SHIVRATNA SAHAKARI PATPEDHI LIMITED,MUMBAI V. THE INCOME TAX OFFICER, 41(2)(5), MUMBAI

ITA 956/MUM/2025

AI Insights

The case involves Shivratna Sahakari Patpedhi Ltd., a cooperative credit society, which faced additions under sections 69 and 69A of the Income Tax Act for unexplained cash deposits and investments over several assessment years from 2013-14 to 2016-17. The society argued that the deposits were made by its members and were reported under a new PAN, which was not updated in the banks' records, leading to the use of an old PAN for tax assessments. The ITAT, referencing a similar case (Bhavana Steel Vs. ITO), set aside the previous assessments and directed a fresh assessment under the new PAN, emphasizing the need for proper verification of the deposits' genuineness.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314601 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Other Referred Cases: Bhavana Steel Vs. ITO 152 taxmann.com 218 (Bom-HC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UODAL RAJ SINGH
• Assessee Lawyers: RAMESH IYER
• Keywords: Set aside; Unexplained investment; Co-operative Credit Society
• Section: 147; 142(1); 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “C” Bench, Mumbai. Before Smt. Beena Pillai (JM) & Shri Omkareshwar Chidara (AM) ITA No. 956/MUM/2025 (Assessment Year : 2013-14) ITA No. 957/MUM/2025 (Assessment Year : 2014-15) ITA No. 958/MUM/2025 (Assessment Year : 2015-16) ITA No. 959/MUM/2025 (Assessment Year : 2016-17) Shivratna Sahakari Patpedhi Ltd. Opp Shivsena Main Office Ram Hajare Marg Tagore Nagar Group No. 1 Vikhroli East Mumbai-400 083. Vs. ITO 41(2)(5) 745, Kautilya Bhavan, Bandra Kurla Complex Bandra East Mumbai-40 0051. PAN : ABLFS9654C Appellant Respondent Assessee by : Shri Ramesh Iyer Revenue by : Shri Uodal Raj Singh Date of Hearing : 16/04/2025 Date of pronouncement : 06/05/2025 O R D E R Per Omkareshwar Chidara (AM) :- These four appeals were filed by the appellant company for four assessment years i.e. for A.Y. 2013-14 to A.Y. 2016-17 and as the issue to be adjudicated is the same, all the appeals were heard together and a common order is passed as under. In all these A.Ys., the grounds of appeal raised by the appellant company are the same and reproduced below :- 1. The Ld. Commissioner of Income Tax (Appeals) has erred in sustaining the additions made by Ld. Assessing Officer on account of cash deposits in bank account as unexplained money u/s 69A of the Act which belongs to the members on the society. 2. The Ld. CIT(Appeals) has erred in sustaining the additions made by the Ld. Assessing Officer on account of time deposits invested by the society as unexplained investments u/s 69 of the Act. 3. The Ld. CIT(Appeals) has erred in sustaining the order passed by the Ld. AO for a PAN (ABLFS9654C) for which cancellation process was initiated. Shivratna Sahakari Patpedhi Ltd. 2 4. The Ld. CIT(Appeals) has erred in not taxing only the profits of the society under Income from Business and thereby allowing deduction u/s 80P(2)(a)(i) 5. Your appellant further reserves the rights to add, amend or alter the aforesaid grounds of appeal as they may think fit by themselves or by their representatives.” 2. Thus, the main issue to be decided is that whether the Ld. AO is justified in making addition under section 69 and 69A of the Act relating to the cash deposits made by the members of appellant society. The main argument of the appellant society is that the money deposited in this Society’s account belongs to hundreds of members of society. In this cases, the appellant was issued notice under section 148A(b) of the I.T. Act because there are huge cash deposits made in the bank accounts of this appellant society and no return of income was filed for all these years for this PAN related case. The Income Tax Department has the information that this appellant society has certain bank accounts with the PAN of ABLFS9654C, but no returns of income were filed by the appellant with this PAN, for all these four years. 3. After obtaining the information, the Income Tax Department issued notices under section 148A(b) of the Act and reasons for reopening the assessment were provided to the appellant. In response to these notices, the appellant Society has filed the following reply :- “Further notice u/s 142(1) of the IT Act was issued to the assessee on 10.04.2023 wherein assessee was asked to explain the cash deposits and time deposits transactions with supporting documentary evidences. Assessee further replied on 19.04.2023 and submitted that PAN was intimated to all the banks vide an application and requested to report all transactions on new PAN, however, some banks did not update the same and reported transactions on Old PAN. Assessee stated that the application for cancellation of Old PAN along with Indemnity bond that was submitted office. However, assessee did not submit any documentary evidence in support of his claim explaining the said transactions. Assessee has not denied the transactions undertaken by it during the year under consideration.” 4. Ld. AO has stated in the assessment order that the appellant filed a reply stating all these transactions were reflected in the return of income Shivratna Sahakari Patpedhi Ltd. 3 with the new PAN AAOAS1974N which was allotted to it. But, no supporting documentary evidences/explanation were provided to the Department from which it can be ascertained that these transactions were entered in the Return of Income with new PAN obtained by the society. As the genuineness of these cash deposits was not established by appellant, all the cash deposits of Rs. 3,32,63,831/- were added as “unexplained money” under section 69A of the Act by the Ld. AO while completing the assessment order during A.Y. 2013-14. Similar additions were made during the assessment years 2014- 15, 2015-16 and 2016-17 also. As the appellant could not prove the genuineness of these cash deposits made in the bank account before Ld. CIT(A) also, the additions made by Ld. AO were confirmed by him in all these years. 5. Aggrieved by the additions made by Ld. AO/confirmed by Ld. CIT(A), the appellant filed appeals as mentioned in page No. 1 of this order. 6. During the appeal proceedings before the ITAT, Ld. AR of the appellant has stated as follows :- a) All the deposits are made by small depositors who are members of the society. b) There is no reason for not cooperating with the Revenue as they genuinely believed that since all these deposits were reflected in the Return of Income filed by them with new PAN allotted by the Department. c) The income earned by the Society is exempt under section 80P(2)(d) of the Act and there is no incentive for appellant to avoid the enquiries of Department. d) All the cash deposits belong to members of the society and not the unexplained money of appellant society and hence neither section 69 nor section 69A of the Act is applicable. 7. The appellant Society filed written submissions during the hearing before the ITAT which is reproduced below :- 1. Humbly request the Hon. ITAT to please set aside and remand back the order of the AO u/s. 147 r.w.s.144 with a request to the AO to pass fresh order under the correct PAN after giving the appellant sufficient opportunity to explain the details of cash deposits and fixed deposits in Shivratna Sahakari Patpedhi Ltd. 4 Saraswat Co-op Bank and any other bank based on which information the assessment was reopened. 2. The entire issue arose because of issue of notice u/s 148A(b) under the incorrect PAN though the appellant had informed the various banks on 12-08-2016 (refer pages 33 to 38 of paper book) to update the new PAN in its records which the bank failed to do so. 3. The appellant had also informed the tax department on 17-05-2017 (refer page 27 and 28 of paper book) to deactivate the incorrect PAN from the income tax database which the department also failed to do so. 4. Neither did the Bank nor the Income Tax Department act on their respective letters informing them about the new PAN. Thus the appellant is made to suffer hugely due to no fault of the appellant. 5. However, the appellant did mention to the department in their notice u/s. 148A(b) that the PAN is incorrect and that they have filed their regular return under the new PAN for all the years except AY 2013-14 since by the time they got the new PAN in February 2016 , the due date u/s.139 for filing return of Income was over and time barred. 6. The appellant is a very small co-operative credit society whose members are small traders, street vendors, rickshaw and taxi owners who deposit their hard earned money in the society and also take small loans for their business from the society. The society operates only in and around Vikhroli a small suburb of Mumbai. 7. The appellant a co-operative credit society is subject to audit every year and the same also reflect the transactions as disclosed in the various Banks which it operates. 8. The appellant has not hidden any income and also not evaded any tax. 9. The Hon. ITAT is the last fact finding authority and the appellant humbly wishes to state that all incomes have been declared and it is only these facts which need a proper verification. 10. Using any other mode for achieving justice will be a costly affair for a small co-operative credit society. 11. The appellant sincerely apologises for non response to the notices as it was under a genuine belief that as the notices were issued under an incorrect PAN responses submitted to the department was sufficient to close the matter. 8. Finally the Ld. AR of the appellant relied on the decision of Bhavana Steel Vs. ITO 152 taxmann.com 218 (Bom-HC). In similar circumstances, the Bombay High Court directed the Department to do fresh assessment after Shivratna Sahakari Patpedhi Ltd. 5 giving opportunity to the appellant, in the new PAN related assessment. Accordingly, the Ld. AR of the appellant pleaded the Bench to remand he matter to file of the Ld. AO to enquire into all aspects of cash deposits made in the incorrect PAN may be set aside and reassessment may be done under the new PAN to the extent of addition made under section 69 and 69A of the I.T. Act, after giving opportunity to the appellant society. 9. The Ld. DR relied on the orders of Ld. AO/Ld. CIT(A) and argued that there is no mistake on the part of the Revenue as the bank accounts were aligned to the old PAN of appellant and no returns of income were filed by appellant with that PAN and that PAN was not cancelled also. As, the bank accounts are aligned to this old PAN and the Revenue has correctly made the addition, especially when the appellant has not properly represented and informed the Department about all the issues, pleaded the Ld. DR. 10. Heard both sides. Prima facie, it appears that there is some communication gap between the appellant and Revenue. The Department made additions because the old PAN was not cancelled, the bank accounts of appellant society are still aligned to this old PAN and with this old PAN, no Return of Income was filed. Since there is no proper representation before the AO, the additions were made by Ld. AO. But, prima facie, it appears, there is mistake on both the parties – Revenue and appellant. Revenue cannot be found fault because of the above reasons nor appellant can be found fault because appellant was under the impression that once new PAN was allotted to them, they can incorporate all the transactions in that new PAN and filed Return of Income. Almost in similar circumstances, Hon'ble Bombay High Court in the case of Bhavana Steel Vs. ITO (supra), has directed the Department to set aside the assessments done under old PAN and go ahead with the new PAN which was allotted to the appellant. Accordingly, following the ratio of Hon'ble Bombay High Court in the above case, the matter is set aside to the file of Ld. AO to verify the genuineness etc., cash deposits, but the reassessment has to be done afresh under new Shivratna Sahakari Patpedhi Ltd. 6 PAN to the extent of addition made by the Ld. AO on account of “unexplained money” under section 69A and “unexplained investment” under section 69 of the Act. 11. With the above directions, all the appeals are set aside to the file of the Ld. AO. Needless to say, opportunity should be given to the appellant. The Bench does not express any view about the genuineness of deposits or any other issue. 12. The appeals of appellant are allowed for statistical purposes. Order pronounced in the open Court on 06/05/2025. Sd/- Sd/- (BEENA PILLAI) (OMKARESHWAR CHIDARA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 06/05/2025 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai "