GAZOLE L S COOPERATIVE MARKETING SOCIETY LTD.,MALDA vs. ITO, WARD 3(1), MALDA

The present appeal has been preferred by the assessee against the order dated 14.12.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

The brief facts of the case are that the assessee an agricultural marketing cooperative society and engaged in purchase and sale of agricultural implements. The primary consumers of the society are members of large number of primary agricultural society and their members in locality. The society claimed deduction u/s 80P(2)(a)(iii) & (iv) of the Act contending that the profit from its activity was eligible for the deduction. The source of the cash deposits in question was attributed to collections from sales/debtors during the demonetization period. However, due to large size of documents and vouchers related to the transaction, the assessee was unable to upload them and thereafter, the case of the assessee was selected for limited scrutiny focussing on the cash deposits made during the demonetization period and notice u/s 143(2) was issued. The Assessing Officer completed the assessment u/s 143(3) and assessed total income of the assessee at Rs.4882224/- making disallowance u/s 80P of Rs.6,58,224/- and addition u/s 69A of Rs.42,24,000/- treating it as unexplained cash deposits made during the demonetization period.

Aggrieved by the above order, the assessee went in appeal before the ld. CIT(A), where the appeal of the assessee was allowed in respect of the issue of addition made u/s 80P of Rs.6,58,224/- but the ld. CIT(A) sustained the addition of Rs.42,24,000/- made u/s 69A as unexplained cash deposits made during the demonetization period.

Dissatisfied with the order of the ld. CIT(A), the assessee is in appeal before this Tribunal arguing that the cash deposits were made during the demonetization period were properly reflected in the books of account and the source of the deposits was from legitimate business transaction but the Assessing Officer failed to consider the vouchers and books of account which reflected the transactions and made addition u/s 69A of the Act, which was unjustified. The ld. AR contended that the source of the funds was fully explained before the Assessing Officer at the time of framing of the assessment order, therefore, the impugned addition needs to be set aside by this Tribunal even if the addition cannot be made u/s 69A of the Act when the source is truly disclosed before the Assessing Officer at the time of framing of the assessment order. Therefore, the provisions of section 69A of the Act were not applicable in this case as has been done wrongly by the Assessing Officer and also the ld. CIT(A) erred in sustaining the order of the Assessing Officer.

On the other hand, the ld. DR supported the addition made by the Assessing Officer and also supported the decision rendered by the ld. CIT(A).

We, after hearing the rival submissions and reviewing the contention made by both the parties, find that during the assessment proceedings, the assessee has failed to furnish vouchers, cash books, and ledgers despite multiple opportunities provided by the Assessing Officer, which is duly reflected in the assessment order. Therefore, in the interest of justice and fairness, we deem it appropriate to remand the issue relating to addition of Rs.42,24,000/- made u/s 69A being unexplained cash deposits during the demonetization period for fresh examination of the relevant documents to the file of the Assessing Officer with a direction to re-examine the issue de novo after providing reasonable opportunity of being heard to the assessee to present its case and submit necessary documents, cash book, ledger account etc. which were not furnished at the time of framing of the assessment order as indicated by the Assessing Officer. The assessee is also directed to comply with the notices as and when will be issued by the Assessing Officer without fail and provide all necessary documents in support of its claim.

In terms of the above, the appeal of the assessee is allowed for statistical purposes.