E2601 ERUMBUR PRIMARY CO OPERATIVE BANK,ERUMBUR ROAD, CHIDAMBARAM PO vs. INCOME TAX OFFICER, CUDDALORE

आयकर अपीलीय अधिकरण ‘सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2303/Chny/2026 ननिाारण वर्ा /Assessment Years: 2019-20 E2601 Erumbur Primary Cooperative v. The Income Tax Officer, Bank Cuddalore. Erumbur Road, Chidambaram PO, Cudallore, Tamil Nadu-608 704 [PAN: AAAAE4885G] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. C. Karthick, Advocate, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. Chilaka Marthi Vijay Raju, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 18.06.2026 घोषणाकीतारीख /Date of Pronouncement : 24.06.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / NFAC, (hereinafter referred as the ‘Ld. CIT(A)’) dated 11.11.2025, for the Assessment Year (hereinafter referred as the ‘AY’) 2019-20.

GROUNDS OF APPEAL GROUND NO. 1- REJECTION OF CONDONATION OF DELAY IS ARBITRARY AND WITHOUT JURISDICTION 1. The Appellant filed appeal before the CIT (A) with delay of 93 days arising due to rural background, manual record keeping and lack of professional assistance in faceless regime, which facts are on record in Form 35. 2. The Appellant is a primary agricultural co-operative society managed by agriculturists and the delay occurred during transition to faceless system without adequate technical support or awareness. Page 1 of 7

ITA No.2303/Chny/2026 (2019-20) E2601 Erumbur Primary Cooperative Bank 3. Section 249(3): "The Commissioner (Appeals) may admit an appeal after the expiration of the period if he is satisfied that the appellant had sufficient cause for not presenting it within that period." 4. The expression "sufficient cause" requires liberal interpretation to advance substantial justice where no mala fide or deliberate negligence is attributable to the Appellant. 5. The CIT (A) has held that reasons such as lack of awareness and representative delay are not sufficient cause and rejected condonation without appreciating factual matrix and surrounding circumstances. 6. The said finding is perverse as it ignores that the Appellant had no effective representation during assessment and immediate post-assessment period, resulting in delay which is bona fide. 7. The CIT (A) has failed to exercise discretion judiciously and has rejected the appeal at threshold without examining merits, thereby defeating statutory right of appeal. 8. The rejection is mechanical and contrary to settled principle that matters should be adjudicated on merits rather than dismissed on technicalities. 9. The impugned order is liable to be set aside and delay deserves to be condoned in the interest of justice. 10. Demand Involved: Rs. 8, 95, 02,189/-. GROUND NO. 2-VIOLATION OF NATURAL JUSTICE AND FAILURE OF APPELLATE DUTY 1. The assessment was completed under section 147 r.w.s. 144B by treating bank transactions as unexplained without effective participation of the Appellant and without verification of books or nature of transactions. 2. The Appellant made only partial compliance during assessment due to lack of technical understanding and absence of proper professional support in faceless proceedings. 3. Section 144B: Assessment shall be made in a faceless manner ensuring opportunity of being heard and consideration of all material available on record. 4. The Assessing Officer proceeded solely on insight portal information and did not conduct any enquiry, verification or correlation of deposits and withdrawals with books of account. 5. No meaningful opportunity was granted to explain the transactions and no effort was made to understand the nature of co-operative banking operations. 6. The CIT (A) instead of curing the procedural defect dismissed the appeal on limitation without adjudicating merits, thereby abdicating statutory duty as a quasi-judicial authority. 7. The appellate authority is bound to adjudicate issues on merits especially when serious additions are made, and cannot dismiss appeal mechanically on technical grounds. 8. The entire proceedings stand vitiated for violation of principles of natural justice and lack of fair hearing. 9. The impugned orders are therefore liable to be set aside on this ground alone. 10. Demand Involved: Rs. 8, 95, 02,189/-.

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ITA No.2303/Chny/2026 (2019-20) E2601 Erumbur Primary Cooperative Bank GROUND NO. 3-ADDITION OF CASH WITHDRAWALS U/S 69A IS PATENTLY ERRONEOUS 1. The Assessing Officer treated cash withdrawals of Rs. 5, 65, 19,032/- reflected in bank account as unexplained income without examining books of account or nature of transactions. 2. The said amount represents cash debits in bank account and not fresh inflow of funds or undisclosed money. 3. Section 69A: Where any money is found to be owned by the assessee and such money is not recorded in books and explanation is not satisfactory, the same may be deemed as income. 4. The essential condition for invoking section 69A is existence of unexplained money "found" in possession of assessee which is not recorded in books. 5. In the present case, there is no finding of any unexplained asset or money outside books and the entire addition is based on bank withdrawals which are duly recorded transactions. 6. Withdrawal of funds cannot be equated with income as it represents application or movement of funds already available and not unexplained acquisition. 7. The Assessing Officer has fundamentally misunderstood banking entries by treating "cash debit" as income, which is contrary to settled accounting principles. 8. The transactions arise out of deposits received from members and loans disbursed in ordinary course of co-operative credit operations, which has not been examined at all. 9. The addition is arbitrary, without any nexus to income generation and therefore unsustainable in law. 10. Demand Involved: Rs. 5, 65, 19,032/-. GROUND NO. 4-FAILURE TO APPRECIATE NATURE OF CO-OPERATIVE CREDIT ACTIVITIES 1. The Appellant is a primary agricultural co-operative credit society engaged in accepting deposits from members and providing loans to members as part of statutory co-operative framework. 2. The bank account reflects routing of member funds including deposits, withdrawals and loan disbursements in ordinary course of business. 3. Section 80P (2) (a) (i): Deduction is available to co-operative societies engaged in providing credit facilities to its members in respect of profits and gains of such business. 4. The Assessing Officer has failed to examine books of account, member ledgers or statutory records to understand the nature of transactions reflected in bank account. 5. The CIT (A) also failed to consider that high volume of deposits and withdrawals is inherent to co-operative credit societies and cannot be equated with income. 6. The finding treating bank withdrawals as income ignores the business model and statutory framework governing such societies. 7. The addition is therefore vitiated by non-application of mind to the nature of transactions and deserves to be deleted. 8. Demand Involved: Rs. 5, 65, 19,032/-.

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ITA No.2303/Chny/2026 (2019-20) E2601 Erumbur Primary Cooperative Bank GROUND NO. 5- ADDITION MADE WITHOUT ANY ENQUIRY OR CORROBORATIVE EVIDENCE 1. The addition has been made solely on the basis of information available in the system without conducting any enquiry or verification of underlying transactions. 2. The Assessing Officer has not called for or examined books of account, bank statements in detail, or supporting documents relating to deposits and withdrawals. 3. Section 69A: Requires existence of unexplained money owned by the assessee which is not recorded in books and for which no satisfactory explanation is offered. 4. The burden lies on the Assessing Officer to first establish existence of unexplained money before invoking deeming provisions. 5. In the present case, there is no finding of any unexplained asset, ownership of undisclosed money or discrepancy in books. 6. The addition is based purely on presumption and lacks evidentiary foundation. 7. Such addition without enquiry is arbitrary and unsustainable in law. 8. Demand Involved: Rs. 5, 65, 19,032/-. GROUND NO. 6- ERRONEOUS APPLICATION OF SECTION 115BBE 1. The Assessing Officer has taxed the alleged income under section 115BBE at higher rate consequent to addition made under section 69A. 2. The applicability of section 115BBE is contingent upon valid invocation of sections such as 69A. 3. Section 115BBE: Provides for taxation of income referred to in sections 68 to 69D at prescribed rates. 4. When the very addition under section 69A is unsustainable, the consequential application of section 115BBE automatically fails. 5. The Assessing Officer has not demonstrated how the conditions for invoking section 69A are satisfied, yet has applied section 115BBE mechanically. 6. The computation of tax, surcharge and cess is therefore without authority of law. 7. The entire tax liability deserves to be deleted. 8. Demand Involved: Rs. 8, 95, 02,189/-. GROUND NO. 7-NON-CONSIDERATION OF RETURNED LOSS AND ELIGIBILITY UNDER SECTION 80P 1. The Appellant filed return declaring loss of Rs. 10, 34,057/- which has been completely ignored in assessment. 2. The Appellant is eligible for deduction under section 80P in re9spect of income from providing credit facilities to members.

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ITA No.2303/Chny/2026 (2019-20) E2601 Erumbur Primary Cooperative Bank 3. Section 80P: Provides deduction in computing total income of co-operative societies engaged in specified activities. 4. The Assessing Officer has not examined eligibility of deduction under section 80P nor considered business results reflected in financial statements. 5. The computation of income without considering statutory deduction and loss is fundamentally flawed. 6. The CIT (A) also failed to adjudicate this issue on merits. 7. The assessment requires fresh examination on this aspect. 8. Demand Involved: Rs. 10, 34,057/- (loss impact) and consequential effect. GROUND NO.8 1. The assessment order is passed in a mechanical manner by merely relying on insight portal information without independent analysis or reasoning. 2. There is no discussion on nature of business, accounting treatment or correlation of transactions with books of account. 3. Section 147 r.w.s. 144B: Requires reasoned order based on material and proper enquiry. 4. The Assessing Officer has not recorded any cogent finding linking bank transactions to income. 5. The CIT (A) also failed to examine these defects and dismissed the appeal on technical grounds. 6. The impugned orders lack judicial reasoning and are unsustainable. 7. The same are liable to be quashed in entirety. 8. Demand Involved: Rs. 8, 95, 02,189/-. 9. The Appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing. PRAYER 1. In view of the facts and grounds stated above, the Appellant humbly prays that this Hon'ble Tribunal may be pleased to set aside the order passed by the learned CIT (A) u/s 250 dated 11.11.2025 and hold that the delay of 93 days in filing the appeal before the CIT (A) is liable to be condoned. 2. The Appellant further prays that this Hon'ble Tribunal may be pleased to admit the appeal before the CIT (A) and restore the matter for adjudication on merits, after granting adequate opportunity to the Appellant. 3. Without prejudice, the Appellant prays that this Hon'ble Tribunal may be pleased to set aside the assessment order passed u/s 147 r.w.s. 144B dated 01.03.2024, and delete the addition of Rs.5,65,19,032 made under section 69A as being arbitrary and unsustainable in law.

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ITA No.2303/Chny/2026 (2019-20) E2601 Erumbur Primary Cooperative Bank 4. The Appellant further prays that this Hon'ble Tribunal may be pleased to hold that provisions of section 115BBE are not applicable, and consequently delete the tax, surcharge and cess levied thereon. 5. The Appellant further prays that this Hon'ble Tribunal may be pleased to direct the Assessing Officer to consider the returned loss and examine eligibility under section 80P, in accordance with law. 6. The Appellant further prays that this Hon'ble Tribunal may be pleased to grant consequential relief by deleting interest levied under sections 234A, 234B and 234C, and cancel all consequential demands arising therefrom. 7. The Appellant prays for such other and further reliefs as this Hon'ble Tribunal may deem fit in the facts and circumstances of the case.

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ITA No.2303/Chny/2026 (2019-20) E2601 Erumbur Primary Cooperative Bank thousand only) to be deposited with Tamil Nadu State Legal Service Authority by the assessee within 30 days from the date of this order. The AO directed to frame the assessment de-novo, after giving proper opportunity of being heard to the assessee. As far as the issue pertaining to the claim of deduction u/s. 80P is concerned the AO is directed to follow the decision of the Hon’ble Jurisdictional High Court in the case of [2026] 187 taxmann.com 97 (Mad.) T943 Vickrapandiyam Primary Agricultural Co- operative Credit Society Ltd. v. CCIT. The assessee is directed to be vigilant enough this time and participate in the assessment proceedings actively without seeking any adjournment. In the result, the grounds raised by the assessee are allowed for statistical purposes. 4. In the result, the appeal of the assessee is allowed for statistical purposes with the above observations and direction. Order pronounced on the 24th day of June, 2026, in Chennai.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 24th June, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR K 5. गार्ड फाईल/GF Digitally signed by K BABU BABU Date: 2026.07.01 09:10:47 +05'30'

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