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Facts
The assessee, a cooperative society, failed to file its income tax return for AY 2018-19. A significant cash deposit of Rs. 95,69,015/- was made in its bank account. Despite notices, the assessee did not provide satisfactory explanations or documentation.
Held
The Tribunal, while acknowledging the assessee's failure to represent its case properly before the lower authorities, decided to grant one more opportunity for a de novo assessment. A cost of Rs. 2000/- was imposed on the assessee.
Key Issues
Whether the assessee should be given another opportunity for assessment despite being delinquent, and if the cash deposits can be treated as unexplained income without proper opportunity.
Sections Cited
250, 147, 148A, 148, 142(1), 144, 133(6), 69A, 115BBE, 80P, 139(1), 80AC
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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 22.1.2025 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1072407886(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19.
The assessee society has raised the following grounds of appeal:
Prathamika Krushi Pattina Sahakara Sangha Neemeta, Raichur Page 2 of 10 1. The order of the ld. CIT(A) is opposed to the law, facts and circumstances of the case. 2. The order of the ld. CIT(A) is opposed to the various court decisions which is favouring the appellant is against the law and natural justice.
3. The ld. CIT(A) has erred in upholding the addition made in the assessment order without considering amendment to proviso to section 25(1) of the Act as per the Finance Act (2), 2024.
The AO and CIT(A) erred in understanding that the appellant’s books are subjected to audit and governed by the registrar to submit the audited books of accounts considering the cash deposited which was received from the farmers from sale of fertilizer and other goods to farmers as per Government orders and monitory.
5. The ld. CIT and AO’s order is against to the jurisprudence as various courts held that even though the return is filed belatedly section 80P deductions can be allowed. 6. The ld. CIT(A) ought to have considered the adjournment sought and granted for further opportunity and given further date of hearing as the authorized representative and the appellant as busy in July return filing and tax audit reports filing submissions and condone the inadvertent mistake and decided the case on merits of the case. 7. The ld. AO/CIT(A) is not justified in treating the entire Cash deposited into Bank account as unexplained cash credit u/s 69A of the Act by the appellant in the facts and circumstances of the case. 8. The AO erred in not providing the assessment records despite of requesting the records where the 148A and 148 notice not served on the appellant. 9. The ld. AO and ld. CIT(A) has erred in not despite of requesting for VC and adjournment order has been passed against the facts and circumstances of the case. 10. Without prejudice to the above the ld. AO has erred in not allowing the exemption u/s 80P of the Act under the facts and circumstances of the case.
Brief facts of the case are that the assessee is registered under the Karnataka Co-operative Society Act, 1959 on 27.10.1976. The assessee is a society and it conducts its activities to lend loans to its members and also purchase fertilizers, seeds, pesticides etc. from the vendors/company as nominated by the Prathamika Krushi Pattina Sahakara Sangha Neemeta, Raichur Page 3 of 10 Government of Karnataka through tenders/auctions and sell them to the farmers who are the members of the society as well as to the other farmers who are in need of seeds, pesticides, fertilizer etc. for their agricultural activities in the agricultural lands by the farmers at concessional rate in and around the Raichur district.
3.1 As per information available with the department, the assessee had deposited cash to the tune of Rs.95,69,015/- at Raichur District Co-operative Central Bank Limited during the financial year 2017-18 relevant to assessment year 2018-19 but failed to offer this income for taxation by way of filing the return of income and for this reason the case of the assessee was selected for scrutiny and taken up for assessment proceedings u/s 147 of the Act. The assessee was issued an order under clause (d) of section 148A of the Act on 30.03.2022. Consequently notice u/s 148 of the Act was issued on 30.03.2022. In response to the notice the assessee filed return of income on 27/04/2022 by declaring Total Income of NIL after claiming deduction u/s 80P of the Act. The said return was termed as invalid as the same had been verified after the due date and is pending for condonation of delay and the same had not been condoned by the Competent Authority as on the date of passing the assessment order.
