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Facts
The assessee, an Urban Co-operative Bank, filed a return declaring a loss for AY 2017-18. The case was reopened, and additions were made for cash deposits in two banks. The assessee contended these deposits were part of its banking business.
Held
The Tribunal noted the assessee's non-responsiveness but, in the interest of natural justice, set aside the assessment order.
Key Issues
Whether the cash deposits made by the assessee bank were part of its regular banking business, and if further opportunity should be granted to substantiate the claim.
Sections Cited
147, 148, 69A, 144, 144B
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA
अपीलाथ� की ओर से/Appellant by : Mr. A. Venkatesh, Advocate '(थ� की ओर से/Respondent by : Mr. R. Raghupathy, Addl.CIT सुनवाई की तारीख/Date of Hearing : 06.08.2025 घोषणा की तारीख/Date of Pronouncement : 22.09.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order dated 24.03.2025 passed by the Commissioner of Income Tax(Appeals) (hereinafter referred to as “CIT(A))”, dismissing the appeal filed by the assessee against the assessment order dated 23.09.2021 passed u/s.147 r.w.s.144 r.w.s.144B of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).
The assessee is an Urban Co-operative Bank duly registered with the RBI. For the Assessment Year 2017-18, the return of income was filed on 19.03.2018 and a loss of Rs.11,31,241/- was declared. Thereafter, the case was reopened by way of a notice dated 26.09.2019 u/s.148 of the Act and the assessment was completed by making an addition of (a) Rs.47,00,000/- u/s.69A of the Act being cash deposited in Dindigul Central Co-operative Bank Limited and (b) Rs.99,28,000/- u/s.69A of the Act being cash deposited in the Indian Bank and a demand of Rs.2,05,41,263/- was raised. Before the Assessing Officer(AO), the assessee contended that these cash deposits were made in the course of its banking business.
Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld.CIT(A) and submitted the statement of accounts. The ld.CIT(A) remanded the matter to the file of the AO and sought for a remand report after examining the evidence filed by the assessee and calling for such other information and documents as required by the AO to verify the issues raised by the assessee. The AO issued a letter dated 14.08.2024 calling for various records and documents. Since the assessee did not respond to the letter, the AO finalised the remand report and held that the assessee did not explain the nature and source of the cash deposits made by it. The remand report was also forwarded to the assessee for its comments, but it met with no response. Later the ld.CIT(A) passed an order dated 24.03.2025 dismissing the appeal of the assessee. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us.
Before us, the Ld.AR of the assessee submitted that the source for the cash deposited in the banks is from its banking business and prayed that the matter may be remitted to the AO to explain its case with documentary evidence. The Ld.AR also submitted that voluminous records need to be produced below. The Ld.AR, thus, prayed for one more opportunity before the AO.
Per contra, the Ld. DR supported the orders passed by the ld.CIT(A) and AO and argued that the assessee remained non-responsive before the lower authorities, despite the multiple opportunities granted to it and thus prayed that the appeal of the assessee may be dismissed.
We have heard the rival submissions and perused the materials on record and gone through the orders of the lower authoriites. Though, the assessee had largely remained non-responsive to the various notices issued by the AO and the ld.CIT(A), keeping in mind the principles of natural justice, we deem it fit to afford one more opportunity to the assessee to substantiate its case. Therefore, we set aside the assessment order and restore the assessment back to the file of the jurisdictional Assessing Officer for de novo assessment, with a direction to the assessee to substantiate its case. We direct the AO to appear before the JAO as and when called upon and furnish the relevant records and documents in support of the claims made without seeking unnecessary adjournments.
In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 22nd September, 2025 at Chennai.