, all procedural safeguards were observed, including prior approval of competent authority.

2 Ground no. 2; The Learned AO erred in imposing various interest whereas in absence of variation in Income which is not followed in letter & spirit also law of natural justice not followed hence imposition of interest under given Section not justifiable. 5.2.1 This is factually incorrect. A clear variation in income has occurred due to the addition of Rs. 7.18 crore under section 69A. Interest under sections 234A, 234B, and 234C is mandatory and compensatory, as held in Anjum M.H. Ghaswala v. CIT (252 ITR 1, SC). The levy of interest is automatic where conditions prescribed under the law are fulfilled. The AO has no discretion in such cases. This ground is dismissed.

The Learned AO erred in imposing penalty under section 271(1)(c) of Income Tax Act, 1961 since assessee does not violate any such condition also in absence of any elements of Mensrea. Imposition of Section 271(1)(c) is bad in law. 5.3.1 This ground is premature. The present appeal relates to the assessment order, and no penalty has yet been imposed. Only penalty proceedings have been initiated, not concluded. The appellant has the opportunity to respond in the penalty proceedings. Hence, this ground is outside the scope of the current appellate adjudication. This ground is treated as premature and not adjudicated here.

4 Ground no.

The learned AO erred in invoking Section 147 and section 144 as criteria suggested for section 69A had not been complied by AO as mentioned in para 11, 12 & 13 of Statement of Fact. The appellant craves leave to alter, amend modify any of the grounds and or take additional grounds before or at the time of hearing of this appeal. Due to voluminous documents Assessee pray for personal hearing and not Faceless Appellate Proceedings. 5.4.1 The AO reopened the case as per law based on credible data. Section 69A applies where cash or valuable items are found to be unexplained. The onus is on the assessee to prove the source of such cash, and mere production of sales summary or audit reports is insufficient unless the link between cash deposit and actual business sales is clearly and contemporaneously documented, as per CIT v. P.K. Noorjahan (237 ITR 570, SC). Despite repeated notices, the appellant failed to produce Contemporaneous cash book entries, Day-to-day reconciliations, Customer- level receipts, Cash flow linkage between sale and deposit. The sales were recorded on aggregate level, and many invoices/bills lacked sufficient cross- verification. The assessee also failed to file its ITR within the prescribed due date under section 139, weakening its claim of regular business activity. The Audit Report does not override the statutory responsibility of the assessee to explain deposits under income-tax proceedings. The AO has applied section 69A correctly as the explanation offered was not satisfactory. The facts are clearly distinguishable from Kishanchand Chellaram (supra) as there was no violation of natural justice here — repeated opportunities were given, and even video hearing was offered. This ground is dismissed.

In the result, the appeal is dismissed.”

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined.

The Ld. AR stated that the assessment order passed was ex parte u/s 144 of the Act and this was the second round of appeal. The assessee claims to be a society which was established in 1963 with the assistance of the State Government and was established for the purpose of distribution of LPG cylinders but no return of income was filed as the income was claimed to be exempt. The Ld. AO added a sum of ₹7.18 Crore as unexplained money etc. No physical hearing could be carried out. The assessee is in the business of distribution of LPG cylinders and PDS. The assessment order was passed u/s 144 of the Act and the Ld. CIT(A) confirmed the addition. The Ld. AR requested that the matter may be remanded to the Ld. AO as the assessee has sufficient evidence for the cash deposited in the bank account.

The Ld. DR requested that the order of the Ld. CIT(A) may be confirmed.

We have considered the facts of the case, the submissions made and the documents filed. In the interest of justice and fair play it was considered by the Bench that the request of the assessee to set aside the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. AO for making the reassessment de novo. Needless to say, the assessee shall be given a reasonable Kokrajhar Sub Divisional Wholesale opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 6th May, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 06.05.2026 Bidhan (Sr. P.S.)

CIT(A)-NFAC, Delhi.

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order