THOTTIPAL SERVICE COOPERATIVE BANK,THRISSUR V. ITO WARD 2(5), THRISSUR

ITA 552/COCH/2025

AI Insights

The case involves Thottippal Service Co-operative Bank Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, sustaining an addition of Rs.3,24,13,000 under Section 69A of the Income Tax Act, 1961, treating the cash deposits in the bank as unexplained income. The Assessee argued that the deposits were legitimate, sourced from cooperative banking activities and income from a medical store. The Tribunal found that the Assessee was not given adequate opportunity to present its case and directed a re-examination of the matter by the CIT(A).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782070 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 31-07-2025
• Laws Referred To: Income Tax Act, 1961, Kerala Co-operative Societies Act, 1969
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Set aside; Opportunity of being heard; Reassessment proceedings
• Section: 147; 142(1); 2

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, COCHIN SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.552/COCH/2025 (Assessment Year:2013-2014) Thottippal Service Co-operative Bank Ltd. Thottippal Service Co-operative Bank Ltd., Thottippal, Thrissur, Kerala- 680310 [PAN: AACAT4740M] …………. Appellant The Income Tax Officer, Ward 2(5), Thrissur Central Revenue Building, I.S. Press Road., Kerala- 682018 Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Smt. Divya Ravindran Shri Sanjit Kumar Das Date Conclusion of hearing Pronouncement of order : : 21.08.2025 27.10.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 23/05/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 30/03/2022, passed under Section 147 read with Section 144B of the Act for the Assessment Year 2013-2014. 2. The Assessee has raised following grounds of appeal : “1. That the Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining the addition of Rs.3,24,13,000/- under Printed from counselvise.com ITA No.552/Coch/2025 Assessment Year 2013-2014 2 section 69A of the Income-tax Act, 1961, without appreciating that the cash deposits in the appellant’s bank account were fully explained and sourced from legitimate cooperative banking activities, including deposits and loan repayments from members and income from its Neethi medical store. 2. That the CIT(A) failed to consider that the appellant is a registered Primary Agricultural Credit Society, functioning under the Kerala Co-operative Societies Act, 1969, and operating strictly within the framework of its bye-laws, which govern cash collection, cash holding limits, and deposits into the apex bank. The cash deposits were routine and integral to the day-to-day operations of the society and not unexplained income under section 69A. 3. The CIT(A) erred in ignoring the consistent explanation and factual submissions of the appellant, including the clarification that actual cash deposits amounted to Rs.2.71 crore and not Rs.3.24 crore as alleged by the Assessing Officer. The addition was sustained without giving due weight to the cooperative nature of the appellant’s activities and without calling for or examining the books of accounts or other records. 4. The CIT(A) has erred in upholding the addition under section 69A without affording a proper opportunity of hearing to the appellant, despite the appellant’s willingness to produce books of accounts, bank statement, and other supporting documents to substantiate the source of cash deposits.” 3. The relevant facts in brief are that the Assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969, and is classified as a Primary Agricultural Credit Society. It is state that its primary activities involve accepting deposits from members and providing credit facilities exclusively to its members for agricultural and allied purposes. For the Assessment Year 2013- 2014, the Assessee did not file the return of income. Since there were cash deposits in bank accounts of the Assessee, reassessment proceedings under Section 147 of the Act were initiated by issuance of notice under Section 1448 of the Act. In response, the Assessee filed a return of income on 19/11/2021 declaring ‘Nil’ income after claiming deduction under Section 80P(2)(d)(a)(i) of the Act. The reassessment proceedings culminated with passing of Assessment Order, dated 30/03/2022, whereby an addition of INR.3,24,13,000/- was made by the Assessing Officer under Section 69A of the Act Printed from counselvise.com ITA No.552/Coch/2025 Assessment Year 2013-2014 3 treating the entire cash deposits as unexplained income. 4. Being aggrieved, the Assessee preferred appeal before the CIT(A) contending that the Assessing Officer had made addition under Section 69A for INR.3,24,13,000/- treating the entire cash deposits as unexplained without appreciating the facts that the Assessee actual cash deposits during the year amounted to INR.2.71 Crore only and the same were sourced from internal member-based operations such as deposit mobilization, loan repayments and sales from a cooperative medical store. Since the bye-laws did not provide for holding funds in cash, the Assessee was depositing cash routinely in the bank as part of normal operations. However, the CIT(A) did not find merit in the aforesaid submission and sustained the addition of INR.3,24,13,000/- made by the Assessing Officer under Section 69A of the Act vide Order, dated 23/05/2025, impugned by the Assessee by way of the present petition. 5. The Learned Authorised Representative for the Assessee submitted that the Assessee is ready and willing to produce books of accounts and supporting documentation. It was submitted that due to procedural constraints and lack of opportunity for effective representative, the Assessee could not make proper representation before the Assessing Officer and the CIT(A). It was submitted that the notice issued by the Assessing Officer calling for details of all persons making cash deposits in the bank account of the Assessee did not provide sufficient opportunity to the Assessee. Even before the CIT(A) the same could not be filed since the same were voluminous in nature as the deposits of varying amounts were collected from various persons and the records of the same were maintained in physical form and therefore, the Assessee found it difficult to collate and upload the same. However, now the Assessee had been able to gather the supporting documents and seeks one more opportunity to establish the case on merits. It was submitted Printed from counselvise.com ITA No.552/Coch/2025 Assessment Year 2013-2014 4 that cash was deposited into bank account from the available cash balance in hand sourced from daily cash collections received on account of loan repayment made by its members and other dues amount received from members of the society. The Learned Authorised Representative for the Assessee placed on record the details of cash deposits, and submitted that the same be taken in to consideration. In support she placed reliance of affidavit sworn by Secretary of the Assessee/Co-operative Society. 6. Per Contra the Learned Departmental Representative submitted that despite having been granted adequate opportunities, the Assessee had failed to file relevant documents/details either in the assessment or in the appellate proceedings before Ld. CIT(A). Referring to Paragraph 4 of the Ld. CIT(A) order, it was submitted that no response was furnished by the Assessee. It was further submitted that Assessee had been non-compliant even in the assessment proceedings and had failed to furnish supporting documents in support of the claim. Since, the Assessee had failed to discharge the onus, the Assessing Officer was justified in invoking provisions contained in Section 69A of the Act. On the strength of the aforesaid it was submitted that order passed by the Ld. CIT(A) be sustained. 7. We have given thoughtful consideration to the rival submissions and had perused the material on record. 8. We find that during the assessment proceedings, notice under Section 142(1) of the Act was issued to the Assessee on 28/01/2022. In response to the same the Assessee furnished part reply and asked for reasons recorded for reopening the assessment. It was provided to the Assessee on 10/02/2022. Thereafter notice dated 03/03/2022 was issued to the Assessee under Section 142(1) of the Act. In response to the aforesaid notice the Assessee filed reply on 27/03/2022 requesting for some more time to furnish Printed from counselvise.com ITA No.552/Coch/2025 Assessment Year 2013-2014 5 documents. However, the Assessing Officer proceeded to pass the Assessment Order on 30/03/2022 observing that Assessee has failed to furnish relevant documents and details and failed to discharge the onus cast upon the Assessee to establish the source of cash deposited in the bank account of the Assessee. We find that during appellate proceeding a number of opportunities were granted to the Assessee to furnish submissions/documents. It has been noted by the Ld. CIT(A) that despite seeking opportunities to produce books of accounts and relevant documents/evidence in details of deposits made in the bank account, the Assessee had failed to furnish the same. During the appellate proceeding it was explained on behalf of the Assessee relevant documents/details were maintained in physical form and the same were voluminous in nature. It was explained that the deposits of varying amounts were collected from a large number of members and also source from day to day operations. Therefore, the Assessee found it difficult to collate and upload the same supporting documents, in appellate proceedings before the CIT(A) even though opportunity was granted to the Assessee. The Assessee has placed on record specimen of daily cash-statement showing the available cash balances cumulated from small receipts of members along with details of the bank deposits made from such cash balances. Taking into consideration the submissions advanced by both the sides and keeping view the facts & circumstances of the present case, we deem it appropriate and in the interest of justice to grant Assessee another opportunity to make out a case on merits. Accordingly, we set aside the Order, dated 23/05/2025, passed by the Ld. CIT(A) and restore the issue back to the file of the CIT(A) with the directions to adjudicate the appeal afresh after granting the Assessee a reasonable opportunity of being heard. The Assessee directed to co-operate in the appellate proceedings and forthwith file details, documents & submission in support of its claims/contentions before the CIT(A). The CIT(A) is Printed from counselvise.com ITA No.552/Coch/2025 Assessment Year 2013-2014 6 directed to consider the same as per law. It is clarified that in case the Assessee fails to enter appearance and/or fails to file details/documents/submission in response to notice of hearing issued by the CIT(A), the CIT(A) shall be at liberty to decide the issues on merits on the basis of material on record. Since, we have not adjudicated the issues raised on merits, all the rights and contentions of both the sides are left open. In terms of the aforesaid, the Ground No.1 to 3 raised by the Assessee are treated as allowed for statistical purposes, while all other grounds are dismissed as having been rendered infructuous. 9. In result, as per Paragraph 8 above, the present appeal preferred by the Assessee is partly allowed. Order pronounced on 27.10.2025. Sd/- Sd/- (Inturi Rama Rao) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; Ǒदनांक Dated : 27.10.2025 Milan, LDC आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. आयकर आयुÈत/ The CIT 4. Ĥधान आयकर आयुÈत / Pr.CIT 5. ͪवभागीय ĤǓतǓनͬध ,आयकर अपीलȣय अͬधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, स×याͪपत ĤǓत //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, मुंबई / ITAT, Mumbai Printed from counselvise.com "