THOTTIPAL SERVICE COOPERATIVE BANK,THRISSUR vs. ITO WARD 2(5), THRISSUR

The relevant facts in brief are that the Assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969, and is classified as a Primary Agricultural Credit Society. It is state that its primary activities involve accepting deposits from members and providing credit facilities exclusively to its members for agricultural and allied purposes. For the Assessment Year 2013- 2014, the Assessee did not file the return of income. Since there were cash deposits in bank accounts of the Assessee, reassessment proceedings under Section 147 of the Act were initiated by issuance of notice under Section 1448 of the Act. In response, the Assessee filed a return of income on 19/11/2021 declaring ‘Nil’ income after claiming deduction under Section 80P(2)(d)(a)(i) of the Act. The reassessment proceedings culminated with passing of Assessment Order, dated 30/03/2022, whereby an addition of INR.3,24,13,000/- was made by the Assessing Officer under Section 69A of the Act 2 Assessment Year 2013-2014 treating the entire cash deposits as unexplained income.

The Learned Authorised Representative for the Assessee submitted that the Assessee is ready and willing to produce books of accounts and supporting documentation. It was submitted that due to procedural constraints and lack of opportunity for effective representative, the Assessee could not make proper representation before the Assessing Officer and the CIT(A). It was submitted that the notice issued by the Assessing Officer calling for details of all persons making cash deposits in the bank account of the Assessee did not provide sufficient opportunity to the Assessee. Even before the CIT(A) the same could not be filed since the same were voluminous in nature as the deposits of varying amounts were collected from various persons and the records of the same were maintained in physical form and therefore, the Assessee found it difficult to collate and upload the same. However, now the Assessee had been able to gather the supporting documents and seeks one more opportunity to establish the case on merits. It was submitted 3 Assessment Year 2013-2014 that cash was deposited into bank account from the available cash balance in hand sourced from daily cash collections received on account of loan repayment made by its members and other dues amount received from members of the society. The Learned Authorised Representative for the Assessee placed on record the details of cash deposits, and submitted that the same be taken in to consideration. In support she placed reliance of affidavit sworn by Secretary of the Assessee/Co-operative Society.

Per Contra the Learned Departmental Representative submitted that despite having been granted adequate opportunities, the Assessee had failed to file relevant documents/details either in the assessment or in the appellate proceedings before Ld. CIT(A). Referring to Paragraph 4 of the Ld. CIT(A) order, it was submitted that no response was furnished by the Assessee. It was further submitted that Assessee had been non-compliant even in the assessment proceedings and had failed to furnish supporting documents in support of the claim. Since, the Assessee had failed to discharge the onus, the Assessing Officer was justified in invoking provisions contained in Section 69A of the Act. On the strength of the aforesaid it was submitted that order passed by the Ld. CIT(A) be sustained.

We have given thoughtful consideration to the rival submissions and had perused the material on record.

We find that during the assessment proceedings, notice under Section 142(1) of the Act was issued to the Assessee on 28/01/2022. In response to the same the Assessee furnished part reply and asked for reasons recorded for reopening the assessment. It was provided to the Assessee on 10/02/2022. Thereafter notice dated 03/03/2022 was issued to the Assessee under Section 142(1) of the Act. In response to the aforesaid notice the Assessee filed reply on 27/03/2022 requesting for some more time to furnish 4 Assessment Year 2013-2014 documents. However, the Assessing Officer proceeded to pass the Assessment Order on 30/03/2022 observing that Assessee has failed to furnish relevant documents and details and failed to discharge the onus cast upon the Assessee to establish the source of cash deposited in the bank account of the Assessee. We find that during appellate proceeding a number of opportunities were granted to the Assessee to furnish submissions/documents. It has been noted by the Ld. CIT(A) that despite seeking opportunities to produce books of accounts and relevant documents/evidence in details of deposits made in the bank account, the Assessee had failed to furnish the same. During the appellate proceeding it was explained on behalf of the Assessee relevant documents/details were maintained in physical form and the same were voluminous in nature. It was explained that the deposits of varying amounts were collected from a large number of members and also source from day to day operations. Therefore, the Assessee found it difficult to collate and upload the same supporting documents, in appellate proceedings before the CIT(A) even though opportunity was granted to the Assessee. The Assessee has placed on record specimen of daily cash-statement showing the available cash balances cumulated from small receipts of members along with details of the bank deposits made from such cash balances. Taking into consideration the submissions advanced by both the sides and keeping view the facts & circumstances of the present case, we deem it appropriate and in the interest of justice to grant Assessee another opportunity to make out a case on merits. Accordingly, we set aside the Order, dated 23/05/2025, passed by the Ld. CIT(A) and restore the issue back to the file of the CIT(A) with the directions to adjudicate the appeal afresh after granting the Assessee a reasonable opportunity of being heard. The Assessee directed to co-operate in the appellate proceedings and forthwith file details, documents & submission in support of its claims/contentions before the CIT(A). The CIT(A) is 5 Assessment Year 2013-2014 directed to consider the same as per law. It is clarified that in case the Assessee fails to enter appearance and/or fails to file details/documents/submission in response to notice of hearing issued by the CIT(A), the CIT(A) shall be at liberty to decide the issues on merits on the basis of material on record. Since, we have not adjudicated the issues raised on merits, all the rights and contentions of both the sides are left open. In terms of the aforesaid, the Ground No.1 to 3 raised by the Assessee are treated as allowed for statistical purposes, while all other grounds are dismissed as having been rendered infructuous.

In result, as per Paragraph 8 above, the present appeal preferred by the Assessee is partly allowed.