SHREYAS CO OP CREDIT SOCIETY LTD,SHREYAS CO OP CREDIT SOCIETY LTD OPP vs. ORDER BY, ITO WARD 5.2.2., ABD. CURRENT AO, DCIT, CIR. 2.1.1.ABD., AAYAKAR BHAWAN (VEJALPUR)

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ITA 491/AHD/2026Status: DisposedITAT Ahmedabad03 June 2026AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that accepting old denomination notes was permitted for consumer co-operative societies. However, the assessee failed to adequately correlate the cash deposits with its sales. Therefore, the matter was set aside to the AO for further examination.

What were the facts?

The assessee, a co-operative society, deposited a large sum of cash during the demonetisation period. The Assessing Officer (AO) treated a portion of these deposits, made in old denomination notes, as unexplained income. The CIT(A) upheld the AO's decision.

What were the issues?

Whether cash deposits made in old denomination notes during demonetisation are per se unexplained, and whether the assessee sufficiently proved the source of these deposits as business receipts.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Sanjay R Shah, CA
For Respondent: Shri Abhijit, SR-DR
Hearing: 30.04.2026Pronounced: 03.06.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 31.12.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 143(3) of the Income Tax Act, (hereinafter referred as “the Act”).

2.

The brief facts of the case are that the assessee had filed its return of income for A.Y. 2017-18 on 27.09.2017 declaring total income of

ITA No. 491/Ahd/2026 Shreyas CO Op Credit Society Ltd Vs ITO Present Juris. DCIT, A.Y. 2017-18 2 Rs.21,00,000/-. The case was selected for scrutiny under CASS to examine the large cash deposits during demonetisation period. The AO found that that the assessee had made total cash deposit of Rs. 8,50,92,768/- in its different bank accounts during the demonetisation period from 09.11.2016 to 30.12.2016. According to the assessee, cash deposit of Rs.3,58,01,234/- only was made in the bank accounts during the demonetisation period which was duly reported in the ITR filed for this year. The AO had examined the explanation of the assessee regarding source of the cash deposits. However, he was not satisfied with the explanation of the assessee and the cash deposit of Rs.1,31,39,500/- made in old denomination notes of Rs.500 and Rs.1,000 was held as unexplained and added to income. The assessment was completed u/s. 143(3) on 26.12.2019 at total income of Rs.1,52,39,500/-.

3.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th

4.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1.

The learned CIT(Appeals) erred in law and on facts in confirming the addition of Rs 1,31,39,500/- made by the learned Assessing Officer on account of cash deposit made in bank account of the Appellant during demonetization period as unexplained money of the Appellant u/s 69A r w.s. 115BBE of the Act, which itself was wholly illegal and unlawful and not warranted in the facts and circumstances of the case. 1.2. The learned CIT(Appeals) erred in law and on facts in not considering fully and properly the explanation furnished and the evidences produced by the Appellant to prove the source of such deposits and also the fact

ITA No. 491/Ahd/2026 Shreyas CO Op Credit Society Ltd Vs ITO Present Juris. DCIT, A.Y. 2017-18 3 that the same were recorded as sales in the accounts of the Appellant, and hence, were already offered to tax while filing return of income. It is submitted that by confirming the said addition, the learned CIT(Appeals) has in effect taxed the income twice. It is submitted that it be so held now and the addition of Rs 1,31,39,500/- as confirmed by CIT(Appeals) be deleted. 2. Without prejudice to above, the learned CIT(Appeals) grossly erred in law and on facts in confirming the applicability of provision of section 69A r.w.s. 115BBE as invoked by the learned Assessing Officer for making addition of Rs. 1,31,39,500/-. It is submitted that, without prejudice to the main contention that such addition should not have been made, if at all, such addition is sustained since it is a part of business income and the source is explained, the same should be taxed as business income and not as unexplained money u/s.69A. It is submitted that it be so held now. 3. The appellant reserves the right to add, alter or amend any of the grounds of appeal.

5.

Shri Sanjay R Shah, the Ld. AR of the assessee submitted that out of total cash deposits of Rs. 3,58,01,234/- made during demonetisation period, the AO had made addition of Rs. 1,31,39,500/- only in respect of deposits in old denomination notes and the balance cash deposit was held as explained. The Ld. AR explained that assessee was a co-operative society and as the per the guidelines issued by the Government of India, old denomination notes were continued to be accepted for purchases at consumer co-operative societies even after on-set of demonetisation. Thus, the assessee was allowed to accept old denomination notes during the demonetisation period and, therefore, the AO was not correct in treating the cash deposits made in the old denomination notes as unexplained. The Ld. AR further submitted that the cash deposits in the bank accounts during the demonetisation period represented the sale proceeds of the assessee. He submitted that the Ld. CIT(A) had confirmed the addition for the reason that all the invoices in respect of sales made by the assessee were not furnished before him and only sample copies were brought on record. He submitted that the matter may be set aside to

ITA No. 491/Ahd/2026 Shreyas CO Op Credit Society Ltd Vs ITO Present Juris. DCIT, A.Y. 2017-18 4 the file of Jurisdictional AO so as to enable the assessee to establish that the cash deposits represented the sale proceeds of the assessee.

6.

Per contra, Shri Abhijit the Ld. SR-DR, submitted that the assessee was unable to co-relate the cash deposits in the bank account with the sale invoices. He has drawn our attention to the finding given by the Ld. CIT(A) in para-8 of his order, wherein he has observed that the invoices pertained to the assessee were negligible in number as well as in quantum. The Ld. SR-DR had no objection in setting aside the matter to the file of the AO for co-relating the cash deposits with the sales disclosed by the assessee.

7.

We have considered the rival submissions. The AO had treated the cash deposit of Rs.1,31,39,500/- only, made in old denomination notes during the demonetisation period, as unexplained in spite of the fact that the total cash deposit of Rs.3,58,01,234/- was made during the demonetisation period. According to the AO, the assessee was unable to establish that the cash deposits during the demonetisation period represented its normal business receipts. Before the Ld. CIT(A) also the complete evidence to co-relate the cash deposits with the sale invoices was not brought on record and only sample copy of invoices was filed by the assessee. From the copy of Notification brought on record by the assessee in the paper-book, it is found that the old denomination notes were continued to be accepted for purchase at consumer co-operative society even during the demonetisation period. Therefore, the disallowance could not have been made only for the reason that part of the cash deposits were made in the form of old denomination notes. What was relevant to examine was whether the cash deposits made during demonetisation period were consequent to sales made by the assessee.

ITA No. 491/Ahd/2026 Shreyas CO Op Credit Society Ltd Vs ITO Present Juris. DCIT, A.Y. 2017-18 5 The assessee had not furnished any details in respect of month wise cash sales and has been unable to establish that the cash deposits in the bank accounts were commensurate to the total business conducted by the assessee. In the interest of justice, therefore, we deem it proper to set aside the matter to the file of Jurisdictional AO with a direction to examine as to whether the cash deposit made in the bank accounts were commensurate with the sales made by the assessee and were attributable to the business activities of the assessee. The assessee is also directed to bring on record the evidences, before the AO in the course of set aside proceeding, to establish that the cash deposits in the bank accounts represented its sale proceeds. The AO will be free to make necessary enquiry and verification in respect of submissions of the assessee as deemed fit and thereafter re-adjudicate the matter in accordance with the provisions of law.

8.

In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the Court on 03/06/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 03rd June, 2026 Neelesh, Sr. PS (True Copy) आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file.

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