TaxTMI 
TaxTMI 
2025 (4) TMI 1203
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....l matrix, therefore, these appeals were heard together and are being decided by way of this consolidated order. With the consent of the parties, the cross-appeals for the assessment year 2016-17 is taken up as a lead case and the decision rendered therein shall apply mutatis mutandis to the cross-appeals for the assessment years 2017-18 and 2018-19. ITA no.1725/Mum./2023 (Assessee's appeal) ITA no.2076/Mum./2023 (Revenue's appeal) Assessment Year: 2016-17 3. In its appeal for the assessment year 2016-17, the assessee has raised the following grounds :- "The following grounds of appeal are independent of, and without prejudice to one another- 1. It is submitted that in the facts and the circumstances of the case, and in law, the approval granted under section 153D by the competent authority is mechanical and without application of mind. 2 It is submitted that in the facts and the circumstances of the case, and in law, the Assessing Officer erred in issuing a notice dated 27.12.2019 directing the appellants to get the accounts audited under section 142(2A) at the fag end of the assessment proceedings which were getting ....
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....aining the addition on estimation basis is erroneous inasmuch as, the same is not in accordance with the provisions of section 68 of the Act. 5. Disallowance of provision of standard asset Rs 50,00,000 5.1. The CIT(A) erred in sustaining the disallowance made by the Assessing Officer of provision of standard assets of Rs 50,00,000. 5.2. It is submitted that in the facts and in the circumstances of the case and in law, the CIT(A) sustained the disallowance of provision of standard assets without appreciating the facts of the case and hence, pray that the impugned disallowance of Rs 50,00,000 ought to be deleted. 6. Disallowance of prior period expenses Rs 1,10,14,122 6.1. The CIT(A) erred in sustaining disallowance made by the Assessing Officer of prior period expenses of Rs 1,10,14,122. 6.2. It is submitted that in the facts and in the circumstances of the case and in law, the CIT(A) sustained the disallowance of prior period expenses without appreciating the facts of the case and hence, pray that impugned disallowance of Rs 1,10,14,122 is bad in law and ought to be deleted. 7. Disallowance under section 40A(3) of Rs 1,....
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....e of the assessee's case for Special Audit under section 142(2A) of the Act, we find that since during the search and survey action on the assessee, large scale operations of the assessee in multiple cities, involving 320 different accounts in the nationalized/co-operative banks, for seven years were found, the AO considered it appropriate that the accounts of the assessee for the assessment years 2012-13 to 2018-19 be audited as provided in section 142(2A) of the Act. In response to the aforesaid show cause notice, we find that the assessee vide its reply dated 24/12/2019 though agreed that the examination of money trail is a complex investigation, however submitted that there are no complexities in its accounts which will require Special Audit. The assessee further submitted that it has provided various details to the Department during the ongoing assessment proceedings and has been fully co- operating with the Department. Accordingly, vide its reply the assessee prayed that no Special Auditor should be appointed. We find that after taking note of the assessee's submission, the AO passed the necessary directions on 27/12/2019 for audit of the accounts of the assessee unde....
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....ction 143(1) of the Act. Subsequently, a survey action under section 133A of the Act was conducted on the assessee on 08/02/2016, during which huge unexplained cash was found at the branch office at Raipur, therefore the survey was converted into search under section 132 of the Act on 09/02/2016 by executing the warrant on the assessee on 09/02/2016. Subsequent to the search assessment conducted on the assessee on 09/02/2016, a second search action under section 132 of the Act was also carried out on the assessee on 26/05/2017 at the head office of the assessee at Ahmednagar along with branch offices at Mumbai, Ulhasnagar, and residences of key persons of the assessee, who handled the business affairs of the assessee. Simultaneously, survey actions under section 133A of the Act were also carried out at the branch offices of the assessee at Ahmedabad, Chennai, and Hyderabad. In response to the notice issued under section 153A of the Act, the assessee filed its return of income on 02/10/2018 declaring a loss of Rs.2,62,66,952. Thereafter, notice under section 143(2) as well as notice under section 142(1) of the Act along with a detailed questionnaire were issued and served on the ass....
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...., 1962. It was further held that the assessee has neither furnished any details regarding the identity, creditworthiness, and genuineness of its regular or nominal members nor produced any of them. Therefore, it was held that the assessee has failed to explain the source of credit entries contained in its books of account. Accordingly, the AO made an addition of the amounts credited in the accounts of the various account holders of the assessee under section 68 of the Act. It was also seen that the assessee had issued "at par cheques/demand drafts" as against the receipt of cash in the accounts of members, i.e., the assessee has collected cash in the accounts of its customers, deposited the same into its bank account and issued cheques/demand drafts to the customers as per their requirement. It was noted that, in some of the cases, the assessee has issued cheques/demand drafts by accepting cash from the customers without routing through their accounts maintained with the assessee. As regards, the at-par cheques/demand draft issued by the assessee, the AO held that the same have not been routed through the member's account, therefore it is not possible to identify the source of ....
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....arned CIT(A) came to the conclusion that it would be reasonable to estimate the income of the assessee @ 0.15% of such deposits for which no such commission has been charged. As regards the demand draft/at-par cheques, since the assessee has already recognised income @ 0.05%, the learned CIT(A) computed the income @0.10%. As far as the failure to comply with the membership requirements, violation of byelaws, etc., the learned CIT(A) came to the conclusion that they do not impinge on the taxation aspect per se. As a result, the learned CIT(A) granted partial relief to the assessee. Being aggrieved, both the assessee as well as the Revenue is in appeal before us. 12. We have considered the submissions of both sides and perused the material available on record. In the present case, it is evident from the record that upon perusal of the documents found during the course of the search, the AO noticed that the assessee is not following the rules and regulations of KYC and other guidelines as stipulated by the Reserve Bank of India ("RBI"). Further, it was noticed that the assessee has blatantly violated and disregarded the bye-laws, Multi-State Co-operative Society Act as well as due ....
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....every fiscal period. Hence no one can be considered to be exclusive owner of the co-operative society. Therefore, personal benefit vis-a-vis the assessee would be absent in the transactions undertaken by the assessee. 14. In the instant case, the assessee has received the money in the normal course of its business, i.e. by way of deposits from its members or by way of repayment of loans by its members, etc. Further, it is not disputed that the assessee has duly recorded in its books of account the transactions of collections of money as well as deposits made into its bank account. It is worth noting that no material evidence was found during the search or in the post search enquiry, which could lead to the conclusion that the money deposited by its members belongs to the assessee. In the statements of members as well as employees, i.e. cashier/branch manager, of the assessee recorded during the course of search and survey action, relied upon by the AO, there is nothing to show that the money has been used or siphoned off for the benefit of the assessee. Even in the post search enquiry, no material or evidence was found which could lead to the conclusion that the money deposited ....
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.... evident from the record that the Special Auditor only highlighted the discrepancies in maintaining KYC documentation, account opening form and violation of society bye-laws by the assessee, without reference to any material which could lead to the conclusion that the amount deposited in member's account or amount received for the issuance of at-par cheques/demand drafts belongs to the assessee. It is pertinent to note that for discrepancies in maintaining KYC documentation, account opening form, and violation of society bye-laws, action can be taken against the assessee under the relevant statute or by the concerned authority, such as RBI, however, the same cannot lead to an addition in the hands of the assessee under 68 of the Act. Even for the violation of the provisions of Rule 114B by the depositors in certain cases and Rule 114E by the assessee also cannot lead to the conclusion that the money deposited in the members' account belongs to the assessee. Further, since the assessee is receiving the money in the normal course of its business from its members, there is merit in the submissions of the assessee that the society may not be required to prove the creditworthine....
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....bar (AY 2016-17, 2017- 18), Vishal Arora (AY 2014-15) AmolMhetre (AY 2016-17), BhagchandThawani Vaibhav Mehta, PrabhakarMahajan, LajwantiThawani (various AYs) etc. A perusal of the assessment orders shows that information has been disseminated after the search action and the AOs have taken remedial action. f. The appellant undertakes activities similar te banking and a larger leeway has to be given as regards the ingredients of S.68 (of course, this depends on the facts of the case and it cannot be held as such in a blanket manner)." For the above said reasons, we hold that the provisions of section 68 will not get attracted in the facts and circumstances of the present case. 17. In support of the aforesaid conclusion, we may refer to following decisions of the Tribunal in respect of additions made under section 68 of the Act in the hands of the co-operative credit society :- (a) In the case of Sri Bhageeratha Pattina Sahakara Sangha Niyamitha (ITA No.646/Bang/2021 dated 18-02-2022), the Tribunal considered the issue as to whether the demonetised currencies collected from the members and deposited into the bank account of the assessee could be assessed as un....
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....an 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 and it cannot be considered as violation of any of the Provisions of the Act. Accordingly, he submitted that the A.O. was not justified in invoking the provisions of section 68 of the Act. 14. I heard Ld. D.R. on this issue and perused the record. I notice that the A.O. has not doubted the submissions of the assessee that the above said amount of Rs.24,47,500/- represents collection of money in the normal course of carrying on of business of the assessee, i.e., it represents money remitted by the members of the assessee society towards repayment of the loan taken by them and also towards pigmy deposits, etc. The Ld A.R submitted that the assessee has duly recorded in its books of account the transactions of collec....
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....osited in the members accounts only. If the AO had any doubts that the assessee has not satisfied the ingredients of section 68, he could have asked further details from the assessee, but the AO has not done the same, which clearly shows that the assessee has discharged its duty to satisfy the requirement of section 68. We further note that the SBNs have been deposited in the members accounts, accordingly, the assessee did not get any extra benefit as observed by the AO in his order at para No. 06 which was treated as income us 69A of the Act. In view of this, the provisions of section 68 is not applicable in the present facts of the case and the AO without discussing in detail has made addition u/s. 68 which is not proper. Therefore the addition is deleted." (c) The Ahmedabad bench of Tribunal has expressed an identical view in the case of Shri Umiya Co-operative Credit Society Ltd vs. ITO (ITA No.277/Ahd/2022 dated 18-07-2024 by following the decisions rendered by the co-ordinate benches in the following cases: - (i) ITO vs. C D Patani Nagari Sahakari Pat Sanstha (ITA No.727/PUN/2022 dated 28-03-2023. (ii) Merchants Credit Co-op Society Ltd vs. ITO (ITA No.32....
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....on in the hands of the assessee under the Act, and for the same the remedial action needs to be taken in some other statute/regulations. Accordingly, in view of the facts and circumstances of the present case, we are of the considered view that in absence of any material to show that the cash deposited in the accounts of the members, maintained with the assessee society, belongs to the assessee, we do not find any basis in sustaining any addition in the hands of the assessee under section 68 of the Act. Accordingly, the addition made under section 68 of the Act and also the commission income estimated by learned CIT(A) are directed to be deleted. As a result, grounds no.3-4 raised in assessee's appeal are allowed, while grounds no.1-2 raised in Revenue's appeal are dismissed. 20. The issue arising in ground no.5, raised in assessee's appeal, pertains to disallowance of provision for standard assets. 21. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case, pertaining to this issue, are that during the assessment proceedings, it was noticed that the assessee has debited provision for standard ass....
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....debts, which is allowable to scheduled banks, co-operative bank, foreign bank, public financial institution, and NBFC. It was further submitted that the nature of the activity of the assessee is similar and equivalent to that of the banking and NBFC activity, and there is a direct nexus between the activity carried by the co-operative bank or NBFC and the assessee. 24. From a careful perusal of the provisions of section 36(1)(viia) of the Act, it is evident that the same is specifically in respect of provision for bad and doubtful debts made by a scheduled bank, non-scheduled bank, co-operative bank other than a primary agricultural credit society, or a primary co-operative agricultural and rural development bank. Further, the Explanation to section 36(1)(viia) of the Act deals with the meaning assigned to non-scheduled bank, rural branch, scheduled bank, public financial institution, state financial corporation, state industrial investment corporation, co-operative bank, primary agricultural credit society, primary co-operative agricultural and rural development bank and NBFC, under various statutes. It is pertinent to note that co-operative bank, primary agricultural credit so....
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....and held that the expenses pertaining to the assessment years under appeal (i.e. assessment years 2012-13 to 2018-19) shall be allowed, however, where the expense pertains to the assessment year which is not in appeal, such expense shall stand disallowed. 28. We find that it is a settled proposition that expenditure shall be allowable in the year of crystallisation of its liability, even though the said expenditure was related to an earlier period. The said expenditure is treated as current year's expenditure in the year of crystallisation and accordingly allowable as deduction in that year. This principle has been upheld by the Hon'ble jurisdictional High Court in CIT vs. Mahanagar Gas Ltd (2014)(42 taxmann.com 40)(Bom.), wherein it was observed as under: - "(e) We find that the liability in respect of work/services rendered in earlier years was crystallized only on receipt of the bill in the current assessment year. Moreover, the method adopted by the respondent assessees has been accepted by the revenue for the earlier assessment year and also while accounting for the income earned in respect of the work done in earlier years. In the circumstances, the Revenu....
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....ction of TDS. It is further the submission of the assessee that there was no violation of provision of section 40A(3) of the Act as the amount was paid directly in the bank account and the assessee does not have any control over the account of the member to whom the payments have been made. 33. Before proceeding further, it is relevant to note that as per the provisions of section 40A(3) of the Act, no deduction shall be allowed in respect of expenditure when the payment or aggregate of payments exceeding Rs.20,000 is made to a person in a day by way of a mode other than prescribed by the section. Further, the first proviso to section 40A(3) of the Act provides the exception to the aforesaid provision in such cases and under such circumstances as prescribed in Rule 6DD of the Income Tax Rules, 1962 ("the Rules"). 34. In the present case, there is no dispute amongst the parties that the amount credited in member's accounts is qua the rental expenditure paid by the assessee. From the record, it is evident that the AO has considered the withdrawal by the member in cash from its accounts to be against the very purpose of section 40A(3) of the Act. However, as noted above, the....
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....its members only. Therefore, in the present case, there cannot be any dispute regarding the identity of payee, i.e. the landlord members. Further, it is also not disputed that the payment was made on account of rent as per the rent agreement. There is also no allegation that the assessee has not deducted applicable TDS while crediting the rental payment to the account of the landlord members. Considering the fact that the activities of the assessee are akin to banking activities; and the landlords have opened savings/current accounts with the assessee, we are of the considered view that the rent payments so credited to the accounts of the landlords do not violate the objective of introducing section 40A(3) of the Act. Therefore, the disallowance of rental payment under section 40A(3) of the Act is directed to be deleted. As a result, ground no.7 raised in assessee's appeal is allowed. 36. The issue arising in ground no.8, raised in assessee's appeal, pertains to disallowance of deduction under section 80P of the Act. 37. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the assessment proceedings, it was observed that asse....
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....ction 80P of the Act, under which the assessee has claimed the deduction in the present case. As per the provisions of section 80P(1) of the Act, the income referred to in sub-section (2) to section 80P shall be allowed as a deduction to an assessee being a co-operative society. Further, the term "co-operative society" is defined under section 2(19) of the Act as under: "(19) "co-operative society" means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies ;" 39. In the present case, the assessee is a co-operative credit society and is a registered Multi-State Co-operative Urban Credit Society established under the Multi-State Co-operative Societies Act, 2002 and is involved in the activities of a credit co-operative society, viz., accepting deposits from its members and providing credit facilities to them. The assessee has two types of members, namely, ordinary and nominal members. The ordinary members have the right to vote and are subscriber to the shares of the assessee. On the other hand, nominal members are admitted on....
