THE PRIMARY AGRICULTURE COOPERATIVE CREDIT SOCIETY,NENNAL V. ITO., WARD-I, MANCHERIAL

ITA 139/HYD/2025

AI Insights

The case involves The Primary Agriculture Cooperative Credit Society, NENNAL (V), Adilabad, which appealed against the order of the CIT(A)-National Faceless Appeal Centre, Delhi, concerning the assessment year 2014-2015. The society, engaged in agricultural activities, had not filed its return of income for the year in question but was found to have deposited a significant sum in a bank account. The Assessing Officer reopened the assessment under section 147 of the Income Tax Act, 1961, suspecting that income had escaped assessment. The society contended that the deposits were from loans taken for agricultural purposes and provided bank statements to substantiate this. However, both the Assessing Officer and the CIT(A) were not convinced by the explanations provided, leading to the appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126706 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINATH SADANALA
• Assessee Lawyers: UPADHYAY RAGHAVENDER
• Keywords: Competent authority; Reason to believe

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.139/Hyd./2025 Assessment Year 2018-2019 The Primary Agriculture Cooperative Credit Society, NENNAL (V), Adilabad Dist. Telangana. PAN AACAT9042J vs. The Income Tax Officer, Ward-1, MANCHERIAL Telangana. PIN-504208 (Appellant) (Respondent) For Assessee : Shri Upadhyay Raghavender, Advocate For Revenue : Shri Srinath Sadanala, Sr. AR Date of Hearing : 22.04.2025 Date of Pronouncement : 24.04.2025 ORDER PER MANJUNATHA G. : This appeal has been filed by the appellant- company against the order dated 29.06.2024 of the learned CIT(A)-National Faceless Appeal Centre [in short the “NFAC”] Delhi, relating to the assessment year 2014-2015. 2 ITA.No.139/Hyd./2025 2. Briefly stated facts of the case are that, the assessee-society was a Primary Agriculture Cooperative Society Limited and registered under the Co-operative Society Act and deal directly with rural (agriculture) by selling their produces and selling of Fertilizers and pesticides to the Farmers as per the instructions. During the year under consideration, the assessee-society had deposited a sum of Rs.62,86,015/- maintained with The Adilabad District Cooperative Central Bank Ltd., but, did not file it’s return of income. The case of the assessee- society was selected for scrutiny by the Directorate of Income Tax (Systems) as per the information available in Insight Portal of the Department. The Assessing Officer has reason to believe that the income chargeable to tax has escaped assessment, he reopened the assessment of the assessee-society u/sec.147 of the Income Tax Act, 1961 [in short “the Act”] by taking necessary approval from Competent Authority and issued notice u/sec.148 of the Act dated 02.04.2022. In response, the assessee-society filed it’s reply dated 13.10.2023 contending, inter alia, that, due to 3 ITA.No.139/Hyd./2025 lack of knowledge about the Income Tax Act and it’s provisions, the assessee-society could not file it’s return of income for the impugned assessment year 2018-2019. Further, the assessee-society admitted that, it had deposited a sum of Rs.62,86,015/- in The Adilabad District Cooperative Central Bank Ltd., and also furnished bank statement regarding the source of the said cash deposits. It was the contention of the assessee-society before the Assessing Officer that, the said bank account is a loan account and the said bank account is used for giving and collecting loan to it’s members only who are carrying-out agricultural activities and the transactions are from taking loan from the Bank and later re-deposited in the loan account maintained with the Bank and, therefore, these amounts do not partake the characteristic of ‘unexplained’. However, the Assessing Officer being not satisfied with the explanation furnished by the assessee-society, treated the cash deposit of Rs.62,86,015/- in bank account as unexplained money u/sec.69A of the Act. Similarly, the Assessing Officer made addition of Rs.2,53,315/- by 4 ITA.No.139/Hyd./2025 disallowing the claim of deduction u/sec.80P of the Act as the assessee-society has not filed return of income u/sec.139 of the Act. Accordingly, the Assessing Officer determined the total income of the assessee-society at Rs.65,39,330/- vide order dated 26.02.2024 passed u/sec.147 r.w.s.144 r.w.s.144B of the Act. 3. On being aggrieved by the assessment order, the assessee-society carried the matter in appeal before the learned CIT(A) and reiterated it’s submissions made before the Assessing Officer. The learned CIT(A) being not satisfied with the explanations furnished by the assessee-society sustained the additions made by the Assessing Officer. 4. Aggrieved by the order of the learned CIT(A), the assessee-society is now in appeal before the Tribunal. 5. Shri Upadhyay Raghavender, Advocate for the Assessee-Society submitted that, the assessee-society had not filed it’s return of income u/sec.139 of the Act. However, in response to notice issued u/sec.148 of the Act, the assessee-society has furnished explanation along with 5 ITA.No.139/Hyd./2025 relevant bank statement to prove the source of cash deposit of Rs.62,86,015/- out of loan taken from the bank to advance loan to it’s members for agricultural activities and re-deposited into the bank account in the regular course of business during the year under consideration. He submitted that the members of the assessee-society are agriculturists and due to lack of knowledge, the assessee-society could not file it’s return of income and also not aware of the intricacies of the income tax proceedings. However, during the course of assessment proceedings, in response to notice issued u/sec.148 of the Act, the assessee-society has furnished relevant bank statement in respect of cash deposits made by assessee-society in The Adilabad District Cooperative Central Bank Ltd., to prove the source of cash deposits and as per sec.80P of the Act, the assessee-society is eligible for deduction for the loans advanced to it’s members. He, therefore, pleaded that since the assessee- society has proved the source of cash deposit made into bank account, the additions made by the Assessing Officer 6 ITA.No.139/Hyd./2025 and sustained by the learned CIT(A), should be deleted in the interest of justice. 6. Shri Srinath Sadanala, Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the assessee-society did not disclose the cash deposit in it’s audit report and only after issuance of show cause notice, the assessee-society admitted the cash deposit of Rs.62,86,015/- and thereby, submitted false declaration in it’s reply and deliberately concealed the transaction of cash deposits into the bank account. Further, the assessee-society has failed to prove the purpose for which it has taken loan from the bank. Similarly, the assessee has disclosed profit of Rs.2,53,315/- and in absence of return of income, as per the provisions of sec.80P of the Act, the deduction claimed by the assessee- society cannot be allowed. In absence of satisfactory explanation furnished by the assessee-society, the Assessing Officer made the impugned additions, which are sustained by the learned CIT(A) as the assessee-society failed to furnish any supporting documentary evidences 7 ITA.No.139/Hyd./2025 before the learned CIT(A) to controvert the findings of the Assessing Officer. He accordingly pleaded that the order of the learned CIT(A) be confirmed in the interest of justice. 7. We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute between the parties that, the assessee- society had not filed it’s return of income u/sec.139 of the Act, but, in response to notice issued u/sec.148 of the Act, the assessee-society has furnished explanation along with relevant bank statement to prove the source of cash deposit of Rs.62,86,015/- out of loan taken from the bank to advance loan to it’s members for agricultural activities and re-deposited into the bank account in the regular course of business during the year under consideration. We find that during the course of assessment proceedings, the Assessing Officer noted that the assessee-society has not reported about the purported bank account maintained with The Adilabad District Cooperative Central Bank Ltd., in it’s audit report and it came to the light only after issuance of show cause notice by the Department, the assessee-society has 8 ITA.No.139/Hyd./2025 furnished the relevant bank statement. We find that, although, the assessee-society had not filed it’s return of income u/sec.139 of the Act, but, in response to notice u/sec.148 of the Act, the assessee-society has furnished it’s explanation along with relevant bank statement to prove the source of the cash deposit into the bank account, but, the Assessing Officer has not considered the explanation of the assessee-society and evidence in support of it’s arguments. The learned CIT(A) sustained the addition on the ground that the assessee-society failed to prove the ‘purpose’ of taking loan from the bank. We find that, the Assessing Officer had made the addition in absence of return of income either u/sec.139 or u/sec.148 of the Act, ignoring the explanation furnished by the assessee-society along with relevant documentary evidences i.e., bank statements etc., Further, the Assessing Officer also denied the deduction claimed by the assessee-society u/sec.80P of the Act to the tune of Rs.2,53,315/- disclosed by the assessee- society as it’s net profit under the Head “Profit and Gain from Business or Profession”, in absence of filing of return 9 ITA.No.139/Hyd./2025 of income u/sec.139 of the Act. In this view of the matter and considering the facts and circumstances of the case, we deem it fit and appropriate to restore the instant issues back to the file of Assessing Officer for de novo verification after providing due opportunity of hearing to the assessee- society. Needless to say, it is the sole risk and responsibility of the assessee-society to plead and prove it’s case with supporting documentary evidences as called for by the Assessing Officer in consequential proceedings. Accordingly, the grounds raised by the assessee-society are allowed for statistical purposes. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 24.04.2025 Sd/- Sd/- [VIJAY PAL RAO] [MANJUNATHA G] VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, Dated 24th April, 2025 VBP 10 ITA.No.139/Hyd./2025 Copy to 1. The Primary Agriculture Cooperative Credit Society, NENNAL (V), Adilabad Dist. Telangana. PIN-504 204. 2. The Income Tax Officer, Ward-1, Sy.No.425, 1st Floor, Ranga Raja Complex, Reddy Colony, Beside TTD Kalyan Mandapam Lane, MANCHERIAL – 504208. Telangana. 3. The Pr. CIT (Central), Hyderabad. 4. The DR ITAT “A” Bench, Hyderabad. 5. Guard File. //By Order// //True Copy// "