Appeal allowed for cooperative society against improper income addition during demonetization. Identity and genuineness of deposits established.

The Tribunal allowed the appeal by the cooperative society, finding that the Assessing Officer's addition of cash deposits as unexplained income during demonetization was improper. The society satisfied the identity and genuineness of the deposits, conducted transactions with members in the ordinary course of business, and ceased accepting old currency notes after relevant notifications. As a result, the addition under section 68 of the Income Tax Act was deleted.

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Issues:
The main issue in this case is the addition of cash deposits during the demonetization period.

Details:
The appellant, a cooperative society, accepted cash deposits from members during demonetization. The Assessing Officer (AO) added the cash deposits as unexplained income under section 68 of the Income Tax Act, 1961, and taxed it at a special rate under section 115BBE. The AO contended that the society was not authorized to collect old currency notes (SBNs) as per government notifications. The AO did not seek further information despite the society providing details of depositors and transactions. The AO's addition under section 68 was upheld by the CIT(Appeals).

On appeal, the appellant argued that the cash deposits were collected in the ordinary course of business and deposited into members' accounts. The appellant complied with section 68 requirements by providing necessary details. The appellant also highlighted that it stopped accepting SBNs after relevant notifications were issued. The appellant relied on previous judgments to support its arguments.

The Tribunal noted that the society dealt only with its members and accepted cash deposits during demonetization for various accounts. The AO's addition under section 68 was deemed improper as the society satisfied the identity and genuineness of the deposits. The Tribunal found that the society did not gain any extra benefit from the deposits and deleted the addition under section 68.

Therefore, the appeal by the appellant was allowed, and the addition of cash deposits during demonetization was deleted.

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