TaxTMI 
TaxTMI 
2025 (2) TMI 1501
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....ent under the old PAN which was already surrendered by the assessee. 4. On the facts and circumstances of the case the Ld. CIT(Appeals) NFAC has erred in having not considered the return of income filed by the assessee under the new PAN allotted to the assessee society and grossly erred in ignoring the additional evidence filed vide assessee's application dated 06.03.2024. 5. On the facts and circumstances of the case the Ld. CIT(Appeals) NFAC has erred in having sustained an addition of Rs. 6,19,500/- made by the Ld.AO u/s. 68 of the Income Tax Act treating the same as unexplained cash credits, on account of accepting SBNs by assessee society during demonetization period and depositing the same in its bank account although admittedly the cash received and deposited was duly recorded in the books of accounts maintained in regular course of business. 6. On the facts and circumstances of the case the Ld.CIT (Appeals) NFAC has erred in having not considered the case laws on point at issue, relied upon by the assessee which are on identical facts and are fully applicable to the facts of present case." 3. Briefly the facts of the case are that the asses....
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....ed after perusal of the evidence placed on record that the assessee society had accepted Specified Bank Notes (SBNs) from its members during demonetization period and had credited SBNs to its cash book and deposited these SBNs in its bank account. It was explained that the deposits were made out of collections in the ordinary course of carrying on business i.e. it represented the money deposited by it out of loans, sale proceeds which are duly recorded in its books of accounts maintained in regular course of business. It was submitted that as the books of accounts have not been rejected by the Ld.AO and the closing balance as on 08.11.2016 has not been doubted by the Ld.AO, the addition made by the Ld.AO is not sustainable. Therefore the source of deposits stood proved which has been acknowledged and accepted by the Ld.AO. It was submitted that the AO has not considered the facts correctly as she wrongly presumed that the assessee society has accepted SBNs of Rs. 6,19,500/- during demonetization period where as factually only SBNs of Rs. 48,000/- were received during demonetization period i.e. on 15.11.2016 and SBNs of Rs. 5,71,500/- were out of closing cash balance as on 08.11.201....
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....etized notes after the prescribed date of 8.11.2016. The assessee has explained that it has stopped collection after the receipt of notification dated 14.11.2016 issued by RBI, which has clearly clarified that the assessee society should not collect the demonetized notes. Accordingly, I am of the view that the deposit of demonetized notes collected by the assessee from its members would not be hit by the provisions of section 68 of the Act in the facts and circumstances of the case. Accordingly, I set aside the order passed by the Ld.CIT(A) on this issue and direct the A.O. to delete this disallowance 7. Further reliance was placed on the decision of Coordinate Chandigarh Benches in case of The Khojkipur Primary Agriculture Cooperative Society Ltd. Vs. ITO (ITA No. 865/Chd/2023 dt. 23/08/2024) wherein, following the aforesaid decision, it was held as under: "7. We have heard the rival contentions and gone through the record. In this case, the Id. counsel has explained that the amount in question was already collected from the farmers-members and the same was further deposited by the assessee-society in the bank account. The Id. counsel has duly explained that the amount....
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.... 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 assessee has explained that it has stopped collection after the receipt of notification dated 14.11.2016 issued by RBI, which has clearly clarified that the assessee society should not collect the demonetized notes. Accordingly, I am of the view that the deposit of demonetized notes collected by the assessee from its members would not be hit by the provisions of section 68 of the Act in the facts and circumstances of the case. Accordingly, I set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete this disallowance. 16. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes." 8. In view of the above discussion, the addition made/confirmed by the lower authorities in the case of the assessee on this issue is not sustained and the same is accordingly ordered to be deleted." 8. Per contra, the L....
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....olation of law. 6.5 Any cash credit has to satisfy the test of identity and credit worthiness of the creditor and the genuineness of the transaction. As SBNs were not legal tender after demonetization, receipt of SBNs was per se illegal and does not satisfy the test of genuineness in terms of Sec. 68 and are therefore, liable to be added as unexplained credits u/s. 68 of the Act." 9. We have heard the rival contentions and purused the material available on record and are of the considered view that there is no legal and justifiable basis for invocation of provisions of section 68 of the Act as the assessee has duly explained the nature and source of cash deposits so made in specified bank notes during the demonetization period. It has been explained by the assessee that the cash so deposited was received from its members by way of deposits in their saving accounts with the assessee society as well as the recovery of loans given to the members during the regular course of business and in terms of cash deposits in specified bank notes Rs. 5,71,500/- was received from its members prior to demonetization and which was forming part of cash in hand as on 8/11/2016 and Rs. 48,....