ANNASAHEB RAMESH CHHAGANLAL AJMERA NAGARI SAHAKARI PATSANSTHA LTD.,DHULE V. ACIT CIRCLE, DHULE

ITA 471/PUN/2024

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The case involves Annasaheb Ramesh Chhaganlal Ajmera Nagari Sahakari Patsanstha Ltd., a credit cooperative society, which appealed against the order of the Commissioner of Income Tax (Appeals) confirming an addition of Rs. 1,04,00,000 as unexplained cash deposits in the society's bank account for the Assessment Year 2012-13. The society argued that these deposits were from loan recoveries and cash withdrawals, supported by audited books and other documents. However, the CIT(A) rejected these explanations due to the absence of an audit report and income tax return for the relevant year, as the society had incurred a loss and was not liable to file under section 139(1) of the Income Tax Act. The Tribunal noted that similar issues for other assessment years had been set aside for fresh adjudication and accepted the source of cash deposits in a subsequent year, leading to the decision to remand the matter back to the CIT(A) for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 28945 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P. MURKUNDE
• Assessee Lawyers: SANKET M. JOSHI
• Keywords: Set aside; Opportunity of being heard; Corroborative evidences
• Section: 148; 144; 142(1); 139(1); 68; 69A; 139

Judgement Text

" आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.471/PUN/2024 Assessment Year : 2012-13 Annasaheb Ramesh Chhaganlal Ajmera Nagari Sahakari Patsanstha Ltd., Near Old deopur Police Station, Agra Road, Deopur, Dhule – 424002. Maharashtra. PAN: AAATA8347E Vs. The ACIT Circle, Dhule. अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Sanket M. Joshi Department by : Shri Ramnath P. Murkunde Date of hearing : 03-12-2024 Date of Pronouncement : 03-03-2025 आदेश / ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 11.01.2024 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, [“CIT(A)”] pertaining to the Assessment Year (“AY”) 2012-13. 2. The assessee has raised the following grounds of appeal :- “1] The learned CIT(A) erred in confirming the addition of Rs. 1,04,00,000 towards alleged unexplained cash deposits in bank account without appreciating that the sources of the said cash deposits were from cash withdrawals and loan recoveries made from borrowers as duly explained out of audited books of accounts, cash book and other details furnished by the appellant credit society and hence, there was no reason to confirm the said addition on facts and in law. 2] The learned CIT(A) erred in rejecting the explanation regarding source of cash deposits by holding that the audited books furnished by the appellant credit society could not be relied upon since the appellant had not filed the audit report and ITR u/s 139(1) without appreciating that the assessee society had incurred a loss in this year and therefore, it was not liable to file ITR u/s 139(1) of the Act. 3] The learned CIT(A) erred in not appreciating that the full names of all borrowers along with their account nos., from whom recoveries of loans were made in cash were duly reflected in the cash book furnished by appellant and the appellant had specifically requested to produce all details regarding their 2 ITA No.471/PUN/2024 addresses, PAN cards and any other details as required, before the Verification Unit considering the constraint of file size in online proceedings and thus, the CIT(A) was not justified in rejecting the said explanation without giving proper opportunity of furnishing the evidences required by him. 4] The learned CIT(A) ought to have appreciated that in the assessment order u/s 143(3) r.w.s. 147 passed for A.Y.2016 17 which was reopened on same facts, the Dept. has accepted the source of cash deposits made by the appellant society on very same set of facts and therefore, there was no reason to take a contrary view while adjudicating the issue of cash deposits for A.Y.2012-13. 5] The appellant craves leave to add/ alter/ amend any of the grounds of appeal.” 3. Briefly stated, the facts of the case are that the assessee is a credit cooperative society registered under the Maharashtra State Co-operative Societies Act, 1960 and is engaged in providing credit facilities to its members. For the relevant AY 2012-13, the assessee did not file its return of income under section 139 of the Income Tax Act, 1961 (the “Act”). Based on the information available with AIR/ NMS data, the Ld. Assessing Officer (“AO”) found that the assessee had deposited cash amounting to Rs. 1,04,00,000/- in the savings bank account with IDBI Bank, Dhule. Since the source of cash deposits remained unexplained, the case of the assessee was reopened under section 147 of the Act. Accordingly, notice under section 148 of the Act was issued which was duly served upon the assessee. The assessee, however, failed to file its return of income in response to the notice under section 148 of the Act and also failed to comply with the notice(s) issued under section 142(1) of the Act asking the assessee to explain the source of the said cash deposit(s) with supporting evidences. The Ld. AO, therefore, proceeded to complete the assessment ex-parte passed under section 144 read with section 147 of the Act vide his order dated 02.12.2019 by making an addition of Rs.1,04,00,000/- as unexplained income of the assessee. 4. On appeal before the Ld. CIT(A), the assessee filed detailed written submissions along with supporting documentary evidences in support of its contention that the source of cash deposits of Rs. 1,04,00,000/- added by the Ld. AO is from explained sources. The submissions of the assessee are recorded by the Ld. CIT(A) in para 5.2 of his appellate order, the relevant extract of which is reproduced below: 3 ITA No.471/PUN/2024 “2. Contentions of the Appellant: Ground No-1: On the facts and in law the AO has erred in making addition of Rs 1,04,00,000/- on account of cash deposited in bank from unexplained income. It is known fact in Dhule City, that the appellant patsanstha had closed its activity and the only activity, the patsanstha is undertaking is that of recovering outstanding loans and paying the same to the depositors. The impugned recovery from outstanding loans cannot be treated as income. This fact is evident from the books of accounts and record maintained by appellant patsanstha. Therefore, the income assessed at Rs. 1,04,00,000/- which in fact represents loan recovery deposited in bank is not justified. Copy of audited P&L A/c and Balance Sheet are attached herewith as Annexure-3 The source of cash deposits of Rs. 1,04,00,000/- added by the AO is from explained sources: The assessee has maintained books of accounts and audited the same. All the entries of deposits in IDBI Bank are duly recorded in the books of accounts. The copy of statement of IDBI Bank in which the impugned amount of Rs.1,04,00,000/- was deposited is attached herewith as Annexure-4. Further, in support of the fact that all the cash deposits in IDBI Bank are recorded in the books of accounts, copy of ledger account of IDBI Bank is attached herewith as Annexure-5. Further, the source of impugned deposits in IDBI Bank can be noted from the copy of cash book attached herewith as Annexure-6. Further, the datewise deposits in IDBI Bank and the source of the deposits is explained in tabular chart attached herewith as Annexure-7. In this tabular chart the source of some of the transactions is explained in detailed and the source of all the transactions can be noted from the copies of audited P&L A/c and Balance Sheet, bank statements, ledger account of bank statements and cash book. Further, in support of the impugned source claimed in tabular chart, the major evidence in respect of the some of the entries, some of the evidence as an example is attached as Annexure-8. It is pertinent to note here that the record supporting the entries in books of accounts i.e. cash book, bank book etc. is huge and if in case your honour want to go through the same, kindly ask local Verification Unit to do the verification, if required by your honour. The huge data in the form of record supporting the books of accounts is huge and hence cannot be uploaded online. However, we are of the opinion that your honour will be satisfied with our submission with Annexures and will not required any further verification.” 4.1 The Ld. CIT after considering the above submission of the assessee dismissed the appeal of the assessee for the reasons recorded by him in para 5.3 of his appellate order. The relevant observations and findings of the Ld. CIT(A) are as under: 4 ITA No.471/PUN/2024 “5.3. From the above submission of the appellant, it is apparent that it closed its activity during the year and only recovery of loans and refunding the same to the depositors were taking place. It has been explained that the cash deposits in question were from the loan recovery. In support of its contention, the appellant furnished a cash flow statement. However, it does not bear the name, address and other details of the persons from whom the loan was recovered and to whom the same was refunded. The details given through the Bank Books are not acceptable as the appellant had neither filed the audit report nor the respective Income Tax Return. The appellant is referring to the contents of an audit report to support its explanation regarding the amount deposited in the bank account. However, the contention of the appellant has no validity because the appellant did not furnish the audit report as per the provisions of section 44AB of the Act and has also not filed its Income Tax Return for the year under consideration either u/s 139(1) or in response to notice u/s 148. Hence, I do not find force in the contention of the appellant that the