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Facts
The assessee, a co-operative credit society, accepted deposits from its members and lent money to them. The Assessing Officer made additions for cash deposits during demonetization and disallowed the claim for deduction under Section 80P, as the assessee failed to provide necessary details. The CIT(A) upheld the assessment order.
Held
The Tribunal, considering the assessee's plea and in the interest of justice, decided to restore the matter to the Assessing Officer for de novo adjudication. The assessee was directed to provide necessary details and comply with the proceedings.
Key Issues
Whether the cash deposits during demonetization constitute undisclosed income, and whether the assessee is eligible for deduction under Section 80P without providing proper documentation.
Sections Cited
143(3), 142(1), 144, 69A, 80P, 80P(2)(a)(i), 81, 115BBE, 67A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI GIRISH AGRAWAL
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), vide order no. ITBA/NFAC/S/250/2024-25/1067272717(1), dated 02.08.2024 passed against the assessment order by Income Tax Officer, Ward 26(2)(6), Thane, u/s. 143(3) of the Income-tax Act (hereinafter referred to as the “Act”), dated 27.12.2019 for Assessment Year 2017-18.
Mulund Vikas Sahakari Pathpadi Ltd., AY 2017-18 2. Grounds taken by the assessee are reproduced as under:
1. 1. The Ld. CIT (Appeals), NFAC has erred in not considering entire income of the assessee eligible for deduction u/s 80P.
2. The Ld. CIT(Appeals), NFAC has erred in considering cash deposit as a business income and additions 67A u/s 115 BBE.
3. Your appellant further reserves the rights to add, amend or alter the aforesaid grounds appeal as they may think fit by themselves or by their representatives.
Brief facts of the case are that assessee is a Co-operative Credit Society registered under the Maharashtra Co-operative Societies Act, 1960, The Registration Number of the Assessee is MUM/WT/RSR/CR/8295/-SINCE 2003. Assessee is in the business of accepting deposits from its members and lending money to its members. Assessee gives interest on the deposits collected and charges interest on the moneys lended. Assessee does not do any business with the public at large. It only transacts the business with its own members. It does not issue any cheque book to its members and hence does not take part in the cheque clearing process of the Reserve Bank of India. Assessee filed its return of income on 07.09.2017, reporting total income at Rs.5,41,560/- which was revised on 30.03.2019 with total income at Rs.5,55,110/-. Ld. Assessing Officer noted about the credit entries appearing in the bank accounts of the assessee including deposit of cash therein during the demonetisation period, details of which is tabulated below: S.No. Name of Bank Bank Account No. Amount (Rs.) 1. Sarvodaya Bank 2010500001648 33,26,470/-
Mumbai Dist Co-op Bank 0013/18/06/000066 77,40,000/- 3. Bharat Cooperative Bank 5214100000089 24,79,250/-
Total 1,35,45,720/- Mulund Vikas Sahakari Pathpadi Ltd., AY 2017-18 4. Ld. Assessing Officer called for establishing source and nature of these credit entries appearing at bank account, including cash deposits. Ld. Assessing Officer also noted that assessee had claimed deduction of Rs.5,55,110/- u/s. 80P, in its revised return. Details were called for in this respect also, to justify the claim so made. In the course of assessment, assessee failed to comply with the notices issued u/s.142(1) to explain the nature and source of credit entries including cash deposits totalling to Rs.1,35,45,720/- (tabulated above) as well as for claim of deduction u/s.80P and proceeded to complete the assessment u/s. 144 of the Act by making addition u/s.69A of Rs.1,35,45,720/- and disallowing the claim of deduction u/s.80P of Rs.5,55,110/-. Ld. CIT(A) confirmed the addition/disallowance made by the ld. Assessing Officer, since even before the appellate proceedings before him, no material, documents and explanations were provided in support of the claim made by the assessee.
5. Before us, ld. Counsel for the assessee pleaded that matter may be restored to the file of ld. Assessing Officer by giving an assurance that all the necessary compliances shall be made to satisfy the claim made by assessee in respect to the addition/disallowance made by the ld. Assessing Officer.
We have perused the orders of the authorities below as well as submission of facts furnished before us. It is stated by the assessee that it is managed by a committee of members elected by all members. The members are not very highly educated and hence not well versed with income tax proceedings. The members were under bona fide belief that since the income of the co-operative credit society is eligible for deduction uls 80P(2)(a)(i), the net total income of the society being nil. Similarly, books of accounts of the society are audited u/s 81 of Mulund Vikas Sahakari Pathpadi Ltd., AY 2017-18 the Maharashtra Co-operative Societies Act, 1960. All the amounts deposited in bank accounts either by way of cash or credits were on account of collections from members. The members of the society are mainly small street vendor, Auto- Rickshaw and taxi drivers, small shopkeepers, salaried employees and persons who are unable to get finance from the nationalized and scheduled banks due to the cumbersome procedures.
6.1. Assessee explained its modus operandi in respect of collection of money from its members which is reproduced as under:
1. 1. The society has appointed daily commission agents who collect daily deposits from the street vendors, Auto- Rickshaw and taxi drivers, small shopkeepers, salaried employees and deposit the same with the society. For this the society pays commission ranging from 1-3% of the amounts collected.
2. The society accepts money from its members in form of Term Deposits, Fixed Deposits, Savings deposits, Daily Deposits, Monthly Income deposit, Recurring Deposits and other deposits.
3. The society pays interest to its members on their deposits.
The deposits which are collected from members are given to the needy members by way of Personal loans, long term loans, Vehicle Loan, Loans against deposits.
The society receives income by way of interest on these loans.
6. To maintain liquidity and to comply with the statutory requirements the society invests in fixed deposits with other co-op banks as permitted under the provisions of the Maharashtra Co-op Societies Act, 1961.
Considering the facts on record and prayer made by the ld. Counsel for the assessee, in the interest of justice and fair play, we find it appropriate to remit the matter back to the file of ld. Assessing Officer for denovo meritorious adjudication, on the issues raised by the assessee in its appeal. Needless to say, assessee be given reasonable opportunity of being heard and to make any further submissions, if so desired. Assessee is also directed to be diligent in attending the
In the result, appeal by the assessee is allowed for statistical purposes.