INCOME TAX OFFICER, WARD 2, CUDDALORE, CUDDALORE vs. E 2585 PUDUCHATTIRAM PRIMARY AGRL CO-OP CREDIT SOCY LIMITED, PUDUCHATTIRAM

The brief facts of the case are that the assessee was amongst the non-filers of the return u/s. 139 of the Act. The case of the assessee was flagged under “High Risk Non-Filer” in accordance with the RMS formulated by the CBDT. The assessee has undertaken the transaction in the nature of cash deposit in another cooperative bank amounting to Rs. 2,38,26,682/-. In terms of this information a notice u/s. 148 of the Act was issued vide dated: 30.03.2022 after following the procedure as laid in section 148A of the Act, in response to the same no ITR was filed by the assessee and was also not responded to the notices issued during the proceedings. Ultimately, the case of the assessee was assessed ex-parte u/s. 144, 147 r.w.s. 144B of the Act after making an addition of Rs. 7,65,54,217/- u/s. 69A of the Act. The assessee being aggrieved with this order of the AO preferred an appeal before the Ld. CIT(A), who in turn partly allowed the appeal of the assessee and a substantial relief was granted to the assessee. Now, the Revenue being aggrieved with the same preferred the present appeal before us.

We have gone through the order of the AO, order of the Ld. CIT(A) and grounds taken by the Revenue. It is observed that the assessee under consideration was totally absent in the proceedings before the AO but submitted Registration certificate issued by the Dy. Registrar of the Cooperative Societies, Copy of the Bye Laws of the society, copy of the financial statements audited by the Cooperative Auditor appointed by the Cooperative deptt. of the State Govt. and details of the loans/deposits collected/disbursed by the assessee from its members both in cash and bank.

Before the Ld. CIT(A), the assessee filed application under rule 46A of the Rules for admission of the submissions first time submitted by the assessee before the Ld. CIT(A) and the same is admitted by the First Appellate Authority and the same is forwarded to the AO for his comments in the form of Remand Report. The AO furnished the same vide his report dated: 17.09.2025. The Ld. CIT(A) observed that the assessee is a primary agricultural cooperative credit society, providing credit facilities to its members and encouraging thrift among the members; providing agricultural implements to its members and sale of provision under the public distribution system.

It is further observed that the assessee, in the course of its business collects deposits from its members in the form saving deposits, current deposits, recurring deposits and fixed deposits etc. The appellant also borrows money from the District Central Cooperative Bank (DCCB). Out of these, the appellant provides loans to its members. The repayments of various loans taken from the appellant by its members are both in cash and by bank. The cash received by the assessee in terms of repayment of loan and on the sale of the ration under the PDS were deposited into the bank account of the assessee.

The AO, himself accepted vide his remand report that the entire deposit in its bank account is not the income, hence the same was deleted by the Ld. CIT(A) and we do not find any infirmity in the order of the Ld. CIT(A) on this issue, same is sustained without any variation. Resultantly, grounds raised by the Revenue are found untenable, hence dismissed. As the Ld. CIT(A) had observed the financials of the assessee only after considering the remand report submitted by the AO and there is no defect found in the books of the assessee. Hence, he accepted the net profit declared by the assessee (duly audited by the Cooperative Auditor appointed by the Cooperative deptt. of the State Govt.). On this issue also, no new fact brought to our knowledge by the Revenue, which need our attention, hence, relevant grounds raised by the Revenue are Dismissed.

In the result, the appeal of the Revenue is dismissed in above terms.