INCOME TAX OFFICER, WARD 3(1), KALYAN, RANI MANSION, SECOND FLOOR, MURBAD ROAD, KALYAN V. NAVJEEVAN SAHAKARI PATPEDHI MARYADIT, KALYAN, THANKAR PADA, KALYAN WEST

ITA 5000/MUM/2024

AI Insights

The case involves the Income Tax Department (revenue) appealing against the order of the CIT(A) which had allowed the appeal of Navjeevan Sahakari Patpedhi Maryadit, a cooperative credit society. The revenue challenged the CIT(A)'s decision on two main grounds: the deletion of an addition of Rs. 49,61,737 which was initially disallowed by the Assessing Officer (AO) under section 80P(2)(a)(i) of the Act, and the deletion of an addition of Rs. 2,22,07,124 as unexplained cash credit under section 68 of the Act. The CIT(A) had found in favor of the assessee based on various judicial precedents and the specific circumstances of the case, which included the society's operations being limited to its members and lacking a banking license from the RBI.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473345 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Other Referred Cases: Citizen Cooperative Credit Society Ltd. [Civil Appeal No. 10245 of 2017], Mavilayi Service Co-operative Bank Ltd. v/s CIT, Calicut [(2021) 123 taxmann.com 161 (SC)]
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA PANDE
• Assessee Lawyers: V. G. GINDE
• Keywords: Additional evidence; Unexplained cash credit; Unexplained investment
• Section: 143(3); 250; 68; 69B

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 5000/MUM/2024 (निर्धारण वर्ा / Assessment Year :2012-13) ITO, Ward 3(1), Kalyan 2nd Floor, Rani Mansion, Murbad Road, Kalyan West, Maharashtra-421301 v/s. बिधम Navjeevan Sahakari Patpedhi Maryadit, Kalyan 14-15, Panchdhara Apartments, Thankar Pada, Kalyan (West)-421301 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAAAM5330Q Appellant/अपीलधर्थी .. Respondent/प्रनिवधदी निर्ााररती की ओर से /Assessee by: Shri V. G. Ginde रधजस्व की ओर से /Revenue by: Ms. Monika Pande सुिवधई की िधरीख / Date of Hearing 31.01.2025 घोर्णध की िधरीख/Date of Pronouncement 25.03.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the revenue against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 10.06.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2012-13. 2. The revenue has raised the following grounds of appeal: P a g e | 2 ITA No. 5000/Mum/2024 A.Y. 2012-13 Navjeevan Sahakari Patpedhi Maryadit, Kalyan “1. On the facts and in circumstances of the case and in law, in deleting the addition of Rs.49,61,737/-, the CIT(A) erred in not exercising his co-terminus powers by failing to conduct any independent enquiries to analyse the particular issue whether or not the co-operative society is doing business which is not permitted by the said statute. 2. On the facts and in circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs.2,22,07,124/-, even though it has been brought out in Para 3.5 of the impugned order that a new scheme of Silver Jubilee Deposit Scheme was introduced by the assessee from where a sum of Rs.2,29,81,643/- of deposit was mobilized for the first time. The CIT(A) erred in not exercising his co-terminus powers by failing to conduct any independent enquiries to analyse this particular aspect of cash deposits, which were not similar to the nature of cash deposits in the preceding years. 3. The order of the Ld.CIT(A) may be vacated and that of the Assessing Officer may be restored. 4. The appellant craves leave to add, amend or alter any ground/grounds, which may be necessary. ” 3. Brief facts of the case are that the assessee is a registered cooperative credit society under the Maharashtra Co-operative Societies Act, 1960. Return declaring nil income was filed on 27.09.2012 for AY 2012-13. The case was selected for scrutiny and the assessment was completed u/s 143(3) after disallowing the deduction u/s 80P(2)(a)(i) of the Act amounting to Rs. 49,61,737/-. Further, the additions were made on account of unexplained cash credit u/s 68 of Rs. 2,22,07,124/- and unexplained investment of Rs. 1,65,00,000/- u/s 69 and 69B of the Act. The total income was assessed at Rs. 4,36,68,861/-. 4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A) who allowed the appeal of the assessee vide order dated 10.06.2024. Aggrieved with the order of Ld. CIT(A), the revenue is in appeal before the Tribunal. P a g e | 3 ITA No. 5000/Mum/2024 A.Y. 2012-13 Navjeevan Sahakari Patpedhi Maryadit, Kalyan 5. Ground No. 1 Disallowance of deduction u/s 80P(2)(a)(i) of the Act. 5.1 Ld. AO disallowed the claim of deduction u/s 80P(2)(a)(i) by applying the provisions of section 80P(4) after observing that the assessee is carrying on the business of banking and providing credit facilities to its members. Ld. CIT(A) decided the issue in favour of the assessee in the light of the decisions of the Hon’ble Apex Court in the cases of the Citizen Cooperative Credit Society Ltd. [Civil Appeal No. 10245 of 2017] and Mavilayi Service Co-operative Bank Ltd. v/s CIT, Calicut[ (2021) 123 taxmann.com 161 (SC)]. 5.2 In light of the above decisions and the fact that the Ld. AO did not establish that the cooperative society is doing business which is not permitted or it has received any licence to work as a cooperative bank from the Reserve Bank of India [RBI], the denial of deduction u/s 80P(2)(a)(i) to the assessee was held to be unjustified by the Ld. CIT(A) who allowed the appeal of the assessee. 5.3 Aggrieved with the order of ld. CIT(A), the revenue has filed an appeal before the Tribunal. Before us, Ld. AR has argued that this issue is covered by the decision of the Hon’ble Apex Court in Mavilayi Service Cooperative Bank Ltd. (supra). He further submitted that there is no banking licence given by the RBI for doing banking business to the assessee. In view of these facts, Ld. AR submitted that the decision of the Ld. CIT(A) was correct and deserves to be upheld. P a g e | 4 ITA No. 5000/Mum/2024 A.Y. 2012-13 Navjeevan Sahakari Patpedhi Maryadit, Kalyan Ld. DR, on the other hand, has relied on the order of Ld. AO. 5.4 We have heard the rival submissions and perused the material placed before us. We find that the issue is decided in favour of the assessee by the decision of the Hon’ble Apex Court in the case of Mavilayi Service Cooperative Bank Ltd. (supra) as well as Citizen Cooperative Credit Society Ltd. (supra). Since the assessee’s business of accepting deposits and giving loans was restricted to its members and it did not have permission to do banking business for which a licence is required from RBI, Ld. CIT(A) correctly decided that the assessee is entitled to deduction u/s 80P(2)(a)(i) of the Act. We, therefore, see no reason to interfere with the decision of the Ld. CIT(A) on this issue. Accordingly, the appeal on this ground is dismissed. 6. Ground No. 2: Addition on account of unexplained cash credit: 2,22,07,124/- 6.1 With regard to the cash deposits received by the assessee, it was explained that these were out of cash collections made by the agents of the assessee deployed to collect small deposits on a daily basis from its members. Ld. AO did not accept the assessee’s explanation and held that no documentary evidence has been furnished in support of the cash deposits, accordingly, these were treated as unexplained cash credits u/s 68 of the Act. 6.2 Ld. CIT(A) observed that the assessee collected small deposits in cash from its 3600 members in very small amounts on a daily basis and such P a g e | 5 ITA No. 5000/Mum/2024 A.Y. 2012-13 Navjeevan Sahakari Patpedhi Maryadit, Kalyan amounts were deposited in the bank account maintained by the society. During the year, a new scheme viz. Silver Jubilee Deposit Scheme was introduced wherein a sum of Rs. 2,29,81,643/- was mobilized. After considering the explanations and documentary evidence furnished by the assessee during the appellate proceedings, Ld. CIT(A) treated the amount of Rs. 2,22,07,124/- as fully explained and deleted the addition made by the Ld. AO u/s 68 of the Act. 6.3 Before us, Ld. DR has requested that the matter be remanded back to Ld. AO for appropriate investigation. On the other hand, Ld. AR submitted that the matter was remanded back to the Ld. AO for verification during the first appellate proceedings and the assessee had duly furnished requisite evidences during the remand proceedings. However, no remand report was received by the Ld. CIT(A) even after 8 years and therefore Ld. CIT(A) decided the issue after due verification at his end. Ld. AR, therefore, requested that the matter should not be restored to the Ld. AO since more than 12 years have elapsed and especially when all the relevant material was submitted before the Ld. AO during the remand proceedings. 6.4 We have heard the rival submissions. We find that the additional evidence submitted by the assessee was duly examined by the Ld. CIT(A) and it was also observed by him that the accounts were audited not only by the internal auditors but also by the auditors engaged by the Mahanagar Co-operative P a g e | 6 ITA No. 5000/Mum/2024 A.Y. 2012-13 Navjeevan Sahakari Patpedhi Maryadit, Kalyan Auditor Directorate. The entire deposit of Rs. 2,22,07,124/- was duly disclosed in the books of account. Convinced with the explanation and evidence furnished by the assessee, Ld. CIT(A) deleted the addition of this amount u/s 68 of the Act. 6.5 In view of the facts and circumstances of the case explained by the assessee as well as the documentary evidence furnished support of thereof, we uphold the decision of the Ld. CIT(A) in deleting the addition of Rs. 2,22,07,124/-. This ground of appeal is also rejected. 7. In the result, the appeal of the revenue is rejected. Order pronounced in the open court on 25.03.2025. Sd/- Sd/- NARENDER KUMAR CHOUDHRY RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 25.03.2025 अननक ेत स ुंह र जपूत/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// P a g e | 7 ITA No. 5000/Mum/2024 A.Y. 2012-13 Navjeevan Sahakari Patpedhi Maryadit, Kalyan आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "