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Facts
The assessee, a Primary Agricultural Co-operative Bank, had cash deposits of ₹2,84,20,000/- in its bank account. The Assessing Officer (AO) made an addition under Section 69A of the Income Tax Act, 1961, due to the assessee's failure to provide satisfactory explanation regarding the nature and source of these deposits. The Commissioner of Income Tax (Appeal) upheld the AO's order.
Held
The Tribunal, while acknowledging the assessee's failure to provide complete documentation during assessment and appellate proceedings, decided to grant one more opportunity. This was to allow the assessee to substantiate the nature and source of the cash deposits, considering the bank's primary function of providing credit facilities to its members.
Key Issues
Whether the assessee was given adequate opportunity to explain the source of cash deposits, and if not, should a fresh opportunity be granted?
Sections Cited
148, 69A, 143(3)
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee Primary Agricultural Co- op. Bank against the order of the Learned Commissioner of Income Tax (Appeal)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated & SP No.78/Chny/2025 (AY 2018-19) K 816 Telungupalayam Primary – Agricultural Co-op. Bank :: 2 ::
17.03.2025 for the Assessment Year (hereinafter referred to as ‘AY‘)
2018-19.
The main grievance of the assessee is against action of the Ld.CIT(A) passing the order without giving proper opportunity to the assessee and also brought to our notice that the Assessing Officer (AO) to have framed the assessment without giving proper opportunity to the assessee. Since the AO has made the addition of ₹2,84,20,000/- u/s.69A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) on account of cash deposits made in the bank, the assessee prays for one more opportunity before the AO by citing the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC)
Per contra, the Ld.DR doesn’t want us to give one more innings to the assessee and pointed out that during the assessment proceedings as well as appellate proceedings, the assessee failed to file relevant documentary evidences like details of the members who deposited cash and didn’t file month-wise cash received, statement of cash deposits in the bank account, month-wise cash book, cash flow statement, etc., the appellate authority had no other alternative other than confirming the action of the AO. Therefore the Ld.DR doesn’t want us to give one more opportunity to the assessee.
& SP No.78/Chny/2025 (AY 2018-19) K 816 Telungupalayam Primary – Agricultural Co-op. Bank :: 3 ::
We have heard both the parties and perused the material available on record. It is noted that the assessee is a Primary Agricultural Co-op.
Bank formed with an objective of providing credit facilities to its members to improve their economic conditions and for this purpose, provides credit facilities to its members. The assessee-Primary Agricultural Co-op. Bank collects deposits from its members, borrows funds from banks, lends to farmers and its members to provide group loans to self-help groups and collect the repayment of jewel loan, agricultural loan and other loans, etc.
The Ld.AR brought to our notice that the assessee has more than 10,000 members in the relevant assessment year 2018-19. The AO is noted to have re-opened the assessment of the assessee by issuing notice u/s.148 of the Act on 31.03.2022, pursuant to which, the assessee didn’t file any return of income (RoI) within ‘30’ days from the receipt of the said notice.
According to the AO, despite sending several notices to their g-mail and despite sending notices through Speed Post on 25.01.2023, the assessee only replied to the show cause notice dated 07.02.2023. The AO inter- alia asked the assessee to explain the nature and source of the cash deposits of ₹2,84,20,000/- in the Coimbatore District Central Co-op. Bank (CDCCB). According to the AO, the assessee didn’t give the required details called for by him and instead furnished only a general reply by citing some instructions of the Head Office which only allowed it to keep cash balance upto the limit of ₹10 lakhs to ₹15 lakhs in its branch and & SP No.78/Chny/2025 (AY 2018-19) K 816 Telungupalayam Primary – Agricultural Co-op. Bank hence, had to deposit surplus with CDCCB. The AO noted that the assessee didn’t provide the list of members who deposited the cash in its account and also couldn’t discern the purpose of the cash deposit. Since the assessee didn’t gave proper explanation about the cash deposits made to the tune of ₹2,84,20,000/- in the CDCCB, he added the same u/s.69A of the Act. On appeal, the Ld.CIT(A) is noted to have confirmed the action of AO by holding as under:
3.3 The appellant could not submit any explanation in support of its grounds of appeal despite of giving various opportunities during the appellate proceeding. One submission filed by the appellant on 07.11.2024 is not related at all to the grounds of appeal taken by the appellant in the instant case. Further, I have gone through the assessment order and found that the addition made by the AO is very justified and reasonable with supportive facts. During the assessment proceeding also, the appellant could not submit complete reply and documentary evidences as asked by the AO.
In this case, the appellant deposited cash amounting to Rs. 2,84,20,000/- in the bank accounts, however, the appellant has not filed the return of income for the Year under consideration. Further, the appellant could not filed return of income even after issue of notice u/s 148 of the IT Act. Further, the appellant has not furnished sufficient documentary evidences to establish that the cash deposits made by appellant are from explained sources. Further, no documentary evidences, like the details of members who deposited cash, was submitted. The appellant only submitted bank statement showing cash deposits. Month-wise cash received, statement of cash deposits in the bank account-month wise not provided, cash book, cash flow statement weren’t furnished. The appellant failed to maintain books of accounts preparation of income and expenditure and balance sheet for the year under consideration.
Further, I don't find any irregularities in the assessment order. Under the given facts, I am convinced that the sources of cash deposits of Rs. 2,84,20,000/- are not explained. In this regard, the appellant completely failed to submit any explanation or supporting documents either during the assessment proceedings or during the appellate proceeding. Therefore, the grounds of appeal have no merit and hence these are dismissed.
5. The main grievance of the assessee is that since the details called for by the AO/Ld.CIT(A) is voluminous, it couldn’t be uploaded in the Income Tax portal and therefore, pleaded for one more opportunity & SP No.78/Chny/2025 (AY 2018-19) K 816 Telungupalayam Primary – Agricultural Co-op. Bank :: 5 :: before AO. Taking note that the assessee is a Primary Agricultural Co-op.
Bank providing credit facilities to its members mainly farmers, and the claim of assessee is that the cash deposits were nothing but the money repaid by the farmers/members who have availed agricultural loans, jewel loans, etc, we are inclined to grant one more opportunity to assessee substantiate the nature and source of the cash deposits of ₹2,84,20,000/- which was added by AO u/s.69A of the Act and the assessee has undertaken to file all the relevant documents to substantiate the nature and source of the cash deposits. Hence, for the ends of justice and fair play, we set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO for de novo assessment. And taking into consideration, the fact that the voluminous records need to be submitted/filed before the assessing authority, the AO may call for report from the Verification Unit if found necessary and thereafter frame assessment in respect of the cash deposits made to the tune of ₹2,84,20,000/-.
Since we have disposed of the main appeal of the assessee, the Stay Petition filed by the assessee becomes infructuous and hence, dismissed.
& SP No.78/Chny/2025 (AY 2018-19) K 816 Telungupalayam Primary – Agricultural Co-op. Bank 7. In the result, appeal filed by the assessee is allowed for statistical purposes and Stay Petition filed by the assessee is dismissed as infructuous.
Order pronounced on the 07th day of October, 2025, in Chennai.