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Facts
The assessee, a Primary Milk Co-operative Society, received Rs. 55,33,000/- from the District Federation and withdrew it from the bank to pay its members. The assessee debited this amount in its books. The Commissioner (Appeals) confirmed this amount as undisclosed income.
Held
The Tribunal held that the amounts withdrawn were duly paid to the members of the Primary Milk Co-operative Society and the CIT(A) had incorrectly appreciated the facts. Therefore, no addition was called for on this account.
Key Issues
Whether the CIT(A) erred in confirming additions on account of cash withdrawals without a proper hearing and accurate appreciation of facts, and whether the withdrawn amount was indeed paid to the members.
Sections Cited
69C, 115BBE, 250(6), 271AAC, 272A(1)(d), 234A, 234B, 234F
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI TR SENTHIL KUMAR
O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, vide order dated 07.03.2025 relevant to the Assessment Year 2019-20.
The assessee has raised the following grounds of appeal: 1.0 The learned Commissioner of Income Tax (Appeals). NFAC has erred in law and on facts in passing the appellate order ex-parte, without ensuring that a real and meaningful opportunity of hearing was afforded to the appellant, especially considering the peculiar circumstances and genuine limitations faced by the appellant in effectively participating in the proceedings. Asst. Year : 2019-20 - 2– 2.0 The learned Commissioner of Income Tax (Appeals), NFAC has erred in law and on facts in confirming the addition of 155,33,000/- on account of cash withdrawals from the bank account treating the same as undisclosed income made by invoking the provisions of section 69C rws 1158BE of the IT Act, 1961, without adjudicating the appeal on merits and without considering the appellant's inability to respond to the hearing notices due to genuine constraints. 3.0 The learned Commissioner of Income Tax (Appeals), NFAC has erred in law and on facts in confirming the additions made by the Assessing Officer ex-parte in violation of the mandate under section 250(6) of the Act, which requires the Commissioner (Appeals) to dispose of the appeal through a reasoned order on each ground of appeal
, irrespective of the appellant's absence or non-compliance. 4.0 The learned Commissioner of Income Tax (Appeals), NFAC failed to appreciate that non-appearance of the appellant does not empower the Commissioner (Appeals) to dismiss or decide appeal on merits without real hearing. 5.0 The learned Commissioner of Income Tax (Appeals), NFAC has erred in law and on facts in confirming the initiation of penalty proceedings under section 271AAC and 272A(1)(d) of the Income Tax Act. 1961. 6.0 The learned Commissioner of Income Tax (Appeals), NFAC erred in law and on facts has confirmed the charging interest under section 234A, 2348 and 234F of the Income Tax Act, 1961. 7.0 The appellant craves leave to add to, alter, delete or modify any of the above grounds of appeal either before or at the time of hearing of this appeal.
3. Heard the arguments of both the parties and perused the material available on record.
4. It is an undisputed fact that the assessee is a Primary Milk Co- operative Society engaged in collecting milk from its village members and supplying the same to the District Milk Co-operative Society, also known as the District Federation. The District Federation makes payment to the primary Milk Co-operative Society for the milk supplied by them. The said amount thus received is withdrawn from the bank and subsequently distributed to members of the Primary Milk Co- operative Society based on the quantity and quality of milk supplied. It Asst. Year : 2019-20 - 3– is noted that the assessee Milk Co-operative Society has withdrawn from the bank an amount of Rs. 55,33,000/-which has been received from the District Federation, for making payments to its members towards the milk supplied. Such withdrawn amount is duly debited in the books. We find that the affirmation made by the Ld. CIT(A) was due to incorrect appreciation of the facts as detailed by the assessee during before the Revenue authorities. Since the amounts withdrawn were actually paid to the members of the Primary Milk Co-operative Society, no addition is called for on this account.
In the result, the appeal of the assessee is allowed.