3.2 Subsequently the notice u/s 142(1) of the Act/letters was issued but the assessee did not furnish its reply and participate in the proceedings. Further a SCN notice u/s 144 of the Act as well as final SCN were also issued but no compliance was made by the assessee & therefore the AO considered that the assessee had nothing to say about the transaction. The details of the opportunities given by the AO are tabulated below-
Type of Date of Date of Response of Date of Respons Remarks if notice/ notice/ complianc the assessee res- e any communica Communic e given received/not ponse type tion ation received if (Full/ receive part/ d adjourn ment Notice u/s 30.03.2022 30 days Not received NA NA - 148 of the Act Notice u/s 12.10.2022 26.10.2022 Not received NA NA - 142(1) of the Act Notice u/s 11.11.2023 17.1.2023 Not received NA NA Reminder 142(1) of the Act Letter 20.01.2023 5 days Not received NA NA - Letter 25.01.2023 Imme- Not received NA NA Reminder diately Show cause 09.02.2023 17.2.2023 Not received NA NA - notice u/s 144 of the Act Final SCN 02.03.2023 9.3.2023 Not received NA NA - 3.3 The AO accordingly in the absence of any documentary evidences/details/explanations on the part of the assessee, passed the assessment Order u/s 144 r.w.s. 147 of the Act based on material evidences available on Record. During the course of assessment proceedings, the AO by serving the notice u/s 133(6) of the Act on Raichur District Co-operative Central Bank Ltd. had also obtained Bank account statements of 6 account numbers for the period 01.04.2017 to 31.03.2018 and after careful examination it was observed that there was cash deposit to the tune of Rs.95,69,015/-. As the assessee did not furnish any reply regarding the source of cash deposit, the entire amount was treated as unexplained money u/s 69A of the Act & added to the income of the assessee read with section 115BBE of the Act.
3.4 Further after carefully considering the information as available on record the AO observed that as per return of income for A.Y. 2018-19, the assessee had claimed a deductions u/s 80P(2)(a)(i) of the Act amounting to Rs.12,13,397/-. However the Prathamika Krushi Pattina Sahakara Sangha Neemeta, Raichur Page 5 of 10 AO was of the opinion that the deduction claimed by the assessee is also not allowable for the following reason- “The assessee was required to file its return of income for the stated year u/s 139(1) within the due date to claim deduction u/s 80P. But in this case assessee has not filed any return u/s 139 accordingly, as per provisions of the Section 80AC of the Act the assessee is not entitled to claim deduction under 80P of the Act. The provision of the Section 80AC reads as under:- "For section 80AC of the Income-tax Act, the following section shall be substituted, namely:— '80AC. Deduction not to be allowed unless return furnished. — Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after. (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80- IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C. — Deductions in respect of certain incomes", Therefore, in view of the above provisions of Section 80AC the assessee is not entitled to claim deduction under 80P of the Act as no return has been filed u/s 139(1) of the Act.”
3.5 Finally, the AO noted that in this case, since return is invalid so no disallowance of Rs.12,13,397/- is being made along with the addition of Rs. 95,69,015/- on account of cash deposit to avoid the double taxation. The AO computed the total income as under- Sl.No. Description Amount (in INR) 1. Income as per 139(1) No ITR filed 2. Income as per return of income Invalid ITR as verified after due filed in response to notice u/s date and still pending for 148 of the Act condonation from the competent authority 3. Addition as per para 4.1 Rs.95,69,015/- Total income Rs.95,69,015/- Prathamika Krushi Pattina Sahakara Sangha Neemeta, Raichur Page 6 of 10 4. Aggrieved by the Assessment Order passed u/s 147 r.w.s 144 and 144B of the Act dated 17/03/2023, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
During the course of the Appellate proceedings, the hearing of the case was fixed on various dates and e-notices were issued to the assessee as tabulated below-
Notice Date of Remarks date hearing 01.05.2023 - No response in ITBA 19.06.2024 04.07.2024 On 04.07.2024 the assessee requested for adjournment of 15 days 14.09.2024 23.09.2024 On 23.09.2024 the assessee requested for adjournment of 15-20 days 07.10.2024 14.10.2024 On 14.10.2024 the assessee requested for adjournment of 15-20 day 07.11.2024 12.11.2024 On 16.11.2024 the assessee requested for adjournment of 10 days Thus, the ld. CIT(A)/NFAC observed that even after providing several opportunities of hearing, the assessee has not furnished any submission but in response to notices the assessee requested for the adjournment but never submitted any reply/submission. As several opportunities had already been granted, no further adjournment can be provided and in the absence of submission, decided the appeal based on the material available on record.
