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Facts
The assessee, a Primary Agricultural Credit Co-operative Society, failed to file a return of income and respond to notices regarding a cash deposit of Rs. 4.63 crore. The Assessing Officer treated this deposit as unexplained income under section 69A of the Act. The assessee's appeal before the CIT(A) was dismissed for non-compliance.
Held
The Tribunal condoned the delay in filing the appeal, acknowledging the circumstances beyond the assessee's control due to their tax consultant's negligence. The Tribunal set aside the orders of the lower authorities and restored the matter to the Assessing Officer for fresh adjudication.
Key Issues
Whether the cash deposit of Rs. 4.63 crore can be treated as unexplained income under Section 69A without providing an opportunity for explanation, and if the delay in filing the appeal can be condoned due to circumstances beyond the assessee's control.
Sections Cited
69A, 148A, 148, 142(1), 147, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 21/08/2024 in DIN No. ITBA/NFAC/S/250/2024-25/1067803666(1) for the assessment year 2018-19.
The appeal before the Tribunal is delayed by 253 days, and the assessee has filed a petition seeking condonation of the delay. We have heard the submissions of the learned AR, DR and perused the materials available on record. The reasons for the delay have been explained in detail in the sworn affidavit filed by the Chief Executive Officer of the assessee-society. It is stated that the assessee is a Primary Agricultural Credit Co-operative Society located in a small backward village, Sathihalli, in Chikkamagaluru district. The Board of Directors and staff, including the CEO, do not possess the required knowledge of income tax law or procedures and were entirely dependent on a local tax practitioner, Mr. Balachandra, for handling their income tax matters. Unfortunately, the said practitioner, without any intimation, shifted his residence to Mumbai in January 2025 and became untraceable. As a result, the assessee was unaware that its appeal before the CIT(A) for A.Y. 2018-19 had been dismissed way back on 21.08.2024. The situation came to light only upon receipt of a registered notice dated 10.03.2025 from the Principal Commissioner of Income Tax, Bengaluru, informing the assessee that their stay application for a demand of ₹7.29 crores had been rejected. Shocked by this, the CEO contacted another chartered accountant on 21.03.2025, who upon checking the income tax portal, informed the assessee that the appeal was already dismissed several months earlier. The delay was thus not deliberate or intentional but due to circumstances beyond the control of the assessee. The explanation furnished by the assessee is supported by a sworn affidavit, and we are satisfied that there exists sufficient cause for the delay in filing the present appeal before the Tribunal. Moreover, denying condonation would result in severe hardship to the assessee, considering that the tax demand is significantly higher than the net worth of the society.
In view of the above facts and circumstances, and in the interest of justice, we condone the delay in filing the appeal and proceed to hear the appeal on merits.
The effective issue raised by the assessee is that the revenue authorities not justified holding the cash deposit of Rs. 4.63 crore as unexplained money under section 69A of the Act and that too without providing an opportunity to present its case. Hence, the matter be set aside to the AO fresh adjudication.
The relevant facts are that the assessee is a primary agricultural credit cooperative society and operating in the rural area. It was found that the assessee during the A.Y. 2018-19 has made cash deposit of Rs. 4.63 crore in the bank but not filed return of income. Hence, a notice under section 148A of the Act and subsequently assessment was reopened by issuing a notice under section 148 of the Act. But the assessee failed to respond to the notices issued and failed to file return of income. Thereafter several notices under section 142(1) of the Act were issued but those notices remained unanswered. Hence, the AO completed the assessment under section 147 r.w.s. 144 of the Act by assessing the cash deposit in the bank as income of the assessee under section 69A of the Act.
The aggrieved assessee preferred an appeal before the learned CIT(A). The learned CIT(A) found that the assessee other than filing the ground of appeal did not make any submission and evidence in support of such grounds. There were several notices issued during the appellate proceeding in order to provide sufficient opportunity to the assessee but failed to avail the same. Hence the learned CIT(A) rejected the assessee appeal filed by the assessee.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The learned AR before us submitted that the authorities below were not justified in treating the amount of ₹4,63,00,000/- deposited by the assessee into the CDCC Bank as unexplained money under section 69A of the Act. He explained that the deposits represented the repayment of Kisan Credit Card (KCC) loans by the agriculturist members of the assessee. The ld. AR stated that these members had availed loans from CDCC Bank through the appellant, and the repayment was merely routed through the appellant’s account. He argued that the appellant should have been given another opportunity to prove that the money did not belong to it and was not unexplained. He also admitted that the appellant failed to properly participate in the assessment and appellate proceedings due to the negligence of its tax consultant, who handled the case but did not communicate properly. The ld. AR clarified that the appellant takes full responsibility for this lapse and sincerely apologizes. He therefore prayed that the impugned orders be set aside, and the matter be restored to the AO for fresh adjudication in accordance with the law.
On the hand, the learned DR did not raise any serious objection if the matter is restored to the AO for fresh adjudication as per law.
We have heard the rival contentions of both parties and perused the materials available on record. We note that the assessee is a Primary Agricultural Credit Cooperative Society working in a rural area. It deposited a large sum of ₹4.63 crore in cash during the financial year . relevant to A.Y. 2018-19. However, it did not file a return of income despite several notices from the AO, including those issued under section 148 and 142(1) of the Act. Due to this non-compliance, the AO completed the assessment under Section 147 r.w.s. 144 of the Act and treated the entire cash deposit as unexplained money under section 69A of the Act. Even during the appellate proceedings, the assessee failed to provide any evidence or explanation. The learned CIT(A) also dismissed the appeal on merits as the assessee did not respond to the notices or submitted supporting documents justifying the cash deposits in the bank.
10.1 Now, before us, the learned AR submitted that the money in question actually belonged to the agriculturist members of the society who had availed Kisan Credit Card (KCC) loans from CDCC Bank, and the deposits were repayments made by them through the society’s account. The ld. AR accepted that the assessee could not effectively participate in the assessment and appellate proceedings due to negligence by the tax consultant. He prayed for one more chance and assured full cooperation going forward. Considering these facts and in the interest of justice, we find it proper to give the assessee another opportunity to explain its case. The amount involved is substantial, and the assessee has now come forward with a plausible explanation backed by a prayer for rehearing. Moreover, the learned Departmental Representative did not object to the matter being restored to the file of the AO. Accordingly, we set aside the orders passed by the lower authorities and restore the matter to the file of the AO for fresh adjudication as per law. The assessee is directed to cooperate fully and provide all necessary evidence and explanation during the reassessment proceedings. The AO . shall consider the matter afresh in accordance with the law after giving the assessee proper opportunity of hearing. Hence the ground of appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in court on 23rd day of July, 2025