SRI SHARANA BASVESHWARA VIVIDDESHA SOUHARDHA SHASHAKARI NIYAMITHA,KUDLIGI vs. INCOME TAX OFFICER, HOSPET

ITA 1424/BANG/2026Status: DisposedITAT Bangalore29 September 2026AY 2018-20199 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that both parties conceded that the assessee society could not adequately represent its case before the Assessing Officer (AO), leading to an ex-parte order. The Revenue's ld. DR relied on the CIT(A)/NFAC's finding that no materials were produced at the appellate stage. However, the ld. A.R. of the assessee requested one more opportunity before the AO to substantiate its claims. In the interest of justice, equity, and fair play, the Tribunal deemed it fit and proper to remit the entire issues in dispute back to the file of the AO for a fresh decision in accordance with the law. The assessee was directed to produce all relevant documents and records. The Tribunal made it clear that in case of further default, the assessee would not be entitled to any leniency. The operative direction was to decide afresh after granting a reasonable opportunity of being heard to the assessee. The issue of whether Section 69A was correctly invoked and the nature of deposits and withdrawals were left to be decided by the AO upon fresh consideration.

What were the facts?

The assessee, Shri Sharana Basveshwara Vividdesha Souhardha Shashakari Niyamitha, filed an appeal against the order of the CIT(A)/NFAC, Delhi, dated 31.01.2026, for assessment year 2018-19. The Assessing Officer (AO) had passed an ex-parte order under sections 147 and 144 of the Income Tax Act, 1961, making additions of Rs. 2,20,35,300/- (cash withdrawals) and Rs. 93,85,860/- (cash deposits) as unexplained money under section 69A, assessing a total income of Rs. 3,14,21,160/-. The assessee contended that the AO and CIT(A) relied solely on AIS/SFT information without proper verification, that the AIS data contained duplicate and inaccurate reporting, and that cash deposits represented sale of e-stamps and cash withdrawals were for bill discounting scheme payments to members. The CIT(A) dismissed the appeal for want of materials. Before the ITAT, both parties conceded that the assessee did not properly represent its case before the AO.

What were the issues?

1. Whether the additions made by the Assessing Officer, confirmed by the CIT(A), are contrary to law, facts, and the Income Tax Act, 1961, due to failure to properly verify bank transactions and the factual position of the appellant? 2. Whether the assessment, based primarily on AIS/SFT information without independent verification, is arbitrary and contrary to settled principles? 3. Whether the CIT(A) erred in confirming additions without considering the clear nexus between cash deposits and the appellant's business activities, and without proper examination of bank analysis? 4. Whether the entire bank deposits were incorrectly treated as income instead of business turnover, and if only the profit element should be taxed? 5. Whether cash withdrawals were incorrectly treated as unexplained under Section 69A without appreciating their nature as payments under the Bill Discounting Scheme? 6. Whether Section 69A was incorrectly invoked without satisfying its conditions, given that transactions were recorded, explained, linked with withdrawals, and proper verification was not conducted? Assessee's Contentions: The assessee argued that the AO and CIT(A) failed to conduct proper enquiry and verification, relying on inaccurate AIS data. Cash deposits arose from e-stamp sales, reconcilable with subsequent stamp paper procurement. Cash withdrawals were for bill discounting to members, duly recorded. Entire deposits should not be treated as income; only profit element is taxable. Section 69A was wrongly invoked as transactions were explained and recorded. The appellate order lacked reasoned analysis and failed to consider binding precedents like CIT v. Bhaichand H. Gandhi, CIT v. Kulwant Rai, CIT v. Taj Borewells, and Dhakeshwari Cotton Mills Ltd. v. CIT, which emphasize the need for proper enquiry and verification. Principles of natural justice were violated. Revenue's Contentions: The Revenue, through the ld. DR, relied on paragraphs 12 & 13 of the CIT(A)/NFAC order, stating that the appeal was dismissed as no materials/evidences regarding deposits/withdrawals were produced by the assessee at the appellate stage.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 69A,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE

Before: SHRI BALAKRISHNAN S. & SHRI KESHAV DUBEY

For Appellant: CA Karthik Bohara Kailash, A.R
Hearing: 06.07.2026Pronounced: 29.09.2026

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC, Delhi dated 31.01.2026 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1085362124(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19. 2. The assessee has raised the following grounds of appeal:-

1.

Order Contrary to Law and Facts: The impugned order passed by the learned Commissioner of Income Tax (Appeals) confirming the additions made by the Assessing Officer is

The order continues below.

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