KRYA VIKRAYA SAHAKARI SAMITI LIMITED DEOLI,DEOLI TONK vs. ITO TONK, TONK

6. The appellant prays your honour to add, amend alter, delete all or any ground of appeal on or before hearing.”

2.2 In this appeal, the ld. AR of the assessee raised additional ground under Rule 11 of ITAT Rules, 1963 which reads as under:- “Erroneously levying tax u/s 115BBE for taxing income for the assessment year 2017-18 whereas provision is made effective from 01.04.2017.”

3. At the outset of the hearing the bench noted that the present appeal so filed by the is delayed by 152 days. The assessee has filed an application submitting therein the reasons for delay in filing the appeal and prayed to condone the delay in filling the present appeal. In support of the application, the assessee has also filed Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. an Affidavit duly sworned in before the Notary, Public Jaipur dated 08.01.2025 for condonation of delay. The content of the affidavit is reiterated here in below ; “Affidavit I amit Patolia, son of Shri Ummed Raj Patolia age 51 years resident of Deoli authorized signatory of Krya vikrya Sahakari Samiti Ltd, Deoli hereby solemnly affirm and declare as under:

1. 1. I am amit Patolia is Authorized signatory signatory of Krya vikrya Sahakari Samiti Ltd, Deoli.

2. That we are assessed of income tax by the Assessing Officer, ward, Tonk on file bearing permanent Account Number AAAA6269L.

3. That I preferred an appeal to the commissioner (Appeals) Jaipur against the Assessing Officer’s order of assessment dated 31.10.2019/21.01.2020 for the assessment year 2017-18.

4. That I received the order of the said Commissioner (Appeals) Faceless (NFAC) on 29.12.2024.

5. That being aggrieved by the said order the said order was either not received and on random visiting the website such order of CIT(Appeals) was found.

6. That soon thereafter I got in touch with my advisors and had the appeal filed on. I further declare that the above statement is true and correct to the of my knowledge and belief. For Krya Vikrya Sahakari Samiti Ltd, Deoli Place: Deoli Dated 08.01.2025 Amit Patolia Authorized Signatory Deponent Verification I amit Patolia, son of Shri Ummed Raj Patolia age 51 years resident of Deoli authorized signatory of Krya vikrya Sahakari Samiti Ltd, Deoli hereby verify that above para 1 to 5 are true and correct to the of my knowledge and belief. For Krya Vikrya Sahakari Samiti Ltd, Deoli Place: Deoli Dated 08.01.2025 Amit Patolia Authorized Signatory Deponent”

Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk.

4. The facts stated in a sworn statement were not controverted by the ld. DR.

Ld. AO noted that the assessee is a co-operative society under the name M/s Deoli Kriya Vikriya Sahkari Samiti Ltd., Deoli, registered under Co-operative Societies Act 1953 and is engaged in trading of fertilizers, pesticides, seeds and controlled & decontrolled items. On examination of the details filed and books of account produced as well as from the copy of the Bank A/c statement of Baroda Rajasthan Khetriya Gramin Bank, Deoli (A/c No. 41690200000142), it was gathered that assessee deposited an amount of Rs. 27,62,000/- on different dates (10.11.2016 to 19.11.2016) in SBN (Specified Bank Notes) during the period of demonetization (i.e. 09.11.2016 to 31.12.2016). Detail of this deposit was filed by the assessee in a tabular form which was kept Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. on record by the ld. AO. The ld. AO noted that from the cash book filed by the assessee that there remain opening cash balance on 9.11.2016 at Rs. 653/- only. The cash-book and ledger accounts of the parties revealed recovery in SBN from debtors for goods at Rs. 27,62,000/- after date of announcement of demonetization on 8th Nov., 2016. The assessee also admitted this fact.