5.1 The ld. CIT(A)/NFAC seen from the details of the assessment proceedings as well as the non-submission of details during the appellate proceedings that the assessee’s claims are not backed by any supporting evidences and assessee has completely failed in discharging its onus and the conduct of the assessee falls under the category of habitual defaulter. Further the ld. CIT(A)/NFAC held that in the present case, the nature & source of deposits made in the bank account was not at all explained & relying upon various
Aggrieved by the order of the ld. CIT(A)/NFAC dated 22/01/2025 passed u/s 250 of the Act, the assessee has filed the present Appeal before this Tribunal.
Before us, the ld. AR of the assessee vehemently submitted that the assessee filed its return of income in response to notice u/s 148 of the Act which was not considered by the AO. The assessee requested to provide the fresh opportunity to file return as there appears to be some mistake in the return through grievance but the same was not addressed by the Authority. Further the ld. A.R. for the assessee stated the AO without considering the request for providing video conferencing/adjournment/grievances had added the entire cash deposits of Rs. 95,69,015/- u/s. 69A of the Act and consequently, levied the taxes as per section 115BBE of the Act which is completely incorrect and without any basis as the assessee had received cash from Farmers on account of sale proceeds of seeds/pesticides/fertilizers as per the government direction.
7.1 The ld. AR of the assessee also submitted that without prejudice to the above, at the best the AO should have added the income by rejecting the deduction claimed u/s 80P(2)(a)(i) of the Act. Further, the ld. A.R. of the assessee requested to provide one more opportunity to appear before the ld. AO and undertakes to provide the relevant documents/information in support of its claim.
The ld. D.R. relied on the orders of the lower authorities and requested to dismiss the appeal of the assessee as the assessee is a habitual defaulter.
Prathamika Krushi Pattina Sahakara Sangha Neemeta, Raichur Page 8 of 10 9. We have heard the rival submissions & perused the material available on record. It is an undisputed fact that the assessee society is registered under the Karnataka Co-operative Society Act, 1959 on 27.10.1976 and conducts its activities to lend loans to its members and also purchase fertilizers, seeds, pesticides etc. from the vendors/company as nominated by the Government of Karnataka through tenders/auctions and sell them to the farmers who are the members of the society as well as to the other farmers who are in need of seeds, pesticides, fertilizer etc. for their agricultural activities in the agricultural lands by the farmers at concessional rate in and around the Raichur district. It is also an undisputed fact that the no return of income was filed u/s 139 of the Act for the assessment year 2018-19. Further the return filed u/s 148 of the Act was termed as invalid as the same had been verified after the due date and is pending for condonation of delay and the same had not been condoned by the Competent Authority as on the date of passing the assessment order.
9.1 Further, It is also an undisputed fact that the assessee had deposited cash to the tune of Rs.95,69,015/- at Raichur District Co-operative Central Bank Limited during the financial year 2017- 18 relevant to assessment year 2018-19 and before us the AR of the assessee submitted that the assessee had received the cash from the farmers on account of sale proceeds of seeds/ pesticides/fertilizers as per the government direction. We also take a note of the fact that the assessee could not represent their case before both the Authorities below. Before us, the ld. AR of the assessee prayed to provide one more opportunity to appear before the ld. AO and undertakes to provide the relevant documents/information in support of its claim.
9.2 This being so, taking into consideration totality of the facts of the case as well as in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we are of the opinion that the assessee may be provided with one more opportunity to represent its case before the AO. Since the assessee was delinquent and lethargic in pursuing his matter before both the lower authorities, we impose a cost of Rs.2000/- (Two Thousand) upon the assessee which shall be paid to the credit of the income tax department as “other fees” within one month from the date of receipt of this order and produce the copy of the Challan before the AO. Accordingly, with the above observations, the issue in dispute is remitted back to the file of AO for denovo consideration in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to submit all the relevant details/documents/records /reports/information etc to substantiate its claim. Further, the AO shall after considering the condonation application filed by the assessee treat the Return filed u/s 148 of the Act as valid return & complete the assessment in accordance with Law. We make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.
In the result appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 22nd July, 2025