TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1210
X X X X Extracts X X X X
X X X X Extracts X X X X
....2023-24/1056845323(1) dated 06.10.2023 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') dated 28.12.2019 by the Assessing Officer, DCIT, Circle-4(2), New Delhi (hereinafter referred to as 'ld. AO'). 2. As these are cross appeals, hence, they are taken up together and disposed of by this common order for the sake of convenience. ITA No. 3477/Del/2023 for AY 2017-18 (Assessee's appeal) 3. The solitary issue involved in the appeal of the revenue is challenging the deletion of addition of Rs. 2,71,38,972/- on account of cash deposits made during the demonetization period by the assessee. 4. We have heard the rival submissions and perused the material available on re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns have been scrutinized u/s 143(3) of the Act every year and no additions have been made u/s 68/69/69A or 269T in the past. During the relevant period, Digital payment system was not widespread as it is currently, and cash transactions were the norm in the semi urban and rural areas. The nature of business activity of assessee (Micro Finance activity) which involves dealing with poor men and women, who did not have access to credit from banks and financial institutions. The borrowers (numbering around 17,280), who have paid cash are largely located in small towns and villages and it has been customary for them to repay loan installments only in cash. The name of borrowers who have paid the amount to assessee was produced to the A.O. during....
X X X X Extracts X X X X
X X X X Extracts X X X X
....provisions cannot be superimposed in Income Tax Act. Deposit of SBN Notes can only give a scope to the A.O. to enquire into source of receipt and only if it is unexplained, it can be subject to tax u/s 68/69/69A of the Act. The A.O. has not explained as how he came to conclusion that the assessee has deposited its own money. All the 17,280 customers have been tested under KYC rules and the loans were advanced before the demonetization order was promulgated. The banks have accepted the deposits and credited to the assessee's bank account which proves that the currencies had the legal backing of Reserve Bank of India. Further, the deposits of Rs. 2,56,52,792/-represent collection from customers in EMI (Equated Monthly Installments) which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lf was Rs. 2,56,62,792/-. The cash had been deposited in 12 banks. It is not in dispute that the assessee had provided details of 17280 customers from whom it had collected the cash recovery and provided the details of customers with unit name, Loan Account Number, name of the person, address, amount of loan, loan sanction date, amount received and date of receipt. The amount recovered from individual customers are very very nominal and the assessee had faithfully deposited the entire collections in its bank account. The ld AO wrongly applied Section 269T of the Act, which barred any borrower to make a repayment of loan in cash in excess of Rs. 20,000 either on a single day or in aggregate during the year. But this provision has to be looke....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial Company duly registered with RBI. The assessee borrows loans from banks and financial institutions and advances the same to microfinance customers. The assessee is also categorized as micro finance institution. The assessee had availed term loans from the banks and interest on such term loans, which were not paid actually by the assessee were disallowed by the assessee voluntarily in the return of income in earlier years. The amount of disallowances made in earlier years was Rs. 25,49,22,936/-. During the year under consideration, the assessee entered into One Time Settlement (OTS) with the banks and financial institutions and got a waiver of substantial sums from the banks and financial institutions under OTS. The assessee had 17 lende....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ars in the return of income. Pursuant to the OTS and waiver obtained thereon, the waiver amounts were written back and credited to profit and loss account, comprising of both principal portion and interest portion and interest portion was not liable to be taxed again as it had been already disallowed in the year in which provisions were made by the assessee. Hence, the assessee to the extent of apportionment of amount paid under OTS towards interest component in the sum of Rs. 23,75,55,144/- had duly claimed the sum as deduction u/s 43B of the Act on payment basis during the year under consideration in their return of income. In fact, this fact is disclosed in tax audit report vide reply to Clause number 26(i)(A)(a) & (b) of from 3CD, which....