Explained receipts from members' loan repayments in Specified Bank Notes were not treated as unaccounted income.

Specified Bank Notes collected from members toward loan liabilities were treated as explained receipts where member-wise details, loan accounts, and the nexus between cash receipts and repayment obligations were produced. The assessee, a primary co-operative society eligible for Section 80P deduction, showed the identity of the depositors and the source and purpose of the receipts before the Assessing Officer. On those facts, the amounts were found to be repayments or adjustments against members' liabilities, not unaccounted income, and the addition was deleted.

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Issues: Whether the amount represented by Specified Bank Notes collected from members towards loan liabilities could be treated as unexplained income in the hands of the assessee.

Analysis: The assessee, a primary co-operative society entitled to deduction under Section 80P of the Income-tax Act, 1961, produced member-wise details of the receipts and the corresponding loan accounts. The receipts were shown to be repayments or adjustments against liabilities owed by the members. The identity of the depositors, the source of the cash receipts, and the nexus with the members' loan obligations were available before the Assessing Officer. On these facts, the receipts were found to have been satisfactorily explained and not liable to be treated as unaccounted income.

Conclusion: The addition made on account of the Specified Bank Notes was deleted and the issue was decided in favour of the assessee.

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