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Facts
The assessee, a primary agricultural co-operative society, made cash deposits and withdrawals during the assessment year. The AO treated these deposits as unexplained income under Section 69 of the Act after the assessee failed to reply to notices.
Held
The Tribunal set aside the orders of the lower authorities, noting that the matter was decided ex-parte and the merits were not considered. The case was remitted to the AO for a fresh decision after considering the documents and hearing the assessee.
Key Issues
Whether the deposits were unexplained income or repayment of loans, and whether the assessee was afforded proper opportunity to present their case.
Sections Cited
69, 148A(d), 148
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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 05/11/2024 in respect of the A.Y. 2018-19.
The brief facts of the case are that the assessee is a primary agricultural co-operative society and during the A.Y. the appellant deposited cash and also withdrawn cash from their bank accounts. In order to verify the said deposits and withdrawals, the AO had issued notices but the assessee had not replied to the notices and therefore the AO had treated the deposits as income and made an addition u/s. 69 of the Act. As against the Ld.CIT(A) and contended that the deposits are nothing but the repayment of loan obtained from DCC Banks. The Ld.CIT(A) had decided the appeal ex-parte since the assessee had not appeared before the Ld.CIT(A). As against the said order, the assessee is in appeal before this Tribunal.
At the time of hearing, the Ld.AR submitted that the AO had wrongly taken the deposits as unexplained money u/s. 69 of the Act since the entire deposits are nothing but the repayment of loan amounts obtained from the DCC Banks. The Ld.AR further submitted that since the assessee is from a rural background and having a minimal educational qualifications, they have not well versed with the provisions and the knowledge in the technical matters and therefore they have not filed replies to the notices issued by the AO. The Ld.AR further submitted that the assessee is also having a language problem and therefore they have not understood the notices in order to file the reply. The Ld.AR further submitted that the assessee is having one computer system with three administrative staff to manage the entire affairs of the assessee. Therefore they find it difficult to operate the systems and therefore while filing the appeal before the Ld.CIT(A), they specifically opted that notices need not be sent through email. The Ld.AR filed a small paper book enclosing the synopsis and the order passed u/s. 148A(d) and the notice issued u/s. 148 of the Act. In the synopsis, the assessee had extracted the form 35 to show that they had not opted for sending the notices through email. The Ld.AR further submitted that the four notices were issued within a period of one month and therefore submitted that apart from problems faced by the assessee, no proper opportunity was given to the assessee to appear before the Ld.CIT(A).
The Ld.DR relied on the orders of the lower authorities and submitted that proper opportunities were granted by the AO as well as by the Ld.CIT(A) and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have considered the submission made by the assessee to the effect that they are from the rural background and also does not have any knowledge in the operating of the systems and also they have some problem in the language and therefore the assessee was not able to respond to the notices issued by the AO. Anyhow the assessee filed their reply on 09/12/2023 for which the assessee had filed an acknowledgment and after going through the said acknowledgment, we came to know that most of the documents were produced by the assessee before the AO. We have also considered the fact that the assessee is a primary agricultural co-operative society catering to the needs of its members and all their incomes are eligible for deduction and their books of accounts are also liable for audit under the Karnataka Co-operative Societies Act. Further, we have also considered the submission that all the deposits are repayment of the loan amounts to the DCC Banks and therefore it could not be treated as unexplained money u/s. 69 of the Act. But unfortunately, both the authorities had passed the order ex-parte and therefore the merits of the matter could not be decided at this stage. We therefore set aside the order of the authorities below and remit the issue to the file of the AO to decide the issue afresh by considering the various documents to be placed by the assessee and also after hearing the assessee in person.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 28th February, 2025.