INCOME TAX OFFICER, THIRUVANANTHAPURAM V. THIRUVANANTHAPURAM SERVICE CO-OPERATIVE BANK LTD, THIRUVANANTHAPURAM

ITA 592/COCH/2024

AI Insights

The case involves the Thiruvananthapuram Service Co-operative Bank Limited, which appealed against the order of the National Faceless Appeal Centre (CIT(A)) for the assessment year 2017-18. The primary issues revolved around the assessment of income, disallowance of expenses due to non-deduction of TDS, and the treatment of interest income and unexplained cash credits. The CIT(A) had previously provided substantial relief to the assessee by deleting the addition made under Section 68 of the Income-tax Act, 1961, which the Revenue challenged. The Tribunal found that the CIT(A) had not adequately verified the documents and remanded the matter for a thorough re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633134 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BINEESHA BABY
• Assessee Lawyers: . LEENA LAL
• Keywords: Unexplained cash credit; Principle of natural justice; TDS; Assessment record
• Section: 143(3); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SONJOY SARMA, JM I.T.A. No.592/COCH/2024 Assessment Year: 2017-18 Income Tax Officer Triruvananthapuram ...................….……….Appellant vs. Thiruvananthapuram Service Co-operative. ….. …..Respondent Bank Limited Head Office, Govt.Press Road Puthenchanthai, Thiruvananthapuram 695001 [PAN: AAAAT9697D] Appellant by: Smt.Bineesha Baby,Advocate Respondent by: Smt.. Leena Lal, Sr, DR Date of Hearing: 05.06.2025 Date of Pronouncement: 13.06.2025 O R D E R Per Sonjoy Sarma: This appeal is filed by the assessee against the order dated 22.01.2024 of the National Faceless Appeal Centre (hereinafter referred to as ‘CIT(A)’] for the assessment year 2017–18. 2. Brief facts of the case are that the assessee is a co-operative society and engaged in banking activities as its principal business. The assessee filed its return of income for A.Y. 2017–18 declaring a 2 ITA No. 592/Coch/2024 Thiruvananthapuram Service Co-operative Bank Ltd loss of Rs.3,70,470/-. The case was selected for scrutiny under CASS, and assessment was completed under Section 143(3) of the Income-tax Act, 1961 on 26.12.2019. The AO assessed the total income at Rs.16,27,30,080/- after making the addition of Rs.2,83,80,844/- under Section 40A(ia) for disallowance of expenses where TDS was not deducted. The assessee denied the status of the society as a co-operative society and consequently, treating interest income of Rs.2,95,38,828/- as income from other sources, thereby denying deduction under Section 80P(2)(a)(i) and 80P(2)(d). Further, the AO made addition of Rs.13,47,19,707/- under Section 68 of the Act treating increase in FDR balances over the previous year as unexplained cash credit. 3. Aggrieved by the above order, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A) allowed substantial relief to the assessee observing that the action of the AO in making an addition u/s 68 of the Act for an amount of Rs.13,47,19,707/- as unexplained cash deposits without examining the documents furnished by the assessee, is unwarranted. Hence, the ld. CIT(A) deleted the addition so made by the AO. 4. The Revenue has come in appeal before the Tribunal challenging the order of the ld. CIT(A). The ld. DR stated that the ld. CIT(A) erred in allowing the claim under Section 80P without proper verification of whether the assessee was actually conducting business exclusively with members. He further stated that the addition under Section 68 was wrongly deleted without examining whether the FDR deposits were genuinely explained and the ld. 3 ITA No. 592/Coch/2024 Thiruvananthapuram Service Co-operative Bank Ltd CIT(A) granted relief despite incomplete responses filed by the assessee at the fag end of the assessment proceedings and also that the ld. CIT(A) did not verify the genuineness of transactions nor called for a remand report from the AO on the documents relied upon by the assessee. 5. Per contra, the ld. AR supported the order of the ld. CIT(A) and stated that there is no infirmity in the order of the ld. CIT(A) and the order may be confirmed by the Tribunal. 6. We have carefully considered the submissions of both the parties. Upon perusal of the records and the order of the ld. CIT(A), we find that while granting relief to the assessee, the ld. CIT(A) observed that the assessee had filed all the requisite details before the AO. However, the contention of the revenue is that such submissions were made belatedly filed at the time of framing of the impugned order and only partial details were submitted and the AO hardly got any time to examine those documents carefully. We note that neither the ld. CIT(A) has recorded any discussion or verification of the underlying documents filed by the assessee nor called for any remand report from the AO to validate the genuineness of deposits or interest income sources. Given the quantum involved and the absence of examination of facts and supporting material, we find merit in the Revenue’s contention that the ld. CIT(A)’s order suffers from lack of factual verification and was passed without proper appreciation of the assessment record. In such a circumstance, in the interest of natural justice and fair play, we are inclined to remand the entire matter back to the file of 4 ITA No. 592/Coch/2024 Thiruvananthapuram Service Co-operative Bank Ltd the ld. CIT(A) with a direction to re-examine the documents and submissions in detail after providing an opportunity of hearing to both parties and if necessary, call for a remand report from the AO. The assessee is directed to fully cooperate with the appellate proceedings and submit all necessary evidence in support of its claims. 7. In view of the above, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced on 13.06.2025. Sd/- Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (SONJOY SARMA) JUDICIAL MEMBER Cochin, Dated: 13th June, 2025 Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "