THE PRIMARY AGRICULTURE COOPERATIVE CREDIT SOCIETY,NENNAL vs. ITO., WARD-I, MANCHERIAL

On being aggrieved by the assessment order, the assessee-society carried the matter in appeal before the learned CIT(A) and reiterated it’s submissions made before the Assessing Officer. The learned CIT(A) being not satisfied with the explanations furnished by the assessee-society sustained the additions made by the Assessing Officer.

Aggrieved by the order of the learned CIT(A), the assessee-society is now in appeal before the Tribunal.

Shri Upadhyay Raghavender, Advocate for the Assessee-Society submitted that, the assessee-society had not filed it’s return of income u/sec.139 of the Act. However, in response to notice issued u/sec.148 of the Act, the assessee-society has furnished explanation along with 5 ITA.No.139/Hyd./2025 relevant bank statement to prove the source of cash deposit of Rs.62,86,015/- out of loan taken from the bank to advance loan to it’s members for agricultural activities and re-deposited into the bank account in the regular course of business during the year under consideration. He submitted that the members of the assessee-society are agriculturists and due to lack of knowledge, the assessee-society could not file it’s return of income and also not aware of the intricacies of the income tax proceedings. However, during the course of assessment proceedings, in response to notice issued u/sec.148 of the Act, the assessee-society has furnished relevant bank statement in respect of cash deposits made by assessee-society in The Adilabad District Cooperative Central Bank Ltd., to prove the source of cash deposits and as per sec.80P of the Act, the assessee-society is eligible for deduction for the loans advanced to it’s members. He, therefore, pleaded that since the assessee- society has proved the source of cash deposit made into bank account, the additions made by the Assessing Officer 6 ITA.No.139/Hyd./2025 and sustained by the learned CIT(A), should be deleted in the interest of justice.

Shri Srinath Sadanala, Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the assessee-society did not disclose the cash deposit in it’s audit report and only after issuance of show cause notice, the assessee-society admitted the cash deposit of Rs.62,86,015/- and thereby, submitted false declaration in it’s reply and deliberately concealed the transaction of cash deposits into the bank account. Further, the assessee-society has failed to prove the purpose for which it has taken loan from the bank. Similarly, the assessee has disclosed profit of Rs.2,53,315/- and in absence of return of income, as per the provisions of sec.80P of the Act, the deduction claimed by the assessee- society cannot be allowed. In absence of satisfactory explanation furnished by the assessee-society, the Assessing Officer made the impugned additions, which are sustained by the learned CIT(A) as the assessee-society failed to furnish any supporting documentary evidences 7 ITA.No.139/Hyd./2025 before the learned CIT(A) to controvert the findings of the Assessing Officer. He accordingly pleaded that the order of the learned CIT(A) be confirmed in the interest of justice.

We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute between the parties that, the assessee- society had not filed it’s return of income u/sec.139 of the Act, but, in response to notice issued u/sec.148 of the Act, the assessee-society has furnished explanation along with relevant bank statement to prove the source of cash deposit of Rs.62,86,015/- out of loan taken from the bank to advance loan to it’s members for agricultural activities and re-deposited into the bank account in the regular course of business during the year under consideration. We find that during the course of assessment proceedings, the Assessing Officer noted that the assessee-society has not reported about the purported bank account maintained with The Adilabad District Cooperative Central Bank Ltd., in it’s audit report and it came to the light only after issuance of show cause notice by the Department, the assessee-society has 8 ITA.No.139/Hyd./2025 furnished the relevant bank statement. We find that, although, the assessee-society had not filed it’s return of income u/sec.139 of the Act, but, in response to notice u/sec.148 of the Act, the assessee-society has furnished it’s explanation along with relevant bank statement to prove the source of the cash deposit into the bank account, but, the Assessing Officer has not considered the explanation of the assessee-society and evidence in support of it’s arguments. The learned CIT(A) sustained the addition on the ground that the assessee-society failed to prove the ‘purpose’ of taking loan from the bank. We find that, the Assessing Officer had made the addition in absence of return of income either u/sec.139 or u/sec.148 of the Act, ignoring the explanation furnished by the assessee-society along with relevant documentary evidences i.e., bank statements etc., Further, the Assessing Officer also denied the deduction claimed by the assessee-society u/sec.80P of the Act to the tune of Rs.2,53,315/- disclosed by the assessee- society as it’s net profit under the Head “Profit and Gain from Business or Profession”, in absence of filing of return 9 ITA.No.139/Hyd./2025 of income u/sec.139 of the Act. In this view of the matter and considering the facts and circumstances of the case, we deem it fit and appropriate to restore the instant issues back to the file of Assessing Officer for de novo verification after providing due opportunity of hearing to the assessee- society. Needless to say, it is the sole risk and responsibility of the assessee-society to plead and prove it’s case with supporting documentary evidences as called for by the Assessing Officer in consequential proceedings. Accordingly, the grounds raised by the assessee-society are allowed for statistical purposes.

In the result, appeal of the assessee is allowed for statistical purposes.