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Issues: Whether cash deposits received from members during the demonetisation period and routed through members' accounts could be assessed as unexplained cash credits in the hands of the assessee society under section 68 of the Income-tax Act, 1961.
Analysis: The assessee was a credit co-operative society dealing with its members, and the cash deposits were shown to have been received from identified members and credited to their respective accounts such as pigmy, savings and loan accounts. The assessee furnished the list of depositors, the amounts deposited and the currency denominations. The transactions were treated as having been recorded in the books, and no further material was brought to dislodge the identity of the members or the genuineness of the receipts. Since the deposits were made into members' accounts and no separate benefit accrued to the assessee, the essential ingredients for invoking section 68 were not established on these facts.
Conclusion: Section 68 was held inapplicable and the addition made on account of the cash deposits was deleted.
Ratio Decidendi: Where cash receipts during demonetisation are shown to have come from identified members and are recorded in the books as credits to their accounts, section 68 cannot be invoked unless the revenue discharges a further evidentiary burden to show that the credits are unexplained in the hands of the assessee.
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