TaxTMI 
TaxTMI 
2024 (7) TMI 1667
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....be deleted. 2. The Commissioner of Income Tax (Appeals) erred on facts without appreciating the circumstances of the case and in Law in holding that cash deposits of Rs. 1,15,97,500/- in the bank account during demonetization period as unexplained cash credit u/s. 68 is wholly illegal, unlawful and against the principles of natural justice. The appellant prays that the addition of Rs. 1,15,97,500/- made in respect of cash deposited by the appellant be deleted. 3. The Commissioner of Income Tax (Appeals) has grievously erred in law and on facts in not considering fully and properly the explanations furnished and the evidences produced by the appellant. The Commissioner of Income Tax (Appeals) erred in law in not providing adequate opportunity of being heard in the appellate proceedings before him and passed appellate order which is not in accordance with principles of natural justice. The appellant prays that direction may be given to provide the appellant sufficient opportunity to file its submissions and the appellant may be allowed to produce additional evidences as per Rule 46A. 4. The Commissioner of Income Tax (Appeals) has grievously erred in law an....
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....income from other sources". 4. Further, during the course of assessment proceedings, the Assessing Officer observed that the assessee has deposited cash in Specified Bank Notes (SBN) of Rs. 1,06,47,500/- during the demonetization period from 10.11.2016 to 14.11.2016. On being asked, the assessee submitted that the said amount was received on account of recovery of loans from it's members from 10.11.2016 to 14.11.2016. In this connection, the assessee's contention was the cash deposited in SBNs in the bank accounts was from repayment of loan by the members of the assessee society during the demonetization period. However, the Assessing Officer did not accept the contention of the assessee on the ground that after demonetization, SBN notes could neither been given nor accepted as legal tender by the assessee. The Assessing Officer was of the view that the assessee is a cooperative credit society and is not a bank and it was never allowed to accept SBN during the demonetization period. The assessee could not provide any document that it was allowed to accept SBN during demonetization period and post announcing of demonetization, the SBN was no longer a legal tender. The Assessing O....
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....ked out the net interest income at Rs. 2,06,392/-. The Counsel for the assessee has produced chart / table before us in which the Counsel for the assessee submitted that the Assessing Officer has incorrectly worked out the proportionate expenses at Rs. 7,61,000/- as against the actual expenses at Rs. 9,67,392/-. Therefore, the net disallowance should have been Rs. 66,881/- as against the addition / disallowance of Rs. 2,06,392/-, made by the Assessing Officer which is not justified. 8. We have gone through the submissions filed by the assessee. On going through the same, we are of the considered view, that in the interest of justice, this issue may be restored back to the file of the Assessing Officer for carrying out the necessary verification and to ascertain whether the details of proportionate expenses furnished by the assessee are in order. 9. In the result, Ground No. 1 of the assessee's appeal is allowed for statistical purposes. Ground No.2:- Addition of Rs. 1,06,47,500/- under Section 68 of the Act. 10. This ground relates to addition of Rs. 1,06,47,500/- on account of acceptance by the assessee of SBN currency during the demonetization period, which were added....
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....was submitted before us that no benefit had accrued to the assessee from depositing of SBN currency notes and that the assessee had merely acted as an intermediary in depositing old currency which ceased to be accepted as legal tender. The Assessing Officer failed to appreciate that the members of the society to whom credit facilities were provided reside in remote and interior places of villages and most of them are illiterate or carrying on small business like sawing of wood. Hence, instead of carrying cash from their respective village, the society came to the rescue of it's members and accepted SBN towards repayment of loan which earlier granted to them. Thus, this assessee society has not got anything out of accepting SBN notes during the demonetization period. The Counsel for the assessee submitted before us was that no addition could have been made under Section 68 of the Act since the assessee has discharged the onus to prove the cash credits by providing the identity of the parties, substantiating the genuineness of the transaction and also giving proof of creditworthiness of parties. In the present case, the Assessing Officer has not disputed the particulars of members fu....
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....s towards settlement of the loan which had earlier been extended to them before the demonetization period. Thereafter, the assessee upon having accepted the SBN from it's members, deposited the same in the bank account held by the assessee. The assessee had also furnished complete details of it's members including their names, PAN, address etc. The assessee had also given a specific explanation that this amount received by the assessee society from it's members was only towards settlement of debt / loan which had earlier been given by the assessee society to it's members. Further, once the assessee had furnished complete details of it's members from whom cash had been received by way of SBN towards settlement of debt, it was open to the Assessing Officer to issue notice to various parties and verify the details furnished by the assessee, in case the Assessing Officer doubted the genuineness of the list of parties provided by the assessee. However, no such exercise was carried out by the Assessing Officer. Therefore, in our considered view so far as applicability of Section 68 of the Act is concerned, no addition is called for in the hands of the assessee since the assessee has been....
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....sed the relevant material on record. It is seen that the assessee is a Urban Cooperative Credit Society which received Rs. 1,78,400/- from 15 depositors whose all the necessary particulars have been given. The list comprises receipt of Rs. 85,970/- from 3 small saving agents and Rs. 94,000/- from 12 customers. The assessee furnished necessary details in respect of the depositors. The AO refused to accept the genuineness of the transaction and made the addition u/s.68 of the Act. The ld. AR has brought to my notice an order passed by the Bangalore Bench of the Tribunal in Prathamika Krushi Pattina Sahakari Sangha Niyamitha Itagi Pkpssn (ITA No. 593/Bang/2021) dt. 01-06-2022 in which the addition made under similar circumstances has been deleted. In this order, the Tribunal relied on another order in Bhageeratha Pattina Sahakara Sangha Niyamitha Vs. ITO - ITA No. 646/Bang/2021 dt. 18-02-2022, that has been referred to in para 5 of the order. No contrary order on such facts, in favour of the Revenue, has been brought on record by the ld. DR. Respectfully following the precedent, I overturn the impugned order and direct to delete the addition of Rs. 1,78,500/- sustained in the first ap....
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....sfied the identity of the deposits, who are members of the society and genuineness of the transactions because the amounts have been deposited 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. 8. In the result, the appeal by the assessee is allowed." 16. Again in the case of Saidatar Co-operative Credit Society Ltd. vs. ITO in ITA No. 1613/Mum/2021 vide order dated 05.09.2022, the ITAT again on similar set of facts allowing the appeal of the assessee on this issue with th....