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....ssee have been framed in conformity with the provisions of the Multi-State Co- operative Societies Act, 2002. Further, the bye-laws of the assessee permit nominal members, upon payment of a fee, to have the membership of the assessee society. Therefore, we are of the considered view that the nominal members are members of the assessee society under the bye-laws of the society read with section 26 of the Multi-State Co-operative Societies Act, 2002. 42. The AO as well as the learned CIT(A) has placed reliance upon the decision of the Hon'ble Supreme Court in Citizen Co-operative Society Ltd v/s ACIT, [2017] 397 ITR 1 (SC), in support of its conclusion that the co-operative society which has failed to abide by its bye-laws, regulations and provisions of the respective Co-operative Society Act, is not eligible for the deduction under section 80P of the Act. The relevant observations of the Hon'ble Supreme Court, in this regard, are reproduced as follows :- "25. So far so good. However, it is significant to point out that the main reason for disentitling the appellant from getting the deduction provided under Section 80P of the Act is not sub-section (4) thereof. Wh....
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....ase, the provisions of section 26 of the Multi-State Co-operative Societies Act, 2002 permits co-operative society to admit a person as a nominal member, and under the bye-laws of the assessee society, nominal members are admitted as members on payment of fees of Rs. 100 without having any voting rights. Thus, in the present case, the assessee has complied with the provisions of the Multi-State Co-operative Societies Act, 2002, under which it is formed. 44. Further, unlike the facts in Citizen Co-operative Society Ltd (supra), the Multi-State Co-operative Societies Act, 2002 expressly permits loan to non- members under section 66(2) on the security of his deposit. The said section reads as follows :- "66. Restriction on loans .- (1) A multi-State co-operative society, other than a co-operative bank, shall not make a loan to a member on the security of his share or on the security of a non-member. (2) Notwithstanding anything contained in sub-section (1), a multi-State co- operative society may make a loan to a depositor on the security of his deposit." 45. Since the assessee has given loans as per the provisions of the Multi- State Co-operative Societies Act....
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.... of members who by reason of the provisions of this Act do not possess such right or power or have no such liability or duty;"" Considering the definition of 'member' under the Kerala Act, loans given to such nominal members would qualify for the purpose of deduction under section 80P(2)(a)(i)." 47. Therefore, we are of the considered view that the reliance placed by the lower authorities on the decision of the Hon'ble Supreme Court in Citizen Co- operative Society Ltd (supra) is completely misplaced, as the said decision was rendered on its own facts, which are different from the present case. 48. In the present case, it is evident from the record that the lower authorities also alleged that the assessee has earned income from providing services to non-members, i.e. by issue of "at par cheques" in lieu of cash. However, it is pertinent to note that the demand draft or at par cheques are also issued at the instructions of the member and the amount is debited/credited from/to the member's account. Therefore, it was a transaction which was carried out at the behest of the member in the accounts of the member maintained with the assessee society. Thus, w....
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....appeal by the Revenue is dismissed. ITA no.1726/Mum./2023(Assessee's appeal) ITA no.2077/Mum./2023 (Revenue's appeal) Assessment Year 2017-18 51. In its appeal for the assessment year 2017-18, the assessee has raised the following grounds :- "The following grounds of appeal are independent of, and without prejudice to one another- 1. It is submitted that in the facts and the circumstances of the case, and in law, the approval granted under section 153D by the competent authority is mechanical and without application of mind. 2. It is submitted that in the facts and the circumstances of the case, and in law, the Assessing Officer erred in issuing a notice dated 27.12.2019 directing the appellants to get the accounts audited under section 142(2A) at the fag end of the assessment proceedings which were getting barred by limitation on 31.12.2019 and without disposing of the objections raised by the appellants. Thus, the aforesaid direction of the Assessing Officer to get the accounts audited under section 142(2A) is nothing but mere tactics to extend the period of limitation which the Courts have held as bad in law. 3. A....
