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Facts
The Revenue appealed against the CIT(A)'s order deleting additions made by the AO based on information about cash deposits and withdrawals by a cooperative credit society. The assessee explained that the deposits were from members and submitted books of accounts, which were audited. The AO did not file a report on the additional evidence submitted by the assessee.
Held
The Tribunal held that the Commissioner of Income Tax (appeal) correctly admitted additional evidence and, since the AO failed to provide a report despite opportunities, decided the appeal based on the evidence. The cash deposits were explained as daily member deposits, and cash withdrawals could not be explained by the Revenue.
Key Issues
Whether the CIT(A) erred in deleting additions based on unexplained cash deposits and withdrawals without sufficient grounds, and whether the AO's failure to submit a report under Rule 46A justified the CIT(A)'s decision based on available evidence.
Sections Cited
250, 147, 144, 144B, 148, 69A, 251
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
This is an Appeal filed by the Revenue against the Order of the Commissioner of Income tax (appeal) (NFAC) under section 250 of the Income Tax Act, 1961 for A.Y.2018-19 dated 17/12/2024 emanating from Assessment Order u/s.147 r.w.s144 r.w.s144B dated 22/02/2023.
Findings & Analysis : We have heard Ld.DR and perused the records. In this case, no one appeared on behalf of the assessee. This is the appeal filed by the Revenue against the Order of the Commissioner of income Tax (Appeal) (NFAC) dated 17/12/2024 for AY 2018-19. Assessee is a cooperative credit society registered under Maharashtra Cooperative Societies Act . It is in the business of providing credit facility to its members. In this case, the ITO received information from the INSIGHT portal of the Income Tax Department that Assessee has deposited Rs.1,00,43,800/- in cash in current account and has done cash withdrawal of Rs.6,05,000/-. The Assessing Officer also received information that Assessee has not filed return of Income. Based on the information, the Assessing Officer issued notice u/s. 148 of the Income Tax Act. The Assessee failed to file any reply to the various notices issued by the Assessing Officer. Then the Assessing Officer (AO) issued a final show cause notice. The Assessee failed to comply it. Assessing Officer passed an order u/s. 144 of the Act. The AO assessed total income of the assessee at Rs.1,06,48,800/-. Thus, the AO added both withdrawals and deposits.
Aggrieved by the Assessment Order, the Assessee filed an appeal before the Commissioner of Income Tax (appeal). Assessee made elaborate submission before the Commissioner of Income Tax (appeal) which has been reproduced by Commissioner of Income Tax (appeal) in the order. Assessee also filed copy of Registration certificate. The Assessee explained that the cash deposits pertains 2 to the small amounts deposited by its members in their respective accounts maintained with the Assessee Co-operative Society . The assessee then deposited these amounts in its account. Therefore, the Assessee submitted before the Commissioner of Income Tax (appeal) that cash deposits are duly explained. Assessee filed copy of Cash Book, Bank book, ledger. Assessee also submitted that its Books of Accounts have been audited and the Audit Report dated 31/07/2018 has been duly submitted to the Dy. Registrar of Co- Operative Societies as per the Maharashtra Cooperative Societies Act.
The Commissioner of Income Tax (appeal) admitted the Additional evidence filed by the Assessee and recorded his satisfaction. The Commissioner of Income Tax (appeal) then as per Rule 46A of the Income Tax Rules forwarded the evidence filed by the Assessee to the Assessing Officer for his report on 24/06/2024. Then Commissioner of Income Tax (appeal) issued Reminders to the Assessing Officer on 2/08/2024, 20/08/2024, 5/09/2024 asking the Assessing Officer to file Report on the submission of the Assessee. Commissioner of Income Tax (appeal) also send a letter to the concern Additional Commissioner Income Tax requesting him to ask the AO to send the report. On 25/09/2024 the AO filed a letter requesting one month’s time. Accordingly, time was granted to the AO. Since the AO did not submit the report under Rule 46A, the Commissioner of Income Tax (appeal) issued letter dated 04/11/2024 to the AO. The AO again sought time accordingly the Commissioner of Income Tax (appeal) again granted time upto 3 5/12/2024. On 15/12/2024, the AO again asked for some more time which was granted upto 31/01/2025. The AO failed to submit the report under Rule 46A of the Income Tax Rules even after providing so many opportunities. Hence the Commissioner of Income Tax (appeal) decided the Appeal based on the documents filed by the Assessee. The Commissioner of Income Tax (appeal) after studying the documents arrived at the conclusion that the Addition of Rs.1,06,48,800/- cannot be sustained hence directed the AO to delete it.
The Revenue is aggrieved by the Order u/s.250 of the Act passed by the Commissioner of Income Tax (appeal). However, Revenue has not brought on record any documents to prove its contention that the delay in filling the Report by AO was due to the non compliance by the Assessee. The Ld.DR has not explained the contention raised in the grounds of appeal
by the Pr.Commissioner Income Tax
3. Pune, who has authorised the appeal. Rule 46A of the Income Tax Rules, 1962 is reproduced below :
“(1)…. (2)……… (3) The [Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity— (a) To examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) To produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant……. 4
As per Rule 46A of the Income Tax Rules, the Commissioner of Income Tax (appeal) admitted the Additional Evidence filed by the Assessee and forwarded it to the Assessing Officer for his verification and report. Therefore, there is no question of delay by the Assessee. As per Rule 46A, the AO was suppose to verify the evidence forwarded by the CIT(A) and submit his report to the CIT(A). The Commissioner of Income Tax (appeal) gave more than sufficient time to the AO to verify the evidence filed by the assessee and file his report. The AO has not bothered to file the report. Therefore, the Commissioner of Income Tax (appeal) decided the appeal based on the documents filed by the Assessee. Hence we do not find any violation of Rule 46A of the Income Tax Rules by the Commissioner of Income Tax (appeal). Therefore, the Ground No. 1 raised by the Pr.Commissioner of Income Tax -3 Pune i.e Revenue is dismissed.
Ground Nos. 2 and 3 raised by the Revenue read as under :
“2 On the facts and circumstances of the case the Ld CIT(A) erred in deleting the entire addition made u/s.69A of the Income Tax Act, 1961 without giving detailed facts in the appellate order as to how the assessee has explained the source of cash deposits and without computing the taxable income of the assessee, given the fact that the assessee was a non-filer and did not file its return of income for the year under consideration. 3 On the facts and circumstances of the case the Ld.CIT(A) ought to have set aside the assessment order to the AO for fresh assessment as per proviso placed under clause (a) of sub-section (1) of section 251 of the Income Tax Act, 1961 which provides that the CIT(A) may set aside the assessment order made u/s. 144 of the Income Tax Act, 1961 back to the AO for making a fresh assessment, given that the assessment order was passed by the AO u/s.144 of the Act due to failure of the assessee to participate in the assessment proceedings.” 5
The Commissioner of Income Tax (appeal) has discussed in the order that the cash deposits were out of the daily cash deposited by various members in their respective accounts maintained with Assessee Cooperative society . The Assessee had filed copies of cash book, bank books, ledgers etc. The AO or Pr.Commissoner Income Tax -3 Pune (who has authorised this appeal) has not contravened the findings of the Commissioner of Income Tax (appeal). It is clear that the AO or Pr.Commissioner Income Tax -3 Pune has not bothered to verify the documents filed by the assessee, they have not brought on record any defect in the documents. It is an admitted fact that the Assessee is a cooperative credit society duly registered under Maharashtra Co-Operative Societies Act. The Assessee has explained that the cash was out of daily deposits made by its customers for which the Assessee had submitted copy of Cash book. This explains that the cash was recorded in the books of account. The Revenue has not brought to our notice any defect in these documents. The AO has also added the Cash withdrawals too. We specifically asked the Ld.DR how cash withdrawals will be Income of the Assessee. Ld.DR could not explain. The AO has added Cash Withdrawals and cash deposits u/s 69A of the Act. Section 69A of the Act is reproduced here under :
“Unexplained money, etc. 1. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the 6 value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. ”
In this case Revenue has not disputed the fact that these amounts were duly recorded in the Books of the assessee which were daily deposits made by various members. The Books of Accounts have been audited. Revenue has not brought on record any evidence to prove that the Deposits were not made by various members of the society.
Therefore, in our considered view the decision of Commissioner of Income Tax (appeal) cannot be faulted with. Therefore, in our considered view there is no merit in the Ground No.2 and 3 raised by the revenue. Accordingly, the Ground No. 2 and raised by the revenue are dismissed.
Ground number 4: No ground was altered or amended hence Ground No. 4 is dismissed.
In the Result, Appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 28th August, 2025.