ITO Vs Prathamik Krushi Pattin Sahakari Sangh Niyamit (ITAT Bangalore)
ITAT Bangalore Faults CIT(A) for Deleting Cash Deposit Additions of Non-Filer Co-op Society Without Examining Source; Matter Remanded to AO
The Bangalore ITAT allowed Revenue’s appeals and set aside NFAC-CIT(A)’s orders deleting large cash-deposit additions u/s 69A in the case of a primary agricultural credit co-operative society which was a non-filer of returns. For AY 2016-17, Assessee had deposited ₹1.71 crore in bank accounts and did not file return nor respond to notices u/s 148, 142(1) & 144, leading AO to complete best-judgment reassessment and deny deduction u/s 80P. For AY 2017-18 also, substantial cash deposits were treated as unexplained.
Tribunal noted that CIT(A) deleted additions by extensively discussing Section 80P, without recording even a single finding on applicability of Section 69A, source of cash, availability of books, KYC of members or genuineness of receipts, despite Assessee being a non-filer and non-compliant. Tribunal held that mere cash book and bank extracts do not establish that cash deposits emanated from members. It observed that if Assessee proves that cash was received from duly identified members with PAN/KYC and recorded in books, no addition would survive; however, in absence of such verification, deletion of additions was unsustainable.
Accordingly, Tribunal restored the entire issue of cash deposits for both years to AO for fresh examination of books, source of funds vis-à-vis members’ contributions and KYC compliance, after granting opportunity to Assessee. Consequential penalty u/s 271(1)(c) for AY 2016-17 was also restored to AO to be decided afresh after quantum determination. All Revenue appeals were allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No.1138 & 1139/Bang/2025 for AYs 2016-17 & 2017-18 are filed by the ITO, Ward 1 TPS, Vijayapur [ The Ld. AO ] against the appellate order passed by the National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(A)] dated 21.3.2025 wherein the appal filed by the assessee against the reassessment order passed u/s. 147 r.w.s. 144B of the Income Tax Act, 1961 [the Act] , were allowed. Therefore the ld. AO is in appeals before us.
