KONARK OASIS RESIDENTS WELFARE SOCIETY,BHIWADI vs. ACIT, CIRCLE 1, ALWAR, ALWAR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1418/JPR/2025 (Assessment Year:2010-11)

Konark Oasis Residents Vs. ACIT Welfare Society Circle-1, RF-4, Kanrk Oasis, Alwar Alwar Bypass Road, Bhiwadi, Alwar �थायीलेखासं./जीआइआरसं./PAN/GIR No:AABAK 7799 N Appellant .. Respondent Appellant by : Sh. Mukesh Khandelwal, CA Respondent by : Sh. Gaurav Awasthi, JCIT Date of Hearing 04.06.2026 Date of Pronouncement 30.06.2026 O R D E R The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), u/s 250 of the Income Tax Act, 1961(hereinafter referred to as “the Act”) dated 15-09-2025. 2. Briefly stated, the assessee is a housing society .For the impugned year i.e. Assessment Year AY 2011-12, the assessee Society was noted to have deposited cash amounting to Rs.20,38,026/- in its

P a g e | 2 ITA No. 1418/JPR/2025 Konark Oasis Residents Welfare Society Bank account. Since no return of income had been filed for the relevant year and in response to letter issued to the assessee asking to explain the transaction of cash deposited, no compliance was made by the assessee therefore, the AO recorded reasons of escapement of income of the assessee to the extent of the cash deposited in its bank account and reopened the case of the assessee by issuing notice u/s 148 of the Act. 3. During the proceedings before the AO, none appeared on behalf of the assessee and accordingly, the AO passed an ex parte order u/s 144 of the Act, adding the entire cash deposited in its bank account as unexplained money u/s 69A of the Act. Further, the AO noted from the bank statement of the assessee that he had received interest of Rs.21,176/- and the same was also added to the income of the assessee. Accordingly, the income of the assessee was assessed at Rs.20,59,200/- after making the addition on account of cash deposited in its bank account and interest income earned. 4. The matter was carried in appeal before the Ld. CIT(A), where the assessee submitted that all the amount deposited in the bank account was collected from Members of the Housing Society, and the Society operated on the principles of mutuality working for the benefit of the Members and therefore no portion of income whether by way of collection from Members or otherwise was taxable. In support of its contention, the assessee filed documents. The Ld. CIT(A) forwarded the documents to the AO for verification who despite two reminders did not submit any remand report.

P a g e | 3 ITA No. 1418/JPR/2025 Konark Oasis Residents Welfare Society 5. The Ld. CIT(A) accordingly went on the examine the explanation of the assessee and noted that the assessee had placed on record; bank statement and self-generated receipts which did not establish that the deposits were exclusively Members’ contributions governed by the principal of mutuality, and he noted that for such claim to be accepted, the assessee was expected to furnish his registration documents, bye- laws, minutes of meetings, Member-wise ledger accounts etc., and in the absence of this basic and primary records, the assessee’s claim remained unverified and incapable of acceptance. Accordingly, all the grounds raised by the assessee were dismissed. The findings of the Ld.CIT(A) in this regard are contended at para 5-5.5 of his order as under:- 5. Findings and decisions:- 5.1The issue involved in the present appeal pertains to the addition of cash deposits of 20,38,026/- made in the bank account of the assessee society during A.Y. 2011-12, which were treated by the AO as unexplained money u/s 69A of the Act. The assessment was framed u/s 144 r.w.s. 148 after the assessee failed to comply with repeated statutory notices. Notice u/s 148 dated 28.03.2018 as well as subsequent notices u/s 142(1) dated 10.08.2018 and 24.09.2018 were duly served, yet the assessee did not file its return of income or submit any details. The assessment order records that sufficient and ample opportunities were provided, but the assessee chose not to respond. In such circumstances, the AO had no option but to complete the assessment ex parteon the basis of available material, including information obtained from the banker which confirmed cash deposits of 20,38,026/- 5.2 During appellate proceedings, it is seen from the ITBA portal that the assessee filed certain replies on 20.01.2021, 02.11.2022, 01.05.2023, 05.10.2024, 11.12.2024, 26.07.2025 and 29.07.2025, wherein it was claimed that being a Resident Welfare Society, the deposits were nothing but members' contributions towards maintenance and service charges. In support, the assessee enclosed copies of the bank statement and certain receipts issued for maintenance charges. Since these documents were additional evidence not furnished before the AO, remand report was called for on 22.07.2025 and reminder issued on 12.08.2025, However, no report was received, and the matter is thus adjudicated on the basis of the material available on record,

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5.3 On examination, it is observed that the assessee has placed on record only limited documents such as the bank statement and self-generated receipts. These by themselves do not establish that the deposits were exclusively members' contributions governed by the principle of mutuality. For such a claim to be accepted, the assessee was expected to furnish its registration documents/bye-laws, minutes of meetings or resolutions fixing maintenance charges, member-wise ledger accounts or cash book, confirmations from members, audited income & expenditure account, and vouchers/bills evidencing actual application of funds for the common services of the society. None of these crucial evidences have been filed. The absence of these basic and primary records renders the assessee's claim unverified and incapable of acceptance. 5.4 It is trite law that the onus is on the assessee to explain the nature and source of cash deposits with cogent and reliable evidence. Mere assertions supported only by a bank statement and internal receipts cannot discharge this burden. Such contentions by the assessee can only be accepted if duly backed by identifiable member-wise details, governing rules of the society, and independent proof of utilization of funds. In the present case, despite ample opportunities at both the assessment and appellate stages, the assessee has failed to discharge this burden. Accordingly, the action of the AO in treating the cash deposits of 20,38,026/- as unexplained income u/s 69A is found to be justified and is confirmed. 5.5 The AO has further added 21,176/- being interest received on the assessee s bank account. The bank statement itself clearly reflects such accrual of interest. The assessee has not offered any explanation or documentary evidence either before the AO or before me to show that the interest was exempt or pertained to any other source. In the absence of any rebuttal, the finding of the AO is upheld and the addition of 21,176/- stands confirmed.

P a g e | 5 ITA No. 1418/JPR/2025 Konark Oasis Residents Welfare Society Bank account pertained to only collection from its Members to be utilized for their benefit alone, is incorrect, since all necessary documents were furnished to the AO during remand proceedings. He drew my attention to the e-proceedings responses acknowledgment submitting documents to the AO during remand proceedings on 07.08.2025 pointing out that the assessee submitted the following:- i) Trial balance ii) Profit and loss account iii) Bank statement iv) All receipts of service charge v) Bye laws of the assessee-Society vi) Registration Certificate of the assessee-Society. 8. Thereafter, he pointed out that all these documents submitted, clearly established that amount collected by the assessee was contributions from its Members governed by the principle of mutuality, contrary to the findings of the Ld. CIT(A). He first drew my attention to the byelaws of the Society filed to the AO and drawing my attention to its aims and objects pointed out that all its objects were for the benefit of the Members of the Society alone. The same are reproduced hereunder:- 4. Aims and object: (a) To be and to act as an Society of Apartment/ Flat Owners in the Project known as KONARK OASIS ("Project"), in such a manner so as to protect the legitimate rights, privileges and interest of all its Members, without prejudice or favor to none; (b) To provide for, and do all or any of the matters as laid down in these bye-laws;

P a g e | 6 ITA No. 1418/JPR/2025 Konark Oasis Residents Welfare Society (c) To establish and carry on, on its own or jointly with individuals or institutions, educational, physical, social, recreational or other activities, for the benefit of the Members; (d) To provide for the security, maintenance, repair, replacement or improvements of common areas and facilities of the Project through a service agency/ service company by may or proportionate contribution from the Members, and, if necessary. (e) To protect the Project from all kinds of damage, to maintain the exterior and elevation of the buildings in the Project and to prevent the same from /any/all kind ofalterations/additions: (f) To recover itself or through service company/ service agency all the charges and other amounts payable by the Members to the Society and/or service company/service agency: (g) To collect from the Member's all taxes, dues, levies, cess, lease money, etc., as may be applicable, in respect of the Project and Schedulec3 Land <<< id deposit the same with the concerned department andauthorities, (h) To pay and deposit from time to time the charges in. respect of electricity and water connection in the Project, (i) To frame rules and administrative procedure with the approval of the General Body of the Society. (j) The income and/or funds/deposits of the Society shall be utilized only for the objects of the Society and shall not be distributed among its Members; (k) The Society' shall carry out its objects without any profit motive. The Society may enter into contracts or agreements with persons, whom the Society deems fit and capable for implementing the objects of the Society, including contracts with persons/ firms/companies, etc. for the security and maintenance of the common areas and facilities of the Project, (l) The Society shall receive, hold or administer donations, grants, gifts, funds and shall collect amounts from the Members, societies/ Society's having similar objects, trusts, institutions and individuals, foreign bodies, governmental agencies etc. as may be permitted by law; (m) To do such other things as may be considered as to be incidental or conducive to the attainment of the aforesaid objectives; and (n) The Society shall not act beyond the scope of its Objectives without duly amending the provisions of the bye-laws for that purpose.

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P a g e | 9 ITA No. 1418/JPR/2025 Konark Oasis Residents Welfare Society 12. He therefore, contended that the findings of Ld. CIT(A) that the assessee had failed to establish that the collections made by the assessee Society were from its members alone, satisfying the principle of mutuality, was grossly incorrect on facts. 13. Ld. DR however relied on the order of the Ld.CIT(A). 14. I have heard the ld. Counsel for the assessee, and also gone through the order of the authorities below.Clearly, the AO in the present case had not submitted his remand report on the evidences produced by the assessee to him during the remand proceedings for verification of his claim that all his collections were from members of the Society towards for their mutual benefit only. The Ld. CIT(A) has perused the documents filed by the assessee and found the assessee to have submitted insufficient documents to justify its claim .However, I have found the assessee to have submitted all relevant documents to justify its claim of all its collections being from its members for their benefit alone. 15. As pointed out by the Ld. Counsel for the assessee before me and as noted above, the assessee submitted copy of its bye laws to the AO which clearly showed all the objects of the assessee Society to be for the benefit of its members alone. The income and expenditure account of the assessee society for the year reflected all receipts from its members alone and all expenses incurred for the benefit of its members alone. The receipts issued by the assessee Society to its members also reflected collection from members for maintenance or other purposes.

P a g e | 10 ITA No. 1418/JPR/2025 Konark Oasis Residents Welfare Society 16. The Ld. CIT(A), I therefore hold, was grossly unjustified in stating that the assessee did not filed the requisite documents to justifying its claim. I have perused all the documents submitted by the assessee and find the claim of the assessee to be justified to the extent of contributions received from the Members satisfying the principle of mutuality and hence not taxable. 17. So far as the interest received from the bank account is concerned, Ld. Counsel for the assessee fairly submitted that the same is liable to tax as it does not satisfy the test of principle of mutuality. 18. In view of the above, therefore I hold that the addition made on account of cash found deposited in the bank account of the assessee to the extent of Rs.20,38,026/- to be deleted while the addition made on account of interest of income of Rs.21,176/-, earned is confirmed. 19. In effect, the appeal of the assessee is accordingly partly allowed. Order pronounced in the open court on 30.06.2026.

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 30.06.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent

P a g e | 11 ITA No. 1418/JPR/2025 Konark Oasis Residents Welfare Society 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur