Audit Reports

Direct Tax

Report No. 16 of 2020 - Performance Audit on Assessment of Co-operative Societies and Co-operative Banks, Union Government Department of Revenue - Direct Taxes

Date on which Report Tabled:
Wed 24 Mar, 2021
Date of sending the report to Government
Wed 25 Nov, 2020
Government Type
Union Department
Direct Tax
Sector Taxes and Duties


The Co-operative Sector witnessed a significant growth in terms of number of entities registered as Co-operative Societies and Co-operative Banks.  During 2009-10 to 2016-17, Co-operative Societies registered a growth of 39.84 per cent.  This topic was selected for performance audit with a view to examine the extent of: Coverage of Co-operative Societies in Income Tax net; Widening and deepening of the tax base; and Compliance of the statutory provisions.

The performance audit covered the assessments of Co-operative Societies and Co-operative Banks completed during the financial years 2014-15 to 2018-19. 

Audit noticed that the number of Co-operative Societies and Co-operative Banks as per records of respective States/ Regional regulatory authorities/ Registering authorities was much higher as compared to the numbers as per ITD indicating that many Co-operative Societies and Banks were not in the tax net of ITD.

Audit noticed that the verification of registration of the entity as Co‑operative Societies/ Co-operative Banks was inadequate and evidential proof of a certificate of registration by Registrar as well as the details of members of the societies was either not available in the assessment records or not verified by the Assessing Officers.

There were instances of irregular allowance of deductions under sections 36(1)(viia), 36(1)(viii), 36(1)(xvii) of the Act and various subsections of section 80P of the Act., where, conditions specified under the said provisions were not fulfilled, involving tax effect of 
Rs.694.50 crore in 649 cases.

Audit noticed instances of non-compliance to provisions laid down in the Act with respect to allowances of deductions/ expenses/ set-off and carry forward of losses, mistakes in computation of tax and interest, non-deduction of TDS, non-levy of penalty etc. involving tax effect of Rs.12,328.40 crore, in 858 cases.

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