Non-Compliance to SCN for Cash Deposits of Rs. 6.16 Cr: ITAT Remands for Fresh Adjudication of Co-Operative Society with 5k Costs [Read Order]

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case involving unexplained cash deposits of Rs. 6.16 crore to the Assessing Officer (AO) for fresh adjudication, citing non-compliance with statutory notices.

Varadharajapuram Primary Agricultural Co-operative Society Ltd., (assessee) faced scrutiny for significant cash deposits in its bank account during the Assessment Year (AY) 2019-20. The AO noted that the assessee had not filed an Income Tax Return (ITR) for AY 2019-20.

The AO initiated assessment proceedings based on information regarding cash deposits amounting to Rs. 6,16,68,376. The AO issued several notices and a show-cause notice (SCN) under Section 144 on 06.09.2023.

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The assessee failed to respond to these notices. The AO treated the entire cash deposits of Rs. 6,16,68,376 as unexplained money under Section 69A read with Section 115BBE of the Act after obtaining bank statements from Trichy District Central Co-operative Bank Ltd.

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Aggrieved by the AO’s order, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) dismissed the appeal for want of prosecution, as the assessee did not comply with the hearing notices issued by the CIT(A).

Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT. The assessee’s counsel argued that the non-compliance with notices issued by the AO and CIT(A) was neither wilful or deliberate but due to circumstances beyond the assessee’s control.

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The counsel submitted an affidavit from the Secretary of the society, undertaking to furnish complete details before the AO if given another opportunity.

The Counsel for the Revenue opposed the plea, highlighting that both the AO and CIT(A) had provided ample opportunities, which the assessee failed to utilize. The Counsel suggested imposing costs if the matter were to be remanded.

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The two-member bench, comprising S.S. Viswanethra Ravi (Judicial Member) and Jagadish (Accountant Member) observed the assessee’s non-compliance with the notices issued by the AO and CIT(A). The tribunal observed the notarized affidavit dated 22.04.2025 from the Secretary of the assessee society.

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The tribunal by taking into consideration the affidavit and in the interest of justice set aside the CIT(A)’s order and remanded the matter to the AO for fresh adjudication. The tribunal imposed a cost of Rs. 5,000 to be paid to the State Legal Aid Authority, Hon’ble Madras High Court, within 30 days of receiving the order.

The AO was directed to verify the payment and decide the issue afresh after considering the assessee’s written submissions and documentary evidence. The appeal of the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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