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TMI Blog2022 (8) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... ith reference to the genuineness of the source of cash deposits in the assessment order completed u/s 143(3) of the I.T.Act. Therefore, for the aforesaid reasons, we uphold the order passed by the PCIT u/s 263 of the I.T.Act. Limited submission of the learned AR as regards the claim of deduction u/s 80P(2)(a)(i) is that investments are made out of statutory compulsions under the Karnataka Co-operative Societies Act and Rules. Hence, the receipt of interest income has nexus with business of the assessee. In this context, the learned AR had relied on the order of the Bangalore Bench of the Tribunal in the case of M/s.Vasavamba Co-operative Society Ltd.. [ 2021 (8) TMI 706 - ITAT BANGALORE] and Uppinangady Co-operative Agricultural Society Limited [ 2021 (12) TMI 563 - ITAT BANGALORE] We find merit in the alternative submission of the learned AR that if interest income is earned out of investments made with Central Co-operative Banks and is in statutory compliance with the Karnataka Co-operative Societies Act and Rules, such investments have business nexus and should be considered as income derived from business of providing credit facilities to the members. This alternate con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant in SBN's during demonetization was liable to be treated as unexplained cash credits u/s. 68 of the Act. 5. The learned P.C.I.T is not justified in law in directing the learned A.O. to tax the interest income under the head Other Sources without appreciating that the said interest income earned by the appellant was from out of the funds of the business of providing credit facilities to the members and therefore, the said interest income formed part of the income earned from business and therefore, the same cannot be assessed under the head Other Sources under the facts and in the circumstances of the appellant's case. 5.1 The learned P.C.I.T ought to have appreciated that the interest income earned by the appellant on deposits in banks was part of the business of providing credit facilities to the members of the appellant and hence, the said interest was liable for assessment under the head Business and not under the head Other Sources and therefore, the deduction claimed by the appellant u/s 80P(2)(a)(i) of the Act is allowable under the facts and in the circumstances of the appellant's case. 6. Without prejudice, the learned PCIT is not ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety reported in (2017) 395 ITR 611 (Kar.). 5. The assessee filed the objections to the show cause notice issued u/s 263 of the I.T.Act. It was submitted that as regards the cash deposits, the entire details were provided to the A.O. It was stated that the A.O. passed order u/s 143(3) of the I.T.Act after making sufficient inquiries and with proper application of mind. Therefore, it was contended that the assessment order cannot be labeled as erroneous, warranting interference u/s 263 of the I.T.Act. As regards the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act, it was contended that the judgment of the Hon ble jurisdictional High Court relied on by the PCIT is not applicable. Hence, the deduction u/s 80P(2)(a)(i) of the I.T.Act is allowable. 6. The PCIT rejected the contention of the assessee and set aside the assessment order dated 26.12.2019 as erroneous and prejudicial to the interest of the revenue. The PCIT directed the A.O. to examine the source of cash deposits and the claim of deduction u/s 80P of the I.T.Act. The PCIT directed the A.O. to provide the assesee opportunity to furnish necessary evidences to establish its claim. The relevant finding of the PCIT reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion furnished by the assessee, and make a fresh assessment in accordance with law. 7. Aggrieved by the order of the PCIT passed u/s 263 of the I.T.Act, the assessee has filed the present appeal before the Tribunal. The assessee has filed a paper book comprising of 171 pages enclosing therein the case laws relied on, notices issued u/s 142 of the I.T.Act, the details of the cash deposits, details of the interest received, copies of the registration certificate, copies of the bank statement of the assessee. As regards the claim of cash deposits is concerned, the learned AR submitted that the entire details of cash deposits were called for by the A.O. and the details of the same were filed before him (pages 89 to 102 of the paper book). The learned AR submitted that specific directions under paragraph 19 of the impugned order of the PCIT mandates the A.O. to make additions of the cash deposits irrespective whether the assessee is able to prove the source of cash deposits. Insofar as the deduction u/s 80P(2)(a)(i) is concerned, the learned AR s limited submission is that majority of the interest income is earned out of investments made with Central Co-operative Banks and is in co ..... 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