Tribunal Supports Co-op Society; Overturns Rs. 1.21 Crore Addition on Demonetization Cash Deposits as Unjustified.

The ITAT Pune Bench ruled in favor of the assessee, a Co-operative Society, regarding the addition of Rs. 1,21,99,435/- made by the AO under section 68 of the Income Tax Act, 1961, for cash deposits during the demonetization period. The Tribunal found the addition unjustified and directed its deletion, dismissing the Revenue's appeal. The decision emphasized the importance of proving the identity and genuineness of transactions, aligning with precedents in similar cases.

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Issues involved:
The judgment involves the issue of deletion of addition made by the Assessing Officer on account of cash deposited during demonetization period, treating it as unexplained cash credit u/s 68 of the Income Tax Act, 1961.

Details of the Judgment:

Issue 1: Addition of cash deposits during demonetization period

The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the A.Y. 2017-18 regarding the addition of Rs. 1,21,99,435/- made by the Assessing Officer on account of cash deposited in a saving bank account during the demonetization period. The Assessing Officer observed that the assessee, a Co-operative Society, had accepted cash in old currency from its members during the demonetization period. The assessee argued that it had provided all necessary details regarding the deposits, including the identity of depositors and genuineness of transactions. The assessee contended that as a cooperative credit society, it cannot ask depositors to prove creditworthiness. The ITAT Pune Bench referred to a similar case and held that the addition made by the AO under section 68 was not maintainable. The ITAT directed the AO to delete the addition of Rs. 1,21,99,435/-, dismissing the grounds of appeal raised by the Revenue.

Decision:
The ITAT Pune Bench held that the addition made by the AO under section 68 was not maintainable in the case of a Co-operative Society accepting cash deposits during the demonetization period. The ITAT directed the AO to delete the addition of Rs. 1,21,99,435/-, following the precedent set in a similar case. Consequently, the appeal of the Revenue was dismissed.

Conclusion:
The ITAT Pune Bench ruled in favor of the assessee, a Co-operative Society, stating that the addition made by the Assessing Officer under section 68 for cash deposits during demonetization was not justified. The ITAT directed the deletion of the added amount, emphasizing the importance of proving identity and genuineness of transactions in such cases.

This summary provides a detailed overview of the judgment, focusing on the issues involved and the decision rendered by the ITAT Pune Bench.

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