AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 1700
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....s Appeal Centre (NFAC), CIT(A) has erred in confirming the addition of Rs. 44,61,000/- being cash deposits as unexplained receipts/ investment/asset under section 69A of the Act. 3. In the facts and circumstances of the case and in law, the Learned National Faceless Appeal Centre (NFAC), CIT (A), Mumbai has erred in passing the impugned order dated 01.12.2023 under section 250 of the Act without providing personal hearing to the appellant thereby grossly violating the principles of Natural Justice." 3. Representatives were heard at length, case records carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated the facts of the case are that on the basis of AIMS data in respect of cash deposits of Specified Bank Notes (SBNs) made by the assessee in its bank accounts, the AO issued notice u/s 142(1) of the Act on 15/12/2017. Pursuant to the notices, the assessee filed its return of income. 4.1. During the course of scrutiny assessment proceedings, the AO asked the assessee to explain the source of cash deposit in the bank account with Bassein Catholic Co-op. Bank Ltd....
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....ition given by the AO is that the assessee should not have accepted the SBNs after 08/11/2016 being not legal tenders. 8. We are of the considered view that after assuming that it was not a legal tender for the assessee then the same was also not legal tender for the banks but the banks have accepted the deposit. Therefore, we do not find any merit in the accusation of the AO. Though the decision of the SMC Bench of ITAT Chennai (supra) is in favour of the revenue bu the same author sitting in Division Bench in the case of TamilNadu State Marketing Corporation Ltd. vs. ACIT (supra) has decided the impugned issue in favour of the assessee. The relevant findings read as under:- "The ld. counsel for the assessee relied on para 9 of the decision, which reads as under:- "10. We have also perused the decision of A. Govindarajulu Mudaliar v. CIT, on which reliance is placed by learned counsel for the Revenue. We, however, fail to understand how the above decision helps the Revenue in the instant case. In that case, certain amounts appeared in the account books of a firm of which the assessee was a partner as credits for him. The assessee was asked for an explanation a....
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....) Ordinance 2016 (subsequently this was passed as an Act), was towards cessation of liability of RBI in respect of SBNs with effect from 31.12.2016. The Government of India vide Gazette of India Notification dated 8.11.2016 notified that the SBNs of Rs. 500 and Rs. 1,000 notes is not a legal tender w.e.f. 9.11.2016. We noted that even the Revenue admitted that the Government has not declared the SBNs as an illegal tender and even possessing of SBNs was not an offence till 31.12.2016. Between the period from 9.11.2016 to 31.12.2016, all the public, who were holding such SBNs were permitted to exchange such holdings against valid currency notes but the scheme itself does not render the SBN as illegal or declaration does not bar in receiving or paying through the SBNs in the course of business like other documents i.e., through cheques, promissory notes, Government securities, which are not legal tender can be freely exchanged so can the SBNs. The Ordinance of December 2016 clearly specifies that on or from 31.12.2016, it is illegal for any person to hold, transfer or receive SBNs. This would mean that prior to 31.12.2016 there is no bar on any person holding, transferring or receivin....
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....ly on the issue of notification issued by the RBI to deal with the specified bank notes and argument is that the assessee is not one of the eligible person to accept or to deal with specified bank notes and thus, even if assessee furnish necessary evidence, the assessee cannot accept specified bank notes after demonetization and the explanation offered by the assessee cannot be accepted. No doubt specified bank notes of Rs. 500 & Rs. 1000 have been withdrawn from circulation from 09.11.2016 onwards. The Government of India and RBI has issued various notifications and SOP to deal with specified bank notes. Further, the RBI allowed certain category of persons to accept and to deal with specified bank notes up to 31.12.2016. Further, the specified bank notes (cessation of liability) Act, 2017, also stated that from the appointed date no person can receive or accept and transact specified bank notes, and appointed date has been stated as 31.12.2016. Therefore, there is no clarity on how to deal with demonetized currency from the date of demonetization and up to 31.12.2016. Therefore, under those circumstances, some persons continued to accept and transact the specified bank notes and d....