THE VIJAYAWADA ELECTRICITY EMPLOYEES CO OPERATIVE CREDIT SOCIETY LIMITED,VIJAYAWADA vs. INCOME TAX OFFICE WARD 2(1) , VIJAYAWADA

Brief facts of the case are that the assessee is a co-operative credit society assessed to income tax. On the information related to cash deposits of Rs.80,62,000/- made during the demonetization period, the Assessing Officer(AO) had issued notice u/s 142(1) of the Act to the assessee. In response to the notice, the assessee had submitted that entire information about the cash deposited during the demonetization period along with names and addresses of the members on account of loan repayment, share capital and thrift deposits. The AO had called for additional information in support of cash deposits made during the demonetisation period. In support of the claim, the assessee had filed the list of members from whom the cash was received. The AO had treated the entire amounts received from the members during demonetisation period amounting to Rs.80,62,000/- as unexplained money of the society u/s 69A of the Act. Further, the assessee had filed return of income in response to notice u/s 142 (1) on 27.11.2019, declaring an income of Rs.35,60,020/- and claimed deduction u/s 80P for the entire amount. The AO disallowed deduction u/s 80P and made addition of Rs.35,60,020/-, net profit shown by the assessee as income of the assessee stating that The Vijayawada Electricity Employees Co-operative Credit Society Ltd., Vijayawada the belated return filed beyond the time limit provided u/s 139(11) or 139(4) or time specified in notice u/s 142(2) or 148 of the Act cannot be considered as return of income for deduction u/s 80P of the Act. The AO completed the assessment u/s 144 of the Act on 30.11.2019 without considering the information and return of Income submitted by the assessee and raised a demand of Rs.1,12,87,188/-.

Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) sustained the disallowance made by the AO and dismissed the appeal of the assessee.

Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds :

The only contention of the Ld.AR is that the assessee did not have any undisclosed income and the revenue authorities ought to have considered the explanation and evidences submitted by the assessee before passing the orders. The assessee filed paper book and filed all the documents as proof of having filed all the evidences before the revenue authorities. The Ld.AR further submitted that in response to the notice u/s 144, the assessee had filed the list of cash receipts received by the society in the nature of loan repayments, recurring deposits, share capital and thrift deposit receipts during the demonetization period, But the same was not considered by the AO and the AO should have put efforts to conduct independent enquiries and collected information from the members as they are all employees of Electricity Board identifiable. With regard to exemption claimed u/s 80P, the Ld.AR relied on the decision of Hon’ble Kerala High Court in the case of Chirakkal Service Cooperative Bank Ltd. (2016) 384 ITR 490 (Ker) wherein it was held that “in cases where returns have been filed, the question of exemptions or deductions referable to section 80P would definitely have to be considered and The Vijayawada Electricity Employees Co-operative Credit Society Ltd., Vijayawada granted if eligible. The Ld.AR submitted that the assessee society filed it’s return of income for the year under consideration on 27.11.2019 i.e. before the order u/s 144 was passed on 30.11.2019. The Ld.AR further submitted that the AO and the Ld.CIT(A) passed orders on mere assumption and presumption which is unwarranted and unsustainable in the eyes of law and deserves to be quashed and the addition of Rs.1,16,22,020/- is liable to be deleted. He, therefore, pleaded to quash the orders passed by the revenue authorities and allow the appeal of the assessee.

Per contra, the Ld.DR contended that sufficient opportunities were given to the assessee to substantiate it’s case, but the assessee did not avail the opportunities. He, therefore, submitted that the Ld.CIT(A) is justified in sustaining the disallowance made by the AO. He, therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee.

We have heard both the parties and perused the material available on record. As is evident from the orders of the lower authorities, the AO made the addition of Rs.80,62,000/- as unexplained cash deposits u/s 69A of the Act as the information furnished by the assessee is incomplete and not satisfactory to prove the genuineness of the cash deposits made

In the result, appeal of the assessee is allowed for statistical purpose.