Loading judgment…
Facts
The assessee, a cooperative society, accepted cash deposits of Rs.74,80,000/- in Specified Bank Notes (SBN) during demonetization. The Assessing Officer treated this as unexplained cash credit under Section 68 of the Income Tax Act. The assessee provided details of the members who made these deposits.
Held
The Tribunal held that the addition made under Section 68 was not maintainable as the assessee provided complete details of the members who deposited the SBN. The Tribunal relied on previous decisions where similar additions were deleted.
Key Issues
Whether the cash deposits made by members of a cooperative society in SBN during demonetization can be treated as unexplained cash credit under Section 68 of the Income Tax Act when the identity of depositors is explained.
Sections Cited
68, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2017-18 Citizen Nagari Sahakri Vs. ITO, Ward-1(1), Nashik. Patsanstha Ltd., 5, Dsouza Colony, Tulip Apartment, College Road, Nashik- 422005. PAN : AABAC1443M Appellant Respondent Assessee by : Shri Pramod S. Shingte Revenue by : Shri Ramnath P. Murkunde Date of hearing : 27.01.2025 Date of pronouncement : 25.04.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 13.09.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18.
The appellant has raised the following grounds of appeal :-
1. On the facts and in the circumstances of the case and in law, lower authorities have erred in confirming an addition of Rs.74,80,000/- as Unexplained cash credit u/s.68 of the IT Act, by disregarding the detailed submission made by the appellant, wherein it was mentioned that the case deposited in bank belongs to identified account holders and alt the details are available with the appellant society, in view of this entire addition deserves to be deleted, Appellant society prays accordingly. Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of natural justice.”
3. Facts of the case, in brief, are that the assessee is a cooperative society engaged in the business of providing credit facilities to its members and also accepting deposits from them. The return of income was furnished on 25-10-2017 declaring taxable income at Rs.NIL. The Assessing Officer completed the assessment u/s 143(3) of the IT Act by determining total income at Rs.74,80,000/-. The above assessed income includes addition u/s 68 of Rs.74,80,000/- being the SBN (Specified Bank Note) deposited during demonetization period.
4. After considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee. It is this order against which the assessee is in appeal before this Tribunal.
5. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR further submitted before us that the assessee is a credit cooperative society and during the course of its business used to accept cash from its members which is deposited in their respective bank accounts. It was further submitted that during demonetization period the assessee cooperative society has deposited an amount totalling to Rs.74,80,000/- in SBN, which was received from identified members of the cooperative society and since Government has permitted certain persons to accept SBN and rest of the other persons were not authorized to accept the same, the Assessing Officer was of the view that the assessee cooperative society is not entitled to accept SBN and therefore he made the addition of the same amount to the income of the assessee. Ld. AR also submitted that the details of each and every member (i.e. Name, PAN, Aadhar, Address, Amount and Bank Account Number) of the society from whom the SBN were accepted is available and was also produced before the Assessing Officer as well as before Ld. CIT(A)/NFAC. Ld. AR further submitted that under identical facts and similar circumstances a Coordinate Bench of this Tribunal has already deleted the similar addition in order dated 03.01.2023 in the case of M/s. Bhagur Urban Credit Cooperative Society Ltd. vs. ITO. Similarly, in the case of ITO vs. CD Patani Nagri Sahakari Pat Sanstha in 28.03.2023, the Tribunal has taken similar view by deleting the identical addition from the hands of cooperative credit society. Accordingly, it was prayed by Ld. AR before the bench that the order passed by Ld. CIT(A)/NFAC may kindly be set-aside and the addition made by the Assessing Officer may also be deleted.
6. Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.
We have heard Ld. Counsels from both the sides and perused the material available on record including the case laws relied on by the assessee. In this regard, we find that the assessee is a credit cooperative society and has deposited SBN of Rs.74,80,000/- during demonetization period. The Assessing Officer added the above amount to the income of the assessee u/s 68 as unexplained cash credit. The Assessing Officer was of the view that the assessee credit cooperative society was not permitted to accept SBN from his members and therefore he added the same to the income of the assessee. However, we find that the complete details of the members who deposited SBN with the assessee was available with the Assessing Officer as well as before Ld. CIT(A)/NFAC since the same was provided by the assessee in support of its claim that the same amount is not unexplained credit but was accepted from the members of the society whose KYC and all other details was available with the assessee cooperative society. We further find that Co-ordinate Bench of this Tribunal has already deleted the similar addition made in the case of other credit cooperative society in the case of M/s. Bhagur Urban Credit Cooperative Society Ltd. (supra) which was also followed in the case of CD Patani Nagri Sahakari Pat Sanstha (supra) wherein addition made on the basis of SBN deposited during demonetization was deleted by observing as under :- “4. We have heard both the parties and perused the records. It is observed that assessee is a Co-operative Credit Society engaged in the business of providing credit facilities and accepting deposits from its members. It is registered under section 9 of the Maharashtra Co- operative Societies Act. The Assessing Officer(AO) in the assessment order observed that assessee has deposited Rs.1,21,99,435/- in the form of banned currency notes during demonetization period. These deposits were accepted by the assessee after 08.11.2016. The assessee provided detailed list of customers from whom such banned currency notes were accepted as deposits and these were duly credited to those customers accounts. The assessee submitted during assessment proceedings that identity of persons and nature of deposits were duly explained and all relevant records were filed, hence, section 68 was not applicable in assessee’s case. However, the AO added Rs.1,21,99,435/- under section 68 of the Act as unexplained cash credits. There is no dispute that assessee provided list of customers who had deposited banned currency into the account. There is no dispute that all those persons were members of the assessee society. Once the assessee has filed all the relevant details regarding the depositors, the onus shifts on the revenue. The AO has not carried out 68. ITAT Pune Bench in for A.Y. 2017-18 dated 03.01.2023 has held in identical facts as under : “4. I have heard the rival submissions and perused 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 – 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 appeal.”
Respectfully following the decision of ITAT Pune Bench in the case of M/s.Bhagur Urban Credit Co-operative Society Ltd., in it is held that addition made by AO under section 68 are not maintainable. Accordingly, AO is directed to delete the addition of Rs.1,21,99,435/-. Thus, grounds of appeal
raised by the Revenue are dismissed.”
8. Respectfully following the decision of ITAT Pune Bench in the CD Patani Nagari Sahkari Pat Sanstha (supra) wherein the Tribunal has followed the decision in the case of M/s. Bhagur Urban Credit Co-operative Society Ltd. (supra) wherein it is held that addition made by Assessing Officer under section 68 with regard to SBN deposited during demonetisation are not maintainable.