R1641 MELAKALKANDARKOTTAI,TRICHY vs. INCOME TAX OFFICER, TRICHY

I humbly submit that the learned Assessing Officer erred in making an addition of Rs. 3,89,66,338/- as unexplained money under Section 69A of the Income-tax Act, merely on the ground that the appellant failed to explain the cash deposits during the reassessment proceedings, without appreciating the true nature and regular business activities of the appellant co-operative society.

I humbly submit that the learned Assessing Officer failed to appreciate that the appellant is a Primary Agricultural Co-operative Credit Society registered under the Tamil Nadu Co-operative Societies Act, 1983, engaged in accepting deposits from members, lending agricultural loans, operating Public Distribution System activities, and implementing Government welfare schemes, all of which necessarily involve substantial cash transactions recorded in regular books of account.

I humbly submit that the appellant society has maintained a proper and complete Cash Book as part of its regular books of account, recording day-wise and member-wise cash transactions, which clearly evidences that the cash deposits represent repayments of loans, deposits from members, and receipts arising out of statutory activities, and therefore such deposits cannot be treated as unexplained under Section 69Amerely on account of technical or procedural failures in responding during the assessment proceedings.

I humbly submit that the learned Assessing Officer ignored the fact that under cooperative regulations, the appellant society cannot retain cash exceeding Rs. 15, 00,000/- at its premises, and therefore surplus cash collected from members and statutory activities was compulsorily deposited into bank accounts.

I humbly submit that the disallowance of direct and other expenses amounting to Rs. 81, 24,644/- is arbitrary, unsustainable, and made without examination of the appellant's audited books of account, which were maintained in accordance with the statutory requirements of the Tamil Nadu Co-operative Societies Act and audited under the relevant provisions thereof.

I humbly submit that the learned CIT (A) erred in confirming the disallowance of deduction of Rs. 2, 88,520/- claimed under section 80P by invoking section 80AC solely on the ground that the return of income was not filed within the due date prescribed under section 139(1).

I humbly submit that the learned CIT(A) failed to appreciate that section 143(1)(a)(v), enabling prima facie adjustment for non-compliance with section 80AC, was inserted only by the Finance Act, 2021 with effect from Assessment Year 2021-22 and has no retrospective application to the Assessment Year 2019-20 under appeal.

I humbly submit that the learned authorities erred in mechanically disallowing deduction under section 80P for the year under consideration, when there existed no statutory provision empowering automatic denial of such beneficial deduction merely on account of belated filing of return.

I humbly submit that the learned CIT (A) failed to appreciate that the return of income was filed pursuant to reassessment proceedings under section 148, and denial of a substantive and welfare-oriented deduction under section 80P on technical grounds defeats the legislative intent and object of the provision.

I humbly submit that the impugned assessment and appellate orders are passed without proper consideration of evidence, without affording a fair opportunity to the appellant to adduce records, and solely on the basis of material gathered by the department, thereby causing grave prejudice to the appellant.

I humbly submit that in the interest of justice, equity, and fair play, the appellant deserves a reasonable opportunity to place its books of account, audit reports, cash books, and other supporting evidences on record, so that the issues may be adjudicated afresh on merits and not on technical or procedural lapses.

The brief facts of the case are that the assessee Cooperative Society has not filed any return of income but deposited cash of Rs. 10 lakhs or more in Saving Bank Account amounting to Rs. 3,79,15,738/-. Based on the above information, a notice u/s. 148 of the Act was issued on 29.03.2023 in accordance with the amended provisions of section 148A of the Act. The assessee has belatedly filed return of income in response to notice issued u/s. 148 of the Act on 04.05.2023. Ultimately, the case of the assessee was assessed ex-parte after making an addition of Rs. 3,89,66,338/-, Rs. 2,88,520/- and Rs. 81,24,644/- on account of unexplained deposits u/s. 69A of the Act, disallowance u/s. 80P of the Act disallowance of certain expenses claimed respectively.

The assessee being aggrieved with the above preferred an appeal before the Ld. CIT (A) with a delay of 178 days. Again, the matter was not pursued by the assessee before the Ld. CIT (A) and delay in filing of appeal was also not explained to the satisfaction of the Ld. CIT (A), hence, he dismissed the appeal of the assessee and confirmed the order of the AO. The assessee being further aggrieved preferred an appeal before us in the present appeal along with application for stay of demand. It is observed that the appeal filed before us is also time barred by 222 days. As the matter pertains to a Cooperative Society and money of common citizen is involved, taking a lenient view and delay before us is condoned. Further, as the matter was never adjudicated on merits and as mentioned (supra). The assessee never turned up before the authorities below, on the request of the Ld. AR we are restoring the matter back to the file of the AO, subject to a cost of Rs. 10,000/- (Ten 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-

In the result, the appeal of the assessee is allowed for statistical purposes and the Stay Application is dismissed with the above observations and direction. Order pronounced on the 24th day of June, 2026, in Chennai.