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....rd assets of Rs 1,00,00,000 5.2. It is submitted that in the facts and in the circumstances of the case and in law, the CIT(A) sustained the disallowance of provision of standard assets without appreciating the facts of the case pray that the impugned disallowance of Rs 1,00,00,000 ought to be deleted. 6. Disallowance of provision for gratuity Rs 3,50,000 6.1. The CIT(A) erred in sustaining the disallowance made by the Assessing Officer of provision of gratuity of Rs 3,50,000 6.2. It is submitted that in the facts and in the circumstances of the case and in law, the CIT(A) sustained the disallowance of provision of standard assets without appreciating the facts of the case and hence, the impugned disallowance of Rs 3,50,000 is bad in law and ought to be deleted 7. Disallowance of prior period expenses Rs 60,11,035 7.1. The CIT(A) erred in sustaining disallowance made by the Assessing Officer of prior period expenses of Rs 60,11,035 7.2. It is submitted that in the facts and in the circumstances of the case and in law, the CIT(A) sustained the disallowance of prior period expenses without appreciating the facts of the ca....
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....Income tax Act, 1961 on account of cash credited in the books of account for issue of at par cheque/DD, as unexplained credit. "3. The appellant craves to leave, to add, to amend and/ or to alter any of the ground of appeal, if need be." 53. During the hearing, no material was placed on record in support of ground no.1 raised in assessee's appeal. Accordingly, the same is dismissed. 54. In ground no.2, raised in assessee's appeal, the assessee has challenged the direction of the AO to get the accounts audited under section 142(2A) of the Act at the fag end of the assessment proceedings. Since a similar issue has already been decided in assessee's appeal for the assessment year 2016-17, therefore the findings/conclusions rendered therein shall apply mutatis mutandis. Accordingly, ground no.2 is dismissed. 55. The issue arising in grounds no.3-4 raised in assessee's appeal, and ground no. 1-2 raised in Revenue's appeal pertains to addition under section 68 of the Act on account of cash deposits and credit transactions. Since a similar issue has already been decided in assessee's and Revenue's appeal for the assessment year 2016-17, theref....
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....al, pertains to disallowance of prior period expenses. Since a similar issue has already been decided in assessee's appeal for the assessment year 2016-17, therefore the findings/conclusions rendered therein shall apply mutatis mutandis. With similar directions, ground no.7 raised in assessee's appeal is allowed for statistical purposes. 60. The issue arising in ground no.8, raised in assessee's appeal pertains to disallowance of rental expenditure under section 40A(3) of the Act. Since a similar issue has already been decided in assessee's appeal for the assessment year 2016-17, therefore the findings/conclusions rendered therein shall apply mutatis mutandis. As a result, ground no.8 raised in assessee's appeal is allowed. 61. The issue arising in ground no.9, raised in assessee's appeal, pertains to enhancement of income made by the learned CIT(A) by disallowing the expenditure under section 40A(3) of the Act. 62. We have considered the submissions of both sides and perused the material available on record. During the appellate proceedings, upon perusal of the details filed by the assessee in respect of expenditure incurred in cash, the learned....
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....d in law, the Assessing Officer erred in issuing a notice dated 27.12.2019 directing the appellants to get the accounts audited under section 142(2A) at the fag end of the assessment proceedings which were getting barred by limitation on 31.12.2019 and without disposing of the objections raised by the appellants. Thus, the aforesaid direction of the Assessing Officer to get the accounts audited under section 142(2A) is nothing but mere tactics to extend the period of limitation which the Courts have held as bad in law. 2. Addition under section 68 of the Act for aggregate cash deposits and credit transactions but excluding the remote deposits 2.1. The CIT(A) erred in sustaining the addition under section 68 of the Act at Rs 37,82,666, estimated at the rate of 0.15 per cent of Rs 252.17 crores being the aggregate cash deposits and credit transactions but excluding the remote deposits of all the account holders in the appellant-society against the addition of Rs 1,041.50 crores made by the Assessing Officer. 2.2. The CIT(A) erred in treating the appellants as facilitator of alleged accommodation entries given by the deposit holders relying on the alleged di....
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....appreciating the facts of the case and hence, pray that impugned disallowance of Rs 85,54,550 is bad in law and ought to be deleted 6. Disallowance under section 40A(3) of Rs 1,45.10.385 6.1. The CIT(A) erred in sustaining the disallowance made by the Assessing Officer under section 40A(3) aggregating Rs 1,45,10,385 being the rent expenses incurred during the year under reference. 6.2. It is submitted that in the facts and in the circumstances of the case and in law, the CIT(A) sustained the disallowance of rent expenses under section 40A(3) without appreciating the facts of the case and hence, pray that impugned disallowance of Rs 1,45,10,385 is bad in law and ought to be deleted. 7. Enhancement of income by the CIT(A) of Rs 7.22.961 7.1. The CIT(A) erred in enhancing the assessment by making disallowance of Rs 7,22.961. being miscellaneous expenses debited to profit and loss account for contravention of provisions of section 40A(3). 7.2. It is submitted that in the facts and in the circumstances of the case and in law, the CIT(A) erred in making the impugned disallowance without appreciating the facts of the case and hence, pr....
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....see has challenged the direction of the AO to get the accounts audited under section 142(2A) of the Act at the fag end of the assessment proceedings. Since a similar issue has already been decided in assessee's appeal for the assessment year 2016-17, therefore the findings/conclusions rendered therein shall apply mutatis mutandis. Accordingly, ground no.1 is dismissed. 68. The issue arising in grounds no.2-3 raised in assessee's appeal, and ground no. 1-2 raised in Revenue's appeal pertains to addition under section 68 of the Act on account of cash deposits and credit transactions. Since a similar issue has already been decided in assessee's and Revenue's appeal for the assessment year 2016-17, therefore the findings/conclusions rendered therein shall apply mutatis mutandis. As a result, grounds no.2-3 raised in assessee's appeal are allowed, while grounds no. 1-2 raised in Revenue's appeal are dismissed. 69. The issue arising in ground no.4, raised in assessee's appeal, pertains to disallowance of provision for standard asset. Since a similar issue has already been decided in assessee's appeal for the assessment year 2016-17, therefore the....
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....erence. It was further observed that the balances as per the books did not reconcile with the balance appearing in the financial statements. On verification of the facts, it was observed that the assessee has passed various entries in the books of accounts, however no such transaction were actually reflected in the bank statements either for the period under consideration or immediately thereafter. It was noticed that the method of debiting bank and corresponding the credit amounts directly to reserve funds is not in accordance with the generally accepted accounting principles. Accordingly, the assessee was asked to explain the rationale and basis of these journal entries and crediting them to the reserves and surplus/NPA provision account. The assessee was also asked to explain as to why the said amount cannot be treated as its income and that if the said amount represents the claim made by the assessee against the bankers, the assessee was requested to explain the accounting treatments undertaken by the assessee when the said amounts were in fact debited by the bankers. In response thereto, the assessee submitted that it is only a book entry without generation of any income, and ....
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....son to agree with such oral averments. Being aggrieved, the assessee is in appeal before us. 77. We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee has maintained bank accounts with various banks/branches. It is the case of the assessee that the Axis Bank has debited its accounts without authority and siphoned off its funds. As per the assessee, it has filed Civil Suits against Axis Bank, IDBI Bank, and Federal Bank before the Hon'ble City Civil Court, Ahmednagar, wherein the assessee has claimed that the Bank(s) have debited its account incorrectly either :- a. in respect of cancelled cheques, b. in respect of cheques not issued by the assessee, or c. excess amount debited by the bank. 78. During the hearing, the learned AR submitted that the Axis Bank has reversed certain wrong entries after the civil suit filed by the assessee. The learned AR also furnished the details of such wrong entries reversed by the Axis Bank. It was submitted that for other transactions fraudulently carried out by Axis Bank, Civil Suit is still pending in City Civil Court, and Criminal Writ ....