THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED,EAST GODAVARI vs. ITO, WARD-1, TUNI

आदेश / ORDER

PER UDAYAN DAS GUPTA, JUDICIAL MEMBER: These two appeals for above two assessment years are filed by the assessee against different orders of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] and since both these appeals are being factually identical with similar grounds and

ITA 672 & 673/VIZ/2025 THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED identical issues involved, we take up the appeal in ITA No. 672/VIZ/2025 (A.Y.2015-16) as lead appeal and proceed to dispose of by this consolidated order, for the sake of convenience.

ITA No. 672/VIZ/2025 (A.Y. 2015-16).

This appeal is filed by the assessee against order of the Learned 2. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] passed under section 250 of Income Tax Act, 1961 [hereinafter in short “the Act”] dated 22.08.2025 which has emanated from the order of the Ld. Assessing Officer [hereinafter in short “Ld.AO”] dated 03.01.2024 passed under section 147 r.w.s 144 r.w.s. 144B of the Act.

“1. The order of CIT (Appeals) NFAC is arbitrary and unjust in making addition of cash deposits of INR 87,76,900. 2. The CIT(Appeals) ought to have verified the cash book by way of a remand report instead of confirming the addition of cash deposits. 3. The CIT(Appeals) failed to see the balance sheet where there is increase in paid up capital which is paid in by way of cash from members and also sale of fertilizers received in cash and also loans and advances received in cash. 4. The CIT(A) failed to see that Sec 69 is not applicable as the entire deposits were recorded in the books hence the applicability of Sec 69 is void ab initio. 5. The appellant craves leave to add to, amend, alter, delete all or any of the above grounds of appeal.”

Brief facts emerging from records are that, the assessee is a Primary 4. Agricultural Cooperative Credit Society engaged in providing credit facilities to

ITA 672 & 673/VIZ/2025 THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED its members including sales of fertilizers and no return of income has been filed in normal course for the year under appeal. On the basis of information available in the portal (NMS Module) that the assessee has deposited cash amounting to Rs.87,76,900/- in its savings bank account, during the financial year under appeal, and in absence of any regular return on record, proceedings were initiated under section 147 of the Act vide notice under section 148 dated 01.04.2022 [as per procedure] with prior approval from higher authorities. In response, assessee failed to file the return of income. Subsequently, Ld. AO issued notices under section 143(2) and 142(1) of the Act, requiring the assessee to explain why an amount of Rs.87,76,900/- should not be added as income of assessee under section 69 of the Act. In response, assessee failed to comply with the notices. The Ld. AO in absence of documentary evidences being actually produced and examined, like cash book, audit reports and other supporting evidences, the assessment was completed on a total income of Rs.87,76,900/- ( by treating the bank deposits as unexplained under section 69A of the Act ).

“6.3 As can be seen from the appellant's written submission, appellant failed even during the appellate proceedings to provide required details and documentary evidences to explain the nature and source of said cash deposit.

ITA 672 & 673/VIZ/2025 THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED

The appellant merely contended that it is a primary agricultural co-operative credit society engaged in the activity of collecting deposits from the members and distributing the same as loan to its members. Since the borrowers are majorly agriculturist, they mostly deal in cash. Appellant further submitted that all the cash deposits were recorded in the books of accounts and were audited by a registrar of co-operative society and hence addition of Rs.87,76,900/- made by the AO as income u/s. 69 of the I.T.Act is not correct. The appellant also filed copy of P&L account and balance sheet along with the above written submission made. However, it is the mere contention raised by the appellant without support of any authentic documentary evidences. Therefore in the absence of full details and authentic documentary evidences appellant's contention that the said cash deposit is out of cash received from borrowers (agriculturist) is not acceptable. It may also be mentioned that the provision of income tax act apply to the case of the appellant independently and merely because the registrar of co-operative Society has audited the books of accounts of the appellant, it may not be acceptable that the appellant has correctly computed income for the relevant previous year. 6.4 During the appellate proceedings, appellant filed copies of P&L account and balance for the relevant previous year and is noted from the copy of P&L account filed by the appellant that during the relevant previous year interest on loan and advances (received and receivable) credited to P&L account is at Rs.32,03,165.19/-. This is the only item in the P&L account which could be said to be received in cash from the borrowers (agriculturist). The nature of other items of income credited to the P&L account clearly indicate that they cannot be received in cash. Therefore, even if it is presumed though not accepted that this interest on loans and advances of Rs.32,03,165.19/- is received in cash, the nature and source of balance cash deposit of Rs.55,73,734.81/- remained unexplained. In the light of above facts of the case, it is needless to say that the appellant failed to discharge onus cast upon it of proving the nature and source of said cash deposit made during the previous year with support of necessary authentic documentary evidence. Therefore, mere contentions raised by appellant in this ground of appeal are not acceptable. This ground of appeal raised by the appellant therefore stand dismissed.”