As per the Gazette Notification of the Ministry of Finance, Dept. of Economic Affairs, on 8th Nov., 2016, and subsequent notifications, only certain entities were allowed to accept these SBNs against sale of goods only and the assessee was neither such entity nor falls into any broader category of such entities. Therefore, show cause notice was issued to the assessee dated 21.10.2019, asking explain and show cause as to why the amount of Rs. 27,62,000/- received from different parties in SBN after 08.11.2016 as recorded in the cash book and thereafter deposited in bank A/c should not be treated unexplained money u/s 68 of the Act. In response the assessee filed the reply. Ld. AO noted that the reply filed was considered in the light of facts of the case and provisions of law and the same was not found acceptable for the following reasons:

Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. 4.1 There is no dispute with regard to the fact that assessee accepted old currency notes (SBN or demonetized currency notes) during course of demonetization period. This fact has been admitted by the assessee and is also evident from the cash-book and the ledger accounts of the parties. 4.2 It is also fact that the Govt. of India vide its notification dated 8.11.2016, discussed supra, discontinued SBN (Rs. 1000 and 500 currency notes) as legal tender and did not allow any entity / person to accept demonetized currency notes against any transaction. Liberty was given was to certain entities like Dairy booths, Petrol pumps, Gas agencies, Medical shops, Consumer societies run by govt., etc. to accept these SBN with certain conditions against sale of goods/services only and not to accept demonetized currency against outstanding dues. This liberty was only given to banks to deposit the said currency notes in customer's account. The assessee does not find place in the list of the exceptions laid down in the said notification. 4.3 The submission of the assessee at point no. 1 of the reply with regard to language of notification no. 3407(E) dated 08.11.2016 is not relevant in instant case for the reason that it is only meant for exchange of currency notes by the Banks. As mentioned above, in the third para of the above gazette notification, it is explicitly mentioned that "the SBNs shall not be ceased to be legal tender... to the extent of transactions specified below....". Thereby, to the extent of transactions mentioned in this above gazette notification and other such subsequent notifications, all other transactions and dealings in SBNs were not legal in the eyes of law. The Central Government has also issued further gazette notifications on the issue and added many other cases/situations where dealing in old SBNs will be allowable but nowhere among them was recovery of debt in SBNs included. The intention of the legislation was thus very clear on this issue and one cannot presuppose that non-mentioning of any guidelines on any trade- mechanism in these gazette notifications would render that particular mechanism legal. Non-mentioning about limitation for any recovery from debtors in the said notification does not give legal right to the assessee to presume or make any meaning favourable to him. 4.4 The second point of its submission is also not tenable in the eyes of law for the reason that the government of India specifically announced that above said currency notes would not be legal tender for any transaction subject to certain exceptions. Here, the transaction means any type of transaction including recovery from debts and sale of goods. In the exceptions, Govt. allowed purchase of certain commodities in SBNs and by mentioning these specific exceptions, it is clear that any other transactions except transactions for purchase of goods as mentioned in the notifications is out of scope of specified exceptions. Hence, transactions relating to recovery from debtors is not Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. part of exceptions underlined in the said notifications. Hence, this contention of the assessee does not carry any weight. 4.5 The other contention of the assessee at point no. 3 is also not acceptable for the ground and reasons discussed at para 6.4. 4.6 The contention of the assessee at point no. 4 is also not relevant in view of specific language and announcement in notification No. 3408(E) dated 8.11.2016, wherein SBN were ceased to be legal tender for any type of transaction except certain exceptions mentioned therein. The assessee is trying to construe the meaning of legal tender as per its convenience which favours it. Hence, this plea also falls flat due to lack of legal ground. 4.7 The submission at point no. 5 is also irrelevant and illogical in view of above discussions and specific language used in notifications dated 8.11.2016. 4.8 The argument at point no. 6 is also not acceptable. The assessee is arguing that goods-debtor is an asset and recovery from debtors is dealing in its own money as reflected in its balance-sheet in monetary terms. This argument is not convincing because once the government announced that SBN ceased to be legal tender from a particular date, then the said debtor was legally bound to deposit his cash balance in his bank account and to pay the dues to the assessee in legal currency. There was no privilege to the debtor for goods or assessee to settle their dues in SBN after the liberty granted by the government to deposit/ exchange the SBN through Banks. Hence, this argument also does not carry any weight. 4.9 The contention at para 7 of the reply appears repetition of earlier submissions discussed above. Here, dispute is not with regard to identity, creditworthiness and genuineness of the debtors but only dispute is that assessee has written-off its debtors by debiting its cash book by equivalent amount of cash in SBN which ceased to be legal tender from 8th Nov. 2016 and the said money was later on utilized for meeting its liabilities. By this way. the source of cash introduced in the books of account of the assessee cannot be said to be legal and from explained sources in terms of sec. 68 of the Act for the reason that source of cash of Rs. 27,62,000/- was not a valid source in the eyes of law. Here, it is pertinent to mention that though the source of money of Rs. 27,62,000/- introduced in its books of accounts is identifiable. still it cannot be treated as explained source in absence of elements of legality of the currency notes/money introduced in the books of accounts and genuineness of the transaction between two parties.

Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. After considering the facts of the case, submission of the assessee and various notifications issued by the Govt. of India with regard to demonetization of currency notes of Rs. 500/- and Rs. 1000/-, the explanation of the assessee was not found acceptable for lack of merit. In light of the facts and circumstances of the case, there has been an open violation of the government's guidelines on demonetization and assessee has written-off its debtors and debited its cash book by equivalent amount of cash in SBN which ceased to be legal tender and which was later on utilized for meeting liabilities. By this way, the source of cash in its book cannot be said to be from explained sources in terms of section 68 of the Act for the reason that source of cash of Rs. 27,62,000/- introduced in cash book was not a valid source in the eyes of law as the currency notes which were accepted by the assessee were ceased to be legal tender. Though the source of money of Rs. 27,62,000/-introduced in its books of accounts is identifiable, still it cannot be treated as explained source in terms of section 68 in the absence of elements of genuineness of the transaction and legality of the currency notes/money introduced in the books of accounts. As such, addition of Rs. 27,62,000/- was made u/s 68 of the Act to the total income declared by the assessee. Tax is The assessee was a consumer cooperative society which deals in controlled and uncontrolled items like fertilizers, seeds and controlled items like sugar and wheat supplied by the Govt. of Rajasthan to the registered sub-dealers. For this activity, assessee gets commission from the Govt. These trading activities falls in the category of consumer society eligible for deduction in accordance with provisions of Sec. 80P(2)(ii) of the act. The assessee society is not exclusively trading for marketing of agriculture produce of its members. The status of the assessee has also been a matter of dispute in past, and the appellate authorities have also held that the controlled and decontrolled items are covered under sec. 80P(2)(c)(ii) of the Act. The assessee has claimed 100% deduction u/s 80P(2)(a)(iii) of the act at Rs. 1,25,441/-. Vide show-cause dated 21/10/2019, the assessee was asked to explain why it has claimed 100% deduction against profits of Rs. 1,25,441/- in spite of being a consumer cooperative society wherein u/s 80P(2)(c)(ii) of the Act, basic deduction of Rs. 50,000/- is allowed from profits. Further, it was asked to explain and show-cause as to why the Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. difference amount of Rs. 75,441/- should not be disallowed. In reply, the assessee submitted that since the assessee was a co- operative society and that are doing marketing of agriculture products produced by their members, the deduction claimed is covered u/s 80P(2)(a)(iii) of the Act where 100% profit is exempted without limit, and further that considering the same in section 80P(2)(c)(ii) in place of 80P(2)(a)(iii) is incorrect and that the error may kindly be rectified in your records. This reply of the assessee not convincing the ld. AO because the activities being carried out by the assessee. The provision of Sec. 80P(2)(a)(iii) of the Act, on which the assessee places its reliance, says that in the case of a co-operative society engaged in the marketing of agricultural produce grown by its members, the whole of the amount of profits and gains of business attributable shall be allowed as deduction. However, the cash in hand is not as elaborated by the assessee in his reply. The assessee was not exclusively engