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Facts
The assessee, a Co-operative Society engaged in selling agricultural produce, fertilizers, and implements, and providing loans, appealed against an addition of Rs. 9,24,070. This addition was made by the Assessing Officer and confirmed by the CIT(A) treating cash deposits as income from unexplained sources. The assessee argued these were deposits from farmers towards outstanding balances during the demonetization period.
Held
The Tribunal condoned the delay in filing the appeal. It was held that the addition made by the AO was not sustainable as the assessee had demonstrated that the cash deposits in the bank account were received from farmers in lieu of earlier sales, as per the Ministry of Finance notification authorizing cooperative stores to accept specified bank notes against sales.
Key Issues
Whether the cash deposits made by farmers with the assessee society during demonetization, representing repayment of outstanding balances, can be treated as unexplained income.
Sections Cited
147, 148, 143(3)
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Order The present appeal has been preferred by the assessee against the order dated 04-12-2023 passed by the Ld. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi[hereinafter referred to as ‘CIT(A)’], for the Assessment Year 2017-18.
The Assessee in this appeal is aggrieved by the action of the CIT(A) in confirming the addition made by the Assessing Officer (A.O.) of Rs. 9,24,070/- on account of cash deposit in the bank 2 account treated as deposit from unexplained sources. The appeal of the assessee is time barred by 313 days. A separate application for condonation of delay has been filed, wherein, it has been pleaded that e-mail address at which notices have been served by CIT(A), was of the earlier counsel/Advocate of the Assessee. However, the said Counsel/Advocate was disengaged by the asssessee. The said Counsel/Advocate did not inform the assessee of the e-mails received from CIT(A) and hence, the Assessee was not aware of the passing of the impugned order of the CIT(A). When it came to the knowledge of the Assessee that the impugned order has been passed by the CIT(A) ex-parte of the assessee, the Assessee immediately preferred the present appeal.
Considering the averment made in the application, the delay in filing the appeal is hereby condoned.
The issues involved in this appeal is regarding confirmation to the addition of Rs. 9,24,070/- made by the lower authorities treating the same as deposit from unexplained sources, whereas, the plea of the assessee is that the Assessee is a Co-operative Society and is in the business of sale of agricultural produce and fertilizers to small farmers and also providing Agricultural implements to farmers on rent and give loans to the small farmers. During the demonetarization period, the outstanding balances were deposited by the farmers with the Assessee-Society which were further deposited in the 3 bank. During the appellate proceedings, the Assessee furnished the relevant documents such as Copy of Saving Bank Account, Loan Account including Cash Credit Vouchers etc. The Ld. CIT(A) called for remand report from the AO on the additional evidence/documents furnished by the Assessee. The A.O. however, reported that the documents furnished by the Assessee were the same as were furnished during the assessment proceedings. He further mentioned that the submissions of the Assessee had duly been considered by the Assessing Officer as mentioned in Para 4 of the assessment order. The AO, therefore, did not offer any comments in the remand report on the submissions/documents furnished during the appellate proceedings.
At this stage, it is relevant to mention here that the perusal of the assessment order would reveal that the Assessing Officer had made addition without considering any submissions and documents furnished by the Assessee. The case of the Assessing Officer was that the Assessee had been non responsive to the notices issued and that in the absence of any response, the Assessing Officer had made additions.
6. Ld. CIT(A) also rejected the submissions of the Assessee observing that the vouchers were incomplete and without any address and the cash deposit had not been co-related with the vouchers and that the books of account had not been produced.
7. I have heard the rival contentions and gone through the record.
4 In this case, the Assessee is a Co-operative Society and is in the business of sale of agricultural produce and fertilizers to the small farmers. Besides that, the Assessee also gives the agricultural implements to farmers on rent and gives loans to the small farmers. During the demonetarization period, the farmers had deposited/paid back the amount outstanding towards them. It was further deposited by the assessee in the bank account.
As per the Notification of Ministry of Finance, (Department of Economic Affairs), dated 8th November, 2016, vide S.O.3408(E) which authorized consumer cooperative stores under authorization of Central or State Governments to accept the specified bank notes against sales. The Assessee is also registered Co-operative Society registered with the Registrar of Cooperative Societies, Punjab. The Assessee had duly demonstrated that the cash deposited in the bank account was received from the farmers in lieu of the earlier sales made. Under these circumstances, the addition made by the A.O. is not sustainable and the same is ordered to be deleted.
In the result, the appeal of the Assessee is allowed .