2022 (6) TMI 151

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....f the Act, being the amount collected by the assessee in the form of Specified Bank Notes from is customers by way of deposits during demonetization period. In addition to the above, the assessee has also raised a legal ground questioning the jurisdiction of the assessing officer. 2. The facts relating to the case are stated in brief. The assessee is a primary agricultural credit co-operative society providing credit facilities to its members. The AO noticed that the assessee has deposited a sum of Rs.36,36,000/- in the form of Specified Bank Notes (SBN), i.e., demonetized notes of Rs.1000/- and Rs.500/- during the period from 09- 11-2016 to 31-12-2016. The assessee explained the sources of these SBN as the deposits made by the members of ....

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....Sahakara Sangha Niyamitha (supra) as under:- "12. The last issue relates to addition made u/s 68 of the Act. The A.O. noticed that the assessee society has deposited "Specified bank notes" (demonetized notes) in the account maintained by it with CDCC Bank, Hosadurga as detailed below:- Date of deposit No. of notes of Rs.1000 No. of old notes of Rs.500 SBN deposit 10.11.16 700 600 10,00,000 11.11.16 463 1150 10,38,000 12.11.16 38 137 1,06,500 13.11.16 138 330 3,03,000 Total 1339 2217 24,47,500 When enquired about the sources for making the above deposits, the assessee submitted that they represent cash received by it from its members towards repayment of loan, Pigmy collection, etc. The A.O. noti....

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....ee. The Ld. A.R. also submitted that the Reserve Bank of India issued a series of notifications with regard to the deposit of demonetized notes from 8.11.2016 onwards. He submitted that the RBI, vide notification dated 14.11.2016, clarified that District Central Co-operative Banks can allow their existing customers to withdraw money from their accounts up to Rs.24,000/- per week. It further clarified that no exchange facility against demonetized notes or deposit of such notes should be entertained by them. In view of the above said notification, the assessee has stopped collecting the demonetized notes from 14.11.2016 onwards. Accordingly, the Ld. A.R. submitted that the above said deposits were collected by the assessee prior to 14.11.2016....

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....e AO has invoked the provisions of sec.68 of the Act for making this addition. I also noticed that the assessee has also complied with the requirements of sec.68 of the Act. The AO has also not stated that the assessee has not discharged the responsibility placed on it u/s 68 of the Act. Peculiarly, the AO is taking the view that the assessee was not entitled to collect the demonized notes and accordingly invoked sec.68 of the Act. I am unable to understand as to how the contraventions, if any, of the notification issued by RBI would attract the provisions of sec. 68 of the Income tax Act. In any case, I notice that the assessee has also explained as to why it has collected demonetized notes after the prescribed date of 8.11.2016. The asses....