Now the assessee is in appeal before the Tribunal on the grounds 6.

containing in the memorandum of appeal and in course of Appellate Proceedings

the assessee has filed a Paper Book containing 106 pages and the Learned

Authorized Representative (for short “Ld.AR”) has submitted that assessee is

engaged in providing credit facilities to its members only ( and not to any

ITA 672 & 673/VIZ/2025 THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED outsiders ) and is also in the business of selling fertilisers, and allied goods to its farmer Members. He further submitted that the entire cash deposits in bank account are the cash that has been received from the Members of the society as deposits ( who are predominantly agriculturist ) and also includes the recovery of loans and advances with interest from the members in cash, which has been deposited in the bank accounts. He further submitted that as per documentary evidences contained in the Paper Book, which includes copy of ledger account, Audit Report, Profit & Loss and Balance Sheet are enclosed and such books of accounts of the assessee-society are duly audited by the Auditors appointed by the Registrar of cooperative societies as per provisions of the State Cooperative Societies Act.

Ld.AR further referred to the trading and profit and loss account and 7. balance sheet, contained in the Paper Book and submitted that all details are contained therein which has been audited and accepted as correct by the auditors and the sources of cash that is deposited in bank has come out of receipts from the Members of the society only which also includes recovery of loans with interest , in the normal course of business activity of the assessee, and are duly recorded in the books of accounts including cash book and provisions of section 69A shall not apply in the instant case and acceptance of cash and disbursement of loans to members are for all practical purpose are the core foundational business activity of this agricultural credit society. As such he prayed referring

ITA 672 & 673/VIZ/2025 THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED to all the documentary evidences, some of which has been filed before the AO, has not been considered in the proper perspective and if an opportunity is allowed then the entire sources of cash deposits in bank can be satisfactorily explained supported by documentary evidences and books of accounts in possession of the assessee’s society.

ITA 672 & 673/VIZ/2025 THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED and lending of money to members against interest are its foundational business activity and the recovery of such loans along with interest are carried out in normal course of business activity of providing credit to its members. We also find that it is necessary to prove the identity, genuineness and the creditworthiness of the members and the sources of the funds needs to be established along with the supporting documentary evidences like Members ledgers account, day books and other relevant evidences relating to source of income of the Members and explained by way of documentary evidences which has been not been done in this case.

As such in the interest of justice, we set aside the matter back to the file of 10. the AO for fresh assessment “ denovo ” after consideration of all documentary evidences and books of accounts and the assessee is also directed to file all necessary supporting papers, submissions and documentary evidences along with books of accounts to satisfactorily explain the sources of cash deposited in bank, identity of the members, genuineness of the transaction and the creditworthiness of the members to the satisfaction of the Ld.AO and to fully cooperate in fresh assessment proceedings.

The assessee will be allowed reasonable opportunity of being heard and 11. notice to be issued in e-mail id in the portal and also in the e-mail id of the counsel

ITA 672 & 673/VIZ/2025 THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED of the assessee as contained in Form No. 36 as “sarmaandrao@gmail.com”, and as per procedure laid down in section 282 of the Act.

We have not expressed any opinion on merits of the case and all legal 12. issues are left open.

In the result, appeal of the assessee is allowed for statistical purposes. 13.

ITA No. 673/VIZ/2025 (A.Y. 2016-17)

The facts of the case are identical to that of the A.Y. 2015-16 and the 14. grounds of appeal contained in Form No. 36 are also the same. Our observations in ITA No. 672/VIZ/2025 for the A.Y. 2015-16 applies mutatis mutandis to this year also. The appeal for this assessment year is also remanded back to the file of Ld.AO for denovo fresh assessment.

In the result, this appeal of the assessee is allowed for statistical purposes. 15.

To sum-up, both the appeals are set-aside and allowed for statistical purposes. 16.

Order pronounced in the open court on 17.06.2026. Sd/- Sd/- OMKARESHWAR CHIDARA UDAYAN DAS GUPTA ACCOUNTANT MEMBER JUDICIAL MEMBER Visakhapatnam Dated: 17.06.2026 Giridhar, Sr.PS

ITA 672 & 673/VIZ/2025 THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED

Copy to: THE N N PATNAM PRIMARY AGRICULTURE CO OP CREDIT SOCIETY LIMITED, 2-24 , P.E.CHINNAYAPALEM EAST GODAVARI, 1 P.E.CHINAYAMPALEM B.O 533406, EAST GODAVARI DIST.-533406, ANDHRA PRADESH ITO, WARD-1, TUNI, 2 EAST GODAVARI DIST.-533401, ANDHRA PRADESH

3 THE PCIT / CIT, 4 THE D.R., ITAT, VISAKHAPATNAM BENCH 5 GUARD FILE TRUE COPY Digitally signed by V S S V S S GIRIDHAR GIRIDHAR BABU MEKALA BABU MEKALA Date: 2026.06.17 14:11:22 +05'30' SR. PRIVATE SECRETARY I.T.A.T., VISAKHAPATNAM