Peeroorkada Service Co-op. Bank Ltd Vs ITO (ITAT Cochin)
Income Tax Appellate Tribunal (ITAT), Cochin Bench, has dismissed appeals filed by Peeroorkada Service Co-operative Bank Ltd., upholding the tax authorities’ decision to add unexplained cash deposits to the bank’s income under Section 68 of the Income Tax Act, 1961. The Tribunal ruled that the co-operative society failed to discharge its onus of proving the identity, creditworthiness, and genuineness of the depositors, and that such additions do not automatically qualify for deduction under Section 80P of the Act.
The case involved appeals for Assessment Years (AY) 2016-17 to 2018-19. Peeroorkada Service Co-operative Bank Ltd., registered as a primary agricultural credit co-operative society under the Kerala State Co-operative Societies Act, 1969, had filed its income tax returns declaring ‘Nil’ income after claiming deductions under Section 80P(2)(a)(i) of the Income Tax Act. Section 80P provides deductions for co-operative societies on income from certain specified activities, including providing credit facilities to members.
Initially, the Income Tax Officer (ITO) disallowed the Section 80P deduction, holding that the appellant was a co-operative bank falling under the purview of Section 80P(4) of the Act, which restricts the deduction for co-operative banks. The ITO relied on the Full Bench judgment of the Kerala High Court in Chirakkal Service Co-operative Bank Ltd. v. CIT [2016] 384 ITR 490 (Ker). Additionally, the ITO made a significant addition under Section 68 of the Act, amounting to over Rs. 40 crores for AY 2016-17, citing unexplained cash credits.