amount of Rs. 1,04,00,000/- was deposited in the bank account after recovering the loans given before. The AO had concrete information regarding the cash deposits made in the bank account which was made available from the departmental AIR. Subsequently, the same was confronted to the appellant by the AO to explain the nature and source of these cash deposits. The appellant failed to explain the nature and source of these deposits during assessment proceedings even after a show cause was issued asking why it should not be added to the total income. The AO added the unexplained money based on material available on record as per relevant provisions. It is a trite law that once the appellant fails to discharge the onus cast on it to explain the nature and source of any sum of money and does not prove the identity and creditworthiness of the person along with the genuineness of the transactions, the amount is deemed to be the income of the appellant as per the deeming provisions of sections 68 and 69A of the IT Act. The deeming provisions of the law are attracted in the facts and circumstances of the case whereby the AO is justified to make an addition to the total income of the amount of cash deposits, as the same was not explained by the appellant. The identity, creditworthiness of the persons giving the sum of money and genuineness of transactions could not be proved to the satisfaction of the AO during the assessment proceedings. Even during the appellate proceedings before the undersigned, the details are not fully furnished along with supporting evidence. The appellant has given a copy of the bank statement, a copy of the ledger account of IDBI bank, a copy of the cash book along with the written submission as enclosures. The authenticity of the books of accounts has not been established due to the lack of a valid return of income and audit report. The appellant has merely given a one-page statement wherein remarks have been made about the source of the cash deposits without giving any specific names, addresses and assessment particulars of the persons from whom the miscellaneous loan recoveries nave been stated to have been received in cash. Furthermore, as part of enclosure no.8 to the written submission, the appellant has given copies of three letters stating them to be some of the evidence as an example. On perusal of a copy of each of the letters from ARA College of Pharmacy,Dhule, Smt. KC Ajmera Ayurveda Mahavidyalaya, Dhule and Institute of Pharmacy, Dhule enclosed, it is found that they have stated to have deposited cheques in the IDBI bank as part of their regular transaction in the Fixed Deposit Overdraft Account 5 ITA No.471/PUN/2024 maintained with the appellant society. These letters in itself are not pieces of evidence regarding the source of the cash deposits made as they have given the details of the cheque deposit. It contradicts the statement made by the appellant that the activity of the society has been closed for a few years because the entities depositing the cheques have stated it to be made in the regular course of their transactions. Thus, the explanation of the appellant is not found to be coherent and remains unsubstantiated. In the absence of any explanation regarding the nature and source of the cash deposits, the AO had no option but to make the addition as per provisions of law. Hence, I do not find any infirmity in the decision of the: AO. Accordingly, the addition of Rs. 1,04,00,000/- is hereby confirmed.” 5. Aggrieved, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto. 6. At the outset, the Ld. AR submitted that the coordinate Bench of this Tribunal has set aside the impugned matter to the file of the Ld. CIT(A) for fresh adjudication in assessee’s own case for AY 2013-14 and 2014-15 involving similar set of facts, cop(ies) of which were placed on record. He further submitted that for AY 2016-17, the Ld. AO has accepted the source of cash deposits under similar facts vide order dated 29.02.2024 passed under section 147 read with section 144B of the Act. A copy of the said assessment order was placed on record. Also, a Paper Book containing the copies of documents filed before the Ld. CIT(A) was filed before us for the relevant AY 2012-13 in support of the assessee’s claim. The Ld. AR contended that given an opportunity the assessee is in a position to substantiate its case before the Ld. CIT(A) by explaining the source of cash deposits made during the relevant AY to his satisfaction. The Ld. AR therefore requested that the impugned issue in the present appeal may also be set aside to the file of the Ld. CIT(A) for fresh adjudication in the light of the above submissions of the assessee. 7. The Ld. DR had no objection to the above request of the Ld. AR. 8. We have heard the Ld. Representative of the parties and perused the material available on record. The facts of the case are not in dispute. We find that the Ld. AO has made the addition of cash deposits of Rs. 1,04,00,000/- as unexplained income vide his ex-parte order passed under section 144 read with section 147 of the Act for want of supporting documents/ evidences. The Ld. CIT(A) has confirmed the impugned addition for the reasons reproduced in the preceding paragraph. Before us, both the parties have agreed that the facts 6 ITA No.471/PUN/2024 involved in the subsequent AYs i.e. 2013-14, 2014-15 and 2016-17 are similar to the facts involved in the present AY 2012-13. We have perused the decision(s) of the Pune Tribunal in assessee’s own case for AY 2013-14 and 2014-15 in ITA No. 472/PUN/2024 dated 25.04.2024 and ITA No. 473/PUN/2024 dated 14.05.2024 respectively wherein under the similar factual context, the Tribunal has set aside the impugned issue(s) to the file of the Ld. CIT(A) for fresh adjudication on merits. The relevant observations and findings of the Tribunal in the said decision(s) (supra) are reproduced below: ITA No. 472/PUN/2024 – AY 2013-14 “5. Heard the rival submissions and perused the material on record. On mere perusal of para 5.3 of the impugned order, it is evident that the appellant had filed explanation in support of cash deposit of Rs.18,38,000/-. Without taking into consideration the explanation filed by the appellant, the CIT(A)/NFAC merely confirmed the addition byholding that the appellant had failed to explain the source of cash deposit before the Assessing Officer. The approach adopted by the CIT(A)/NFAC cannot be sustained in the eyes of law. Therefore, I deem it appropriate to remit the matter to the file of CIT(A)/NFAC to adjudicate the issue in appeal by dealing with the submissions made on behalf of the appellant. Needless to say, the CIT(A)/NFAC shall afford reasonable opportunity of hearing in such fresh proceedings.” ITA No. 473/PUN/2024 – AY 2014-15 “3. It emerges during the course of hearing with the able assistance coming from both the sides that this tribunal's coordinate bench\"s order dated 25.04.2024 in assessee's appeal itself for the assessment year 2013-2014 has already restored the identical issue of unexplained cash deposits back to the learned NFAC for it's afresh appropriate adjudication. It is made clear that the assessee's stand all along is that the impugned cash deposits represent it's cash receipts realised from members in regular business activity(ies) only. That being the case, I adopt judicial consistency in these identical facts and circumstances to restore the assessee's instant sole substantive grievance back to the NFAC for it's afresh appropriate adjudication preferably within three effective opportunities of hearing subject to the rider that it is the assessee's sole risk and responsibility to prove his case before the lower appellate authority in consequential proceedings. Ordered accordingly.” 8.1 The Ld. Counsel for the assessee also brought to our attention that the source of cash deposits in AY 2016-17 have been accepted by the Ld. AO under similar facts vide assessment order dated 29.02.2024 passed under section 147 read with section 144B of the Act for the AY 2016-17. He therefore made a request for setting aside of the present appeal too to the file of the Ld. CIT(A). 7 ITA No.471/PUN/2024 8.2 Considering the totality of facts and in the circumstances of the case enumerated above and following the decision(s) of the Tribunal (supra) and in the absence of any contrary material brought on record by the Revenue to enable us to take a different view, we deem it fit in the interest of justice and fair play, without dwelling into the merits of the case, to set aside the impugned issue to the file of the Ld. CIT(A) for adjudication afresh on merits after allowing reasonable opportunity of being heard to the assessee who shall provide the requisite support in terms of submitting the relevant documents/evidence as may be required/called upon on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A)/NFAC shall be at liberty to pass appropriate order as per fact and law. We order accordingly. The grounds raised by the assessee are therefore allowed for statistical purposes. 9. In the result, the appeal of assessee is treated as allowed for statistical purpose. Order pronounced in the open court on 3rd March, 2025. Sd/- Sd/- (R.K. Panda) (Astha Chandra) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 3rd March, 2025. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, / / True Copy / / िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune 8 ITA No.471/PUN/2024 S. No Details Date Initials Designation 1 Draft dictated on 2 Final Draft placed before author 3 Draft proposed & placed before the Second Member 4 Draft discussed/approved by Second Member 5 Approved Draft comes to the Sr. PS/PS 6 Kept for pronouncement on 7 Date of uploading of Order 8 File sent to Bench Clerk 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "