SHAH PATEL & COMPANY,AHMEDABAD vs. THE ITO, WARD-5(2)(4), AHMEDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER Shah Patel & Company, Income Tax Officer, Vs. S.No.740/53, Under Sarangpur Ward-5(2)(4), Bridge, Opp. Anand Cloth Market, Ahmedabad. Sarangpur, Ahmedabad-380002. [PAN :AAGFS5763 E] (Appellant) .. (Respondent) Appellant by : Shri S N Divatia with Shri Samir Vora, ARs Respondent by: Shri B P Makwana, Sr. DR Date of Hearing 15.07.2025 Date of Pronouncement 29.07.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal has been filed by the assessee against the order dated 04.10.2024 passed by the Ld. ADDL/JCIT(A)-1, Pune (hereinafter referred to as "CIT(A)" for short), passed u/s 250 of the Income-tax Act, 1961, (hereinafter referred to as "the Act" for short) for the Assessment Year 2017-18. 2. The assessee has raised the following grounds of appeal :

1. On the facts and circumstances of the case well as law on the subject the learned Addl/JCIT (A)-1 Pune has erred in confirming addition of Rs.813000/- being Specified Bank Note (SBN) deposited by Debtors directly in various Bank Branches of Appellant’s bank account as unexplained Cash Credit u/s 68 of Income Tax Act.

2. On the facts and circumstances of the case as well as law on the subject the learned Addl/JCIT(A)-1 Pune has erred in adding Rs.7763/- being interest paid on TDS. 3. On the facts and circumstances of the case as well as law on the subject, the learned Addl/JCIT(A)-1 Pune has erred in confirming charging interest u/s.234A, 234B, 234C and 234D which is unjustified and uncalled for.” Shah Patel & Company Vs. ITO Asst. Year : 2017-18 - 2–

3. The brief facts of the case are that the assessee is a Co-operative Housing Society. It filed its return of income for the year under consideration on 06.11.2017, declaring total income of Rs.20,53,560/-. During the assessment proceedings, the Assessing Officer observed that, during the demonetization period, cash deposits aggregating to Rs.1,18,000/- were made in Specified Bank Notes (SBN) into the assessee’s Kotak Mahindra Bank accounts on 15.11.2016, which were not reflected in the assessee’s books. The Assessing Officer also observed that the assessee had accepted Rs.8,13,000/- in SBN from debtors, in contravention of RBI guidelines issued during the demonetization period and made disallowance of Rs. 8,13,000/- being received on account of alleged SBN deposits from debtors and also disallowed the interest on TDS amounting to Rs.7,763/-

4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Ld. CIT(A) who confirmed the addition of Rs.8,13,000/- and disallowance of Rs.7,763/-.

5. Aggrieved by the order of the Ld. CIT(A) upholding the addition/disallowance, the assessee is now in appeal before the Tribunal.

6. We have carefully considered the rival contentions and perused the records. The primary issue pertains to whether the amount of Rs.8,13,000/- deposited in the bank account of the assessee during the demonetization period constitutes unexplained cash credit under section 68 of the Act. The assessee submitted that these deposits were made directly by debtors at various branches of the bank and not received in cash by themselves. It is a fact on record that the members of the Co-operative Society have paid of their due amounts which have been deposited in the bank. Hence, no addition is called for u/s 68 of the Act. Shah Patel & Company Vs. ITO Asst. Year : 2017-18 - 3– The amount of Rs.7,763/- was disallowed being interest on delayed TDS payment. The Assessing Officer rightly disallowed the same on the ground that such expenditure is not allowable under section 37(1) of the Act. Hence, no interference is called for.