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Facts
The assessee, a co-operative credit society, did not file its original return. Information from the Insight Portal revealed substantial financial transactions, leading the AO to reopen the assessment under Section 147. The AO made additions for bad debts, disallowance of provisions, and restricted deduction under Section 80P.
Held
The Tribunal noted that the documents supporting the assessee's claim under the Income Disclosure Scheme (IDS), 2016, were not available before the AO and CIT(A). To examine the veracity of the claim, factual verification was necessary.
Key Issues
Whether the additions made by the AO were justified, especially in light of the assessee's claim of disclosure under the Income Disclosure Scheme, 2016, and whether the documents supporting this claim should be verified.
Sections Cited
139, 147, 144B, 148A, 148, 80P(2)(c), 271(1)(c), 271F, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “J(SMC
Before: SHRI AMIT SHUKLA & SHRI MAKARAND VASANT MAHADEOKAR
आदेश / ORDER
PER MAKARAND VASANT MAHADEOKAR, AM:
This appeal by the assessee is directed against the order passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], dated 26.08.2025, passed under section 250 of the Income-tax Jankalyan Nagari Sahakari Patsanstha Mar Shahapur Act, 1961[hereinafter referred to as “the Act”], for the Assessment Year 2015–16, arising out of the assessment order dated 13.03.2024 passed by the Assessing Officer under section 147 read with section 144B of the Act.
The brief facts of the case are that the assessee is a co- operative credit society assessed in the status of Association of Persons (AOP) and is a resident assessee. The assessee had not filed its original return of income under section 139 of the Act for the assessment year under consideration. Information was available with the Income-tax Department, through the Insight Portal, that during the relevant previous year, the assessee had undertaken substantial financial transactions, namely: - cash deposits aggregating to Rs. 24,80,05,767/- with The Thane District Central Co-operative Bank Ltd.; - time deposits of Rs. 1,07,85,122/- with the said bank; and - further time deposits of Rs. 43,36,090/-, aggregating to total transactions of Rs. 26,31,26,979/-.On the basis of the above information, the Assessing Officer formed a belief that income chargeable to tax had escaped assessment and, after following the procedure prescribed under section 148A, reopened the assessment under section 147. Notice under section 148 was issued on 05.04.2022 after obtaining approval of the specified authority. The case was thereafter transferred to the Faceless Assessment Unit. In response to the notice under Jankalyan Nagari Sahakari Patsanstha Mar Shahapur section 148, the assessee filed its return of income on 05.05.2022, declaring total income of Rs. 15,24,220/-.
During the course of reassessment proceedings, the assessee submitted registration certificate and byelaws of the society, audit report along with balance sheet and profit and loss account, details of share capital, deposits, loans, fixed deposits, savings deposits, recurring deposits and investments, bank statements of The Thane District Central Co-operative Bank Ltd. and interest certificates and other supporting schedules.
4. The Assessing Officer completed the reassessment by order dated 13.03.2024 passed under section 147 read with section 144B of the Act. While accepting the returned income as the starting point, the Assessing Officer made the following additions and disallowances: - Bad debts: Rs. 6,00,000/- - Disallowance of provisions: Rs. 25,23,174/- - Deduction under section 80P(2)(c):Rs. 35,205/- 5. Accordingly, the total income of the assessee was assessed at Rs. 46,82,599/-. The Assessing Officer also initiated penalty proceedings under sections 271(1)(c) and 271F of the Act separately.
Aggrieved by the assessment order, the assessee carried the matter in appeal before the CIT(A). Before the CIT(A), the assessee challenged the validity of the assessment and the additions made by the Assessing Officer, contending that:
Jankalyan Nagari Sahakari Patsanstha Mar Shahapur the income declared in the return had already been disclosed under the Income Disclosure Scheme, 2016; the disallowance of bad debts and provisions was unjustified as the same were made in accordance with the Co-operative Societies Act; the restriction of deduction under section 80P was erroneous; and the assessment resulted in double taxation of the same income.
The CIT(A) recorded that during the appellate proceedings, the assessee filed only the grounds of appeal
and statement of facts, and no additional documentary evidence or detailed written submissions were furnished in support of the grounds raised.
8. The CIT(A), after considering the assessment order, grounds of appeal and material on record, dismissed the appeal. The CIT(A) held that the assessee failed to substantiate its claim regarding declaration under the Income Disclosure Scheme, as no supporting challans or evidence were produced. The CIT(A) also held that the disallowance of bad debts was justified due to absence of basic particulars and supporting evidence and the disallowance of provisions was proper as payments were not established to have been made in the subsequent year. Regarding the excess deduction under section 80P(2)(c) the CIT(A) held that it was correctly restricted to the statutory limit and levy of tax, cess and charging of interest were consequential in nature.
The learned appellate authority was erred in confirming the orders of lower authority i.e. certain addition over and above the income declared by the assessee in filing its return of Income Tax i.e. 1) i) Rs.6,00,000/- on account of Bad debts out of Profit & Loss A/c. ii) Rs.25, 23,714/- on account of provisions being made out of Profit & Loss A/c. iii) Rs.35, 205/-The deduction claimed u/s.80 (P) (2) (c). The total addition was Rs.31, 58,919/- is bad before the eyes of law. 2) The A.O. also erred in adding the income of Rs.15, 24,220/- as declared under the IDS scheme and confirmed the same. 3) The A.O. initiated the proceedings of sec.271 (1)(c) and 271(F) found not maintainable and found issued in routine manner required to be quashed. 4) The assessee craves to leave, add, alter, subscribe, delete or amend any of the above grounds.
During the course of hearing before us, the learned Authorised Representative for the assessee submitted that the assessee had duly opted for the Income Disclosure Scheme, 2016, and in support thereof, placed on record copies of Form No. 3 and Form No. 4 issued under the said Scheme, along with the challan evidencing payment of tax, surcharge and penalty in accordance with Form No.
It was contended that the disclosure made under the IDS covered the income pertaining to the assessment year under consideration and, therefore, the same could not be Jankalyan Nagari Sahakari Patsanstha Mar Shahapur subjected to tax once again under the normal provisions of the Act.
We have considered the rival submissions and perused the material placed on record. It is an admitted position that the documents now produced by the assessee, namely Form No. 3, Form No. 4 and the challans evidencing payment of tax under the Income Disclosure Scheme, 2016, were not available before the Assessing Officer as well as the Commissioner of Income-tax (Appeals). In order to examine the veracity of the assessee’s claim and to reconcile the income declared under the said Scheme with the income assessed for the year under consideration and other relevant assessment years, factual verification is necessary.
In view of the above, we deem it appropriate to restore the matter to the file of the Assessing Officer with a direction to verify the documents furnished by the assessee, reconcile the income declared and taxes paid under the Income Disclosure Scheme, 2016, and thereafter decide the issue afresh in accordance with law, after affording due opportunity of being heard to the assessee.
The learned Departmental Representative raised no objection to the above course of action.
The issues arising in the present appeal are restored to the file of the Assessing Officer with a direction to verify the documents placed on record by the assessee relating to the Jankalyan Nagari Sahakari Patsanstha Mar Shahapur Income Disclosure Scheme, 2016, including Form No. 3, Form No. 4 and the challans evidencing payment of tax, surcharge and penalty, and to reconcile the income so declared with the income pertaining to the assessment year under consideration and other relevant assessment years. The Assessing Officer shall thereafter decide the matter afresh in accordance with law, after affording adequate opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 09.01.2026.