RMS KARAMCHARI BACHAT AND SAKH SAHAKARI SAMITI LIMITED JAIPUR,JAIPUR vs. ITO WARD-1(2), JAIPUR, JAIPUR

ITA 243/JPR/2025Status: DisposedITAT Jaipur13 October 2025AY 2013-1436 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings initiated under Section 147 read with Section 148 were invalid and liable to be quashed. The primary reason was the AO's failure to independently form a 'reason to believe' based on tangible material. The AO relied on incorrect information (NMS data suggesting Rs. 3,28,98,301/- in deposits) without proper verification, and the actual cash deposit found was Rs. 1,97,67,171/-. This discrepancy indicated a lack of concrete material and a failure to establish a live nexus between the information received and the alleged escapement of income. The Tribunal cited Supreme Court judgments in CIT vs. Kelvinator of India Ltd., CIT vs. Sun Engineering Works Pvt. Ltd., and Raymond Woollen Mills Ltd. vs. ITO, emphasizing that reassessment cannot be based on mere suspicion or conjecture. The AO's belief was considered borrowed and mechanical, not independent or genuine. Furthermore, the reassessment notice was issued on a wrong PAN. Consequently, the reassessment proceedings, the notice under Section 148, and the assessment order under Section 147/144 were quashed as void ab initio. Grounds 1 and 2 were allowed. Since the appeal was allowed on legal grounds, other grounds were rendered academic and not adjudicated.

What were the facts?

The assessee, RMS Karamchari Bachat and Sakh Sahakari Samiti Limited, filed four appeals before the ITAT Jaipur Bench for assessment years 2013-14 to 2016-17. The appeals challenged orders of the CIT(A), NFAC, Delhi, dated 27.05.2024. The assessee is a cooperative society. For AY 2013-14, the assessee did not file a return. The AO initiated reassessment proceedings under Section 147/148, alleging unexplained cash deposits of Rs. 3,28,98,301/-. During reassessment, the AO found cash deposits of Rs. 1,97,67,171/- in one bank account. The AO treated this amount as unexplained investment under Section 69 and completed the assessment under Section 147 r.w.s. 144, making an addition of Rs. 1,97,67,171/-. The CIT(A) dismissed the assessee's appeal. The appeals before the ITAT were delayed by 204 days, which was condoned.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 read with Section 148 of the Income Tax Act, 1961, are bad in law and without jurisdiction, and consequently, the assessment order passed under Section 147/144 is void ab initio? (Mixed law and fact) 2. Whether the assessment order passed under Section 144 was framed without affording adequate and reasonable opportunity and in gross breach of natural justice? (Mixed law and fact) 3. Whether the addition of Rs. 1,97,67,171/- on account of unexplained cash credit, confirmed by the CIT(A), is contrary to law and facts, given the assessee's nature as a cooperative society accepting deposits only from its members and redeploying funds as loans? Assessee's contentions: - The reassessment proceedings under Section 147/148 are bad in law and without jurisdiction, as the AO lacked a valid and reasonable basis, relying on mere suspicion and incorrect information (NMS data). The AO failed to independently form a 'reason to believe' supported by tangible material. The initial reason to believe was based on an incorrect figure of Rs. 3,28,98,301/- instead of the actual Rs. 1,97,67,171/-. The reassessment notice was also issued on a wrong PAN. Reliance was placed on CIT vs. Kelvinator of India Ltd., CIT vs. Sun Engineering Works Pvt. Ltd., Raymond Woollen Mills Ltd. vs. ITO, Saurashtra Cement and Chemical Industries Ltd. vs. CIT, CIT vs. Lovely Exports Pvt. Ltd., and Mahesh Kumar Gupta v. CIT. - The assessment under Section 144 was made without providing adequate opportunity and violating principles of natural justice. - The addition of Rs. 1,97,67,171/- is incorrect as the assessee is a cooperative society dealing with its members' funds. Revenue's contentions: - Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144,Section 69,Section 133(6),Section 139(1),Section 250

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM

For Respondent: Smt. Anita Rinesh, JCIT
Hearing: 11/09/2025Pronounced: 13/10/2025

PER: DR. S. SEETHALAKSHMI, J.M.

These are four appeals filed by the assessee against four separate orders of ld. CIT (A), National Faceless Appeal Centre (NFAC), Delhi all dated 27.05.2024 passed under section 250 of the I.T. Act, 1961, for the assessment years 2013-14 to 16-17. 2. The grounds raised by the assessee are common in all the appeals except change in figures, therefore, for t

The order continues below.

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