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Facts
The appellant, a co-operative society, did not file an Income Tax Return. The AO, observing cash deposits of Rs. 2,39,82,500, initiated assessment under Section 148, treated the deposits as unexplained income under Section 144, and denied Section 80P deduction. The CIT(A) upheld the denial of Section 80P but deleted the addition under Section 69A, accepting the assessee's explanation for the cash deposits.
Held
The Income Tax Appellate Tribunal (ITAT) noted that the CIT(A) accepted new evidence from the assessee for the first time without seeking a remand report from the AO, which is a violation of Rule 46A of the Income Tax Rules and principles of natural justice. Consequently, the ITAT set aside the CIT(A)'s order and remanded the matter back, directing the CIT(A) to provide the AO an opportunity to rebut the additional evidence.
Key Issues
Whether the CIT(A) erred in accepting additional evidence from the assessee for the first time without obtaining a remand report from the Assessing Officer, thereby violating Rule 46A of the Income Tax Rules and the principles of natural justice.
Sections Cited
139(1), 148, 144, 80P, 69A
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI GEORGE GEORGE K., VP & SHRI INTURI RAMA RAO, AM
O R D E R Per: Inturi Rama Rao, AM These appeals filed by the Revenue are directed against the orders of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 20.07.2023 & 25.07.2023 for Assessment Years (AY) 2014-15 & 2013-14, respectively.
Since identical issues are involved in these appeals, they are heard together and disposed of by this common order. For the sake of convenience and clarity, the facts relevant to the appeal bearing for AY 2014-15 are stated herein.
& 663/Coch/2023 Kochin Co-opertive Society Ltd.
The brief facts of the case are that the appellant is a co- operative society duly registered under the Kerala Co-operative Societies Act, 1969. No return of income u/s. 139(1) Income Tax Act, 1961 (hereinafter "the Act") was filed y the appellant, However, based on the information that the appellant co-operative society made cash deposit of Rs. 2,39,82,500/-, the Assessing Officer (AO) formed an opinion that income had escaped assessment to tax and issued a notice u/s. 148 of the Act. The appellant had not complied with the notice u/s. 148 nor filed the details called for. In the circumstances the AO was compelled to make best judgement assessment invoking provisions of section 144 of the Act. While doing so, the AO treated the cash deposit as unexplained money of the assessee, while denying claim for deduction u/s. 80P of the Act.
Being aggrieved, appeal was filed before the CIT(A), who vide the impugned order, while confirming the denial of deduction u/s. 80P of the Act for non submission of return of income u/s. 139(1) of the Act, placing reliance on the decision of the Hon'ble Jurisdictional High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham v. CIT [2023] 459 ITR 730 (Ker), however, granted relief in respect of addition made u/s. 69A of the Act on account of unexplained cash credit in the bank by accepting the explanation of the assessee that the deposits were made from the business of gas agency, medical store and providing credit facilities to its members.
The learned CIT-DR submitted that the assessment was exparte. The appellant failed to discharge the onus of explaining the source of cash deposits during the assessment proceedings. The CIT(A), without giving opportunity for rebutting this submission made before the CIT(A), merely accepted the explanation of the appellant that the cash deposits were made out of gas business and deposits from members, etc. Thus, he submits that the order passed by the CIT(A) is in total violation of the principles of natural justice under the provisions of rule 46A of the Income Tax Rules. Therefore, he submits that the matter may be remanded back to the file of CIT(A) for fresh disposal.
On the other hand the learned counsel for the assessee submits that no interference is called for in the order of the CIT(A).
We have heard the rival contentions and perused the material available on record. On a perusal of the assessment order it would reveal that the AO made the addition of cash deposits as unexplained income of the assessee for the failure of the appellant to explain the source of cash deposits. However, the CIT(A) returned a finding of the fact that the appellant explained the source of cash deposits by producing the books of account. The books of accounts and evidences were produced before the learned CIT(A) for the first time. The CIT(A) ought not have accepted the submission of the appellant without calling for a remand report from the AO in terms of provisions of rule 46A of the I.T. Rules. Therefore, the order of the CIT(A) is hereby set aside and remitted back to the file of & 663/Coch/2023 Kochin Co-opertive Society Ltd. the CIT(A) with a direction to afford an opportunity to the AO to rebut the additional evidences and books of account produced before him and dispose of the appeal in accordance with law.
In the result, the appeals filed by the Revenue stand partly allowed.
Order pronounced in the open court on 9th April, 2025.