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Facts
The assessee, a co-operative society, did not file its return of income for AY 2017-18. The Assessing Officer (AO) completed the assessment ex-parte, making additions for unexplained money deposited during demonetization and throughout the financial year. The CIT(A) deleted these additions.
Held
The Tribunal held that the CIT(A) should have called for a remand report from the AO before allowing relief, especially since the assessment order was ex-parte and based on information related to an old PAN. The Tribunal set aside the CIT(A)'s order and remanded the matter back to decide the appeal afresh.
Key Issues
Whether the CIT(A) erred in deleting additions without obtaining a remand report from the AO and whether proper opportunity was granted to the AO to examine additional evidence as per Rule 46A(3).
Sections Cited
144, 69A, 142(1), 46A(3), 44Ab, 143(3), 80P
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2017-18 ITO, Ward-1(5), Kolhapur. Vs. Rajivgandhi Grameen Bigarsheti Path Sanstha Marydit, Kudnur, Chandgad, Dist.-Kolhapur- 416508. PAN : AAABR1249J Appellant Respondent Revenue by : Shri Arvind Desai Assessee by : Shri Pramod S. Shingte Date of hearing : 13.11.2024 Date of pronouncement : 17.01.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the Revenue is directed against the order dated 29.04.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18.
The Revenue has raised the following grounds of appeal :- “i. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in deleting the tail addition of Rs.2,02,56,693/- u/s 69A of the Act on account of unexplained money. ii. On the facts and in the circumstances of the case and in low, the Ld. CIT(Appeals) erred in accepting fresh submission from the AO to examine the additional evidence admitted by him as per the provisions u/s 46A(3) of the IT Rules 1962. iii. The appellant craves leave to add, alter, amend and modify any of the above or all grounds raised
at time of proceedings before the Hon'ble Tribunal which may please be granted.”
3. Facts of the case, in brief, are that the assessee is a co-operative society engaged in the activity of providing credit facilities to its members. The return of income was not filed by the assessee and the case was selected for scrutiny on the basis of cash deposited during demonetization period. Notices u/s 142(1) were issued to the assessee. The assessee neither attended nor any submission was filed before the Assessing Officer. Therefore, the assessment was completed u/s 144 of the IT Act by determining total income of Rs.2,02,56,693/- against the income returned by the assessee at Rs.Nil. The above assessed income includes addition of Rs.10,69,000/- as unexplained money deposited during demonetisation u/s 69A of the IT Act and also Rs.1,91,87,693/- unexplained money u/s 69A cash deposited during whole of the financial year.
4. In first appeal, after considering the reply of the assessee, Ld. CIT(A)/NFAC deleted both the above additions and allowed the appeal of the assessee by observing as under :-
4. Statement of Facts: The ITO has erred in making addition of Rs.10,69,000/- representing the cash deposits during demonetization period and of Rs.1,91,87,693/- representing the total of cash deposits during the financial year other than demonetization period. The co-operative society is engaged in accepting deposits from members and lending the same to members. The business transactions of the appellant have been reflected in this bank account. The source of the cash deposit is essentially from banking receipts in the form of deposits from members. The ITO has erred in adding the entire cash deposit during the year as unexplained. The appellant co- operative society was registered was issued PAN as Body of Individuals prior to 08.10.2016 with PAN NO. AAABR1249J. As such the appellant was tot in a position to file any return or audit reports with this PAN. The appellant was issued a new PAN (AACAR8831P) on 08.10.2016 after which responses to the notices issued under income tax have been accordingly fled under this new PAN 5. Observation and Decision: In ground Nos 1, the Appellant has contested the order u/s 144 of the IT Act, 1961 dated 28/12/2019 for the A.Y, 2017-18 of the AO of making an addition of Rs 10,69,000/- and Rs 1,91,87,693/-, I have carefully considered the submissions made by the appellant. It is observed that the Appellant is a co-operative society registered under the MSCS Act, 1960 in the category of Co-operative Credit Society- Village-Non-Agricultural’ and the activity of the Appellant society the acceptance of deposits from members and providing them credit facilities. The Appellant had not filed return of income for the A.Y. 2017-18. The AO added an amount of Rs 10,69,000/- deposited during the demonetisation period and Rs 1,91,87,693/- representing the total of Cash Deposits in the Appellant's Bank Account as unexplained Income u/s 69A as the Appellant failed to respond to notice u/s 142(1). It is submitted that the source of the cash deposits is from day-to-day business transactions of the Appellant society being the receipts in the form of deposits from members or repayment of loans given to the members. The Appellant has maintained detailed accounts for each of the deposits in the bank as is evident from the cash and bank Book maintained by the Appellant society. The list of persons from whom the cash is received and deposited in the Bank Accounts are also maintained by the Bank. The accounts of the society have been audited by a government auditor in terms of section 81 of the MSCS Act, 1960. The Accounts have also been audited u/s 44Ab of the IT Act, 1961 and the Audit Report in form 3CA/3CD has been filed on 07-10-2017 and duly acknowledged. It is further observed that notice u/s 142(1) was 09-03-2018 and 13-03-2018. Thereafter, after a gap of 1 year and 9 months, suddenly show cause notice was issued on 13-12-2019 fixing the case for hearing on 20-12-2019 and order passed on 28-12-2019. It is clear that proper and meaningful opportunity has not been afforded to the Appellant during the scrutiny proceedings. In view of the above, the AO was not justified in making the addition of Rs.10,69,000/- and Rs.1,91,87,693/- and the addition is hereby deleted. This ground is allowed.
It is this order against which the Revenue is in appeal before this Tribunal.
Ld. DR appearing from the side of the Revenue submitted before us that the order passed by Ld. CIT(A)/NFAC is not justified. It was submitted by Ld. DR that Ld. CIT(A)/NFAC has accepted fresh evidences from the assessee and did not allowed the Assessing Officer to examine the additional evidences admitted by him during the appellate proceedings and therefore, the provisions under Rule 46A(3) of the IT Rules were not followed. In this regard, it was further submitted that during the course of appellate proceedings, the assessee has furnished various documents which includes audit report in Form 3CA/3CD, copy of cash books and copy of various bank accounts & details of deposit during demonetisation. Accordingly, Ld. DR submitted before the Bench that Ld. CIT(A)/NFAC has contravened the Rule 46A(3) of the IT rules and erred in not calling for any remand report from the Assessing Officer and therefore it was requested before the Bench to set-aside the order passed by Ld. CIT(A)/NFAC and restore the assessment order.
Ld. AR appearing from the side of the assessee submitted before us that earlier the assessee co-operative society was allotted PAN No.AAABR1249J in the capacity of body of individuals but Income Tax portal was not permitting to file return or audit report with this PAN. Therefore, the assessee obtained a new PAN No.AACAR8831P on 08.10.2016 and all the transactions were carried on through this new PAN, even the return for the assessment year under consideration i.e. for A.Y. 2017-18 was also filed under this new PAN. Subsequently, the Assessing Officer issued 142(1) notice on earlier PAN and the assessee society could not respond to the above 142(1) notice, consequently the assessment order was passed ex-parte and the whole of the cash deposits and also the cash deposited during the demonetization period was added as total income of the assessee. In first appeal, these facts were brought in the knowledge of the Ld. CIT(A)/NFAC that the ex-parte assessment order was passed on earlier PAN of the assessee which was not in use, however the audit report and income tax return was filed on new PAN. The copy of audit report in Form 3CA/3CD and ITR-V and even the copy of assessment order which was passed on the basis of return filed on new PAN & copy of various bank account statements were furnished before Ld. CIT(A)/NFAC. Apart from above documents, list of persons who have deposited cash of Rs.10,69,000/- during demonetization was also furnished before Ld. CIT(A)/NFAC. It was contended before the Bench that Ld. CIT(A)/NFAC has accepted the fact that the ex-parte assessment order was passed on earlier/inactive PAN of the assessee society and the assessee society has already furnished audit report and income tax return on new PAN wherein all the impugned transactions were incorporated in the regular books of accounts. It was submitted before the Bench that after considering all the documents and the fact that the assessee society has obtained another PAN and return was filed on the new PAN and even the assessment order u/s 143(3) was also passed on the basis of return of income filed on new PAN, Ld. CIT(A)/NFAC allowed the appeal of the assessee which is justified. It was also submitted by Ld. AR that the assessment order was passed by an officer of the Department for the same assessment year and there was no new documents which were required to be verified from the Assessing Officer. Therefore, even if the documents furnished by the assessee Assessing Officer who passed ex-parte assessment order there cannot be said to be any error. On the basis of all the above facts, Ld. AR requested before the Bench to dismiss the appeal filed by the Revenue.
We have heard Ld. Counsels from both the sides and perused the material available on record. It is an admitted fact that the assessee society was allotted two PAN Nos. one was in the capacity of body of individual and subsequently another was in the capacity of co-operative society/AOP. The assessee society was not using the earlier PAN No.AAABR1249J but has filed return of income and audit report on new PAN No.AACAR8831P. It was the sole contention of Ld. DR that the procedure envisaged in Rule 46A(3) was not followed by Ld. CIT(A)/NFAC and without forwarding these documents to the Assessing Officer for verification, the relief has been granted which is unjustified. We find that Ld. AR has furnished copy of ITR- V which was furnished on new PAN & copy of its assessment order passed u/s 143(3) of the IT Act for the period under consideration. We also find that the return of income for the period under consideration furnished on new PAN was selected for scrutiny through CASS for verification of huge deduction claimed u/s 80P of the IT Act. Whereas the impugned ex-parte assessment order was passed on the basis of information of huge cash deposited during demonetisation period & also during whole of the year on old PAN. It is therefore apparent that the assessee has not informed the new PAN to the bank authorities & the old PAN was being utilised in the bank accounts & therefore the information of cash deposit during demonetisation & also during whole of the year was forwarded on the basis of old PAN. We also find that the Assessing Officer who passed assessment order on new PAN has neither verified the cash deposited during demonetisation period nor the cash deposited during whole of the financial year. The Assessing Officer has only verified the deduction claimed under Chapter VI-A and passed the assessment order. Considering the totality of the facts of the case, we find some force in the arguments of Ld. DR that Ld. CIT(A)/NFAC should have had called the remand report from the Assessing Officer on additional evidences furnished before him before allowing the relief to the assessee. Accordingly, we deem it fit to set-aside the order passed by Ld. CIT(A)/NFAC & remand the matter back to his file to decide the appeal afresh after providing an opportunity to the Assessing Officer under rule 46A(3) to verify the additional evidences