SREE NARAYANA GURU COOPERATIVE AND CREDIT SOCIETY LIMITED,DWARKA DELHI V. ITO 43(6), NEW DELHI

ITA 5164/DEL/2025

AI Insights

The case involves Sree Narayana Guru Cooperative and Credit Society Limited, which faced scrutiny from the Income Tax Department regarding unexplained cash deposits and term deposit liabilities. The Assessing Officer reopened the assessment for AY 2012-13 based on information that the society had deposited a significant amount of cash in a bank. The society argued that these deposits were from its own members and provided detailed records to substantiate this. However, the Assessing Officer and the CIT(A) were not convinced, leading to the society's appeal to the Income Tax Appellate Tribunal. The Tribunal found that the lower authorities had not properly considered the society's submissions and allowed the appeal, thereby deleting the additions made under Section 68.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 835847 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 26-08-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUSH KALRA
• Assessee Lawyers: KVSR KRISHNA
• Keywords: Additional evidence; Unexplained cash credit
• Section: 147; 148; 142(1); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES ‘E’: NEW DELHI. BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA Nos.5164 & 5165/DEL/2025 (Assessment Years: 2012-13 & 2017-18) Sree Narayana Guru Cooperative, Vs. ITO And Credit Society Limited Ward 43(6) Sree Narayana Kendra RB2, New Delhi Pocket-3 Sector , D, Dwarka Sector-6 South West Delhi 110075 (PAN: AACAS8347K) ASSESSEE BY : Sh. KVSR Krishna, CA REVENUE BY : Ms. Ankush Kalra, SR.DR Date of Hearing : 22.12.2025 Date of Order : 12.02.2026 ORDER PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. These appeals are filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)/ National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to ‘ld. CIT (A)’) dated 30.06.2025 for Assessment Year 2012-13 2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. Printed from counselvise.com 2 ITA Nos.5164 & 5165/Del/2025 3. First we take up the appeal of revenue in ITA No.5164/Del/2025 for AY 2012-13 4. Brief facts of the case are, the case of the assessee was reopened u/s 147 of the Income Tax Act, 1961, (in short “Act”), for the reason that as per AIR information, available with the department, the assessee has deposited cash of Rs. 1,51,25,143/- with the South Indian Bank Ltd. Kerala. As per ITD System data, the assessee has not filed its return of income for A.Y. 2012-13. Therefore, the source of cash deposit in his saving bank account received remained unexplained and unverifiable. Accordingly, notice u/s 148 of the Act was issued from the office of the ITO, Ward-43(5), New Delhi and duly served upon the assessee. Subsequently, the case was transferred to the office of ACIT, Circle-43(1), New Delhi. In response to the notice, assessee e-filed the return of income on 15.10.2019 declaring total income NIL. The reasons for re-opening of the assessment proceedings were communicated to the assessee on 18.10.2019. The notices u/s 143(2) &u/s 142(1) of the Act along with questionnaires were issued to the assessee. In response, assessee has submitted the documents and other supporting material, after examination of the above, the hearing was conducted on various dates through ITBA System. 5. The assessee is a thrift and credit society. The main business of the society is to accept deposits from members and give various types of loans to Printed from counselvise.com 3 ITA Nos.5164 & 5165/Del/2025 members. During the course of assessment proceedings, the assessee was asked to submit the details of cash deposited during FY 2011-12, the source of these deposits, details of unsecured loans, details of expenses claimed. The assessee was also asked to submit the details of loans and advances to the tune of Rs 3,91,71,181 /-. In response, the assessee submitted copy of computation of income sheet, details of unsecured loans, investment in properties, confirmation, and names of all the members who have made fixed deposits, compulsory deposits. recurring deposits, Saving Deposits and monthly Income Scheme FD, However, the Assessing Officer observed that the assessee did not provide any ITR, identity proof or confirmations in order to prove the genuineness and creditworthiness of the persons who have made term deposit liabilities and loan and advances. Finally a show cause was issued to assessee on 26.12.2019. The relevant notice was reproduced in the assessment order itself. 6. Since, the assessee could not filed the documentary evidence with respect to the identities, towards or proof of payments relating to term deposit liability of Rs.3,16,38,935/-. Similarly with regard to cash deposits of Rs.1,51,25,143/- as the assessee could not explain the source of cash deposits. Accordingly, the Assessing Officer proceeded to make the addition of Rs.3,16,38,935/- towards unexplained term deposit liability and Rs.1,51,25,143/- towards unexplained cash deposits. Printed from counselvise.com 4 ITA Nos.5164 & 5165/Del/2025 7. Aggrieved with the above order, assessee preferred an appeal before NFAC, Delhi and filed detailed submissions which are reproduced from page 2 to 11 of the appellate order and also filed additional evidences under Rule 46A of the IT Rules. Accordingly, a remand report was called from the Assessing Officer vide letter dated 06.03.2024. In response Assessing Officer filed the remand report dated 02.04.2024, the same is reproduced at page 13 to 15 of the impugned order. In the remand report, Assessing Officer has submitted with regard to additions made by the Assessing Officer in the assessment order:- In response to the notice, assessee e-filed the return of income on 15.10.2019 vide Acknowledgement no. 200756890151019 declaring total income NIL. Notice u/s 143(2) of the Act was issued to the assessee on 18.10.2019. Subsequently notices u/s 142(1) of the Act along with reasons and questionnaires were issued to the assessee on various dates In response to these statutory notices the assessee filed its reply stating that the assessee is a thrift and credit society and the main business of the society is to accept deposits from members and give various types of loans to members. During the course of assessment proceedings, the assessee also submitted copy of computation of income sheet, details of unsecured loan, details of unsecured loans, Investment in properties, confirmation, and names of all the members who have made deposits, compulsory deposits, recurring deposits, Saving Deposits and monthly income Scheme. The assessment proceedings were concluded u/s 147 r.w.s.143(3) of the Income Tax Act 1961 on 29.12.2019 at the income of Rs. 4,67,64,080/- after making addition u/sec. 68 of the income tax Act on account of unexplained term deposit liability of Rs. 3,16,38,935/- and Rs. 1,51,25,143/- towards cash deposited in the bank account against returned income of NIL. 8. In response to the submissions in remand report, the assessee submitted as under:- Printed from counselvise.com 5 ITA Nos.5164 & 5165/Del/2025 In this connection it is submitted with regard to the issued concerned i.e cash deposited the assessee mentioned in its reply dated 14.12.2019 that source of the Cash Deposit in Bank Account are the collection of cash from members as \"Deposits and Repayment of Loans\" and to justify its claim the assessee also enclosed Cash Book for Financial year 2011-12 and separate calculation of cash deposited in the South Indian Bank Apart from this the assessee was responsive to the notices issued during the assessment proceedings without failure. During the course of assessment proceedings, the assessee was asked to furnish the details of unsecured loans to the tune of Rs. 3,16,38,935/- and details of total cash deposit of Rs. 1,51,25,143/- vide show cause notice u/s 142(1) dated 14.12.2019. In response the assessee submitted its reply on 25.12.2019 stating that the unsecured loans are mainly \"Deposit\" accepted by the society from its members instead of unsecured Loan. These deposits are accepted under various scheme i.e fixed deposit, compulsory deposit, recurring deposits and MIS scheme for its members. To substantiate its claim the assessee enclosed complete details of the scheme. The assessee has submitted all the documents before erstwhile AO and the same were duly considered ad accordingly assessment order passed. 9. After considering, the submissions of the assessee and the remand report, Ld. CIT(A) dismissed the grounds raised by the assessee with the following observations:- 5.1 On perusal of the assessment order it was observed that the AO made the addition u/s 68 of the Act since the identity and creditworthiness of the depositors not established. Further appellant has claimed that that the details of all members viz. PAN, Aadhaar, mobile numbers etc, from whom the deposits were received, were submitted in annexure A and B. In this regard it is reiterated that for the purpose of section 68 the onus is on appellant to prove identity, creditworthiness and genuineness of the transactions. In this case the appellant failed to submit affidavits or independent confirmations from depositors, details of whom has been furnished in the Annexure-A and B or copies of ITRs, bank statements, or evidence of the financial capacity of the depositors. The information, lacks authentication and fails to establish the genuineness and creditworthiness as required under section 68 of the Act. 10. Aggrieved with the above order assessee is in appeal before us, assessee has filed following grounds of appeal: Printed from counselvise.com 6 ITA Nos.5164 & 5165/Del/2025 1. Order of AO is bad in law and against facts of the case. Notice issued u/s 148 of the Act is not legal as having been issued not in accordance with the law and proper approval of authorities and not within time allowed. 2. That the Ld. CIT(A) has arbitrarily and unjustifiably ignored the facts and evidences available on records while confirming wrong addition of Rs.4,67,64,080/- to the total income of the appellant u/s 68 of the Act made by AO alleging unexplained term deposit liability of Rs.3,16,38,935/- and Rs. 1,51,25,143/- towards cash deposit in its bank account by the appellant from its own members in the year under appeal. 3. The addition made of Rs.4,67,64,080/- and upheld by CIT(A) is without any basis, without any material, simply rejecting the positive evidences filed by appellate. The addition deserves to be deleted. 11. At the time of hearing, Ld. AR of the assessee submitted that, assessee does not press ground No.1 which is legal ground against the notice issued u/s 148 of the Act, the same was dismissed as such. 12. With regard to ground Nos. 2 &3, he brought to our notice the certificate issued by the Registrar Of Cooperative Societies which is placed at page 1 of the paper book and further brought to our notice list of members from whom assessee has received deposits and the same are reproduced at page 18 to 107 of the paper book. He also brought to our notice workings of the Society and he submitted that the Assessing Officer has arbitrarily and unjustifiable ignored the list of members submitted before him and the term deposit and deposits in saving, deposits towards cash, deposit in its bank account are only from its own member in the year under consideration. He objected to the invoking provision of Section 68 of the Act in the case of assessee who is dealing with its own members and brought that the additions made by the Printed from counselvise.com 7 ITA Nos.5164 & 5165/Del/2025 Assessing Officer be deleted. 13. On the other hand, Ld. DR of the revenue relied on the findings of the lower authorities and submitted that the onus is on the assessee to file the evidence of deposits which is not fulfilled by the assessee in this case, therefore, he submitted that Assessing Officer is justified in making the addition u/s 68 of the Act. 14. Considered the rival submissions and material placed on record, we observed that assessee is a cooperative society engaged in the business of thrift and credit society to its own members and accepts deposits from the members of the society and gives various types of loans to its own members. During the year, assessee has made cash deposits of Rs.1,51,25,143/- with the South Indian Bank Ltd., Kerala. After due verification submissions of the assessee, the Assessing Officer not convinced with the statements of the assessee, that assessee accepts deposits from its own members which is the source of making the cash deposit in the bank account and also it has submitted that the details of various types of deposits accepted by it from its own members as on 31.03.2012 as under:- Printed from counselvise.com 8 ITA Nos.5164 & 5165/Del/2025 15. Since not convinced with the details provided by the assessee he proceeded to make the outstanding as on 31.03.2012 as unsubstantiated liabilities to the extent of Rs.3,16,38,935/-, we observed that assessee’s main activities is accepting the deposits from its own members and lending the same to its members. We notice that as on 01.04.2011 the assessee had liability of Rs.2,24,60,750/- and during the year assessee has accepted deposits from its own members to the extent of Rs.94,78,185/- only. We are surprised to note that the Assessing Office made the addition of closing balance as on 31.03.2012 overlooking the fact that assessee has transacted during the yar only to the extent of Rs.94,78,185/-. It clearly shows that Assessing Officer not only overlooked the fact that assessee is accepting deposit from its own members and lending loans to its own members. Further, assessee also filed the detailed deposits details member wise before the Lower Authorities which was completely overlooked by the lower authorities. Further, assessee also filed balance sheet and receipt of payment account before the lower authorities. It clearly shows that assessee is engaged in its activities as a Printed from counselvise.com 9 ITA Nos.5164 & 5165/Del/2025 mutual benefit society, therefore, the lower authorities have completely overlooked the details submitted by the assessee and assessee is registered in the year 2006, and continues to function as mutual cooperative society. 16. Further, we observed that the case of the assessee was reopened only on the basis of cash deposits made by the assessee in their bank account and assessee has to submit the source of cash in the year under consideration. From the books of account submitted by the assessee clearly indicate that assessee has source of cash deposited by the assessee during the year under consideration. The Assessing Officer has proceeded to make the cash deposit by the assessee out of source of cash as only from its own members and he has not only made the above said addition he also proceeded to make the outstanding deposit liability which is due to its own members as unexplained credit in the books of the account of the assessee whereas assessee has submitted the books of account before the lower authorities. From the record we observed that assessee has several members whose deposits are in small denomination in most of the cases it is less than Rs.20,000/- and it is unjustified on the part of the Assessing Officer to demand evidences for such deposits from its own members. The assessee also filed voucher wise, date wise and details of member ID were submitted before lower authorities which is nothing but cash book maintained by the assessee. 17. Considering the every addition made by the Assessing Officer which is Printed from counselvise.com 10 ITA Nos.5164 & 5165/Del/2025 nothing but high pitch assessment without understanding the nature of activities carried on by the assessee. 18. In the result, grounds raised by the assessee are allowed. 19. In the result, appeal filed by the assessee is partly allowed. 20. The same issue is exactly similar to the issue raised by the assessee in the AY 2012-13 (ITA No.5164/D/2025) the findings are applicable for AY 2017-18 mutatis mutandis. In the result, appeal filed by the assessee in AY 2017-18 also considered. Accordingly, ground No.2 & 3 raised by the assessee are allowed. Ground No.1 is general in nature, accordingly, the appeal filed by the assessee in ITA 5165/D/2025 is allowed. 21. Finally, in the result, the appeal filed by the assessee vide ITA No.5164/Del/2025 is partly allowed, and appeal vide ITA No.5165/Del/2025 is allowed. 22. Order pronounced in the open court on this day of 12th February, 2026. Sd/- Sd/- (VIMAL KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:12.02.2026 *Mittali Sr. PS Copy forwarded to: 1. Appellant 2. Assessee 3. CIT Printed from counselvise.com 11 ITA Nos.5164 & 5165/Del/2025 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "