ITO Vs Dugdh Utpadak Sahakari Samiti (ITAT Jaipur)
Jaipur ITAT: Explained Bank Credits Cannot Be Taxed u/s 69A Merely Because Assessee Was Non-Compliant Before AO
The assessee, a village milk cooperative society established in 1975, collected milk from its members and supplied it to Ajmer Zila Dugdh Utpadak Sahakari Sangh (AZDUSS), a government-controlled cooperative dairy. Since nobody appeared during reassessment proceedings, the AO treated the entire bank credits of ₹81,82,058 as unexplained money u/s 69A and subjected them to tax u/s 115BBE.
Before the CIT(A), the assessee produced bank statements, milk purchase invoices, audited accounts and payment vouchers. These established that substantial bank credits were transfers from AZDUSS marked as “MILK PAYMENT” and corresponded with the 10-day milk purchase invoices specifying quantity, FAT, SNF, rate and amount payable. The audited accounts disclosed milk and related sales aggregating to ₹82.05 lakh, substantially reconciling with bank credits of ₹81.82 lakh.
The CIT(A) consequently deleted the addition. The Revenue challenged the deletion principally on the ground that the CIT(A) had considered additional evidence without obtaining a remand report from the AO as contemplated by Rule 46A.
The ITAT rejected the Revenue’s contention. It observed that the bank statement and audited financial statements were already part of the assessment record—indeed, the bank statement containing the large credits itself formed the basis for reopening. Therefore, these documents could not be regarded as additional evidence requiring confrontation to the AO.
More importantly, the bank narration identified AZDUSS as the source of the credits, AZDUSS was admittedly the party to whom the assessee sold milk, and the credits correlated with the sales disclosed in the audited financial statements. The Tribunal held that these facts themselves were sufficient to establish the source of the bank credits. Since the Revenue could point out no infirmity in the CIT(A)’s factual findings, the ₹81.82 lakh addition u/s 69A and consequential taxation u/s 115BBE remained deleted and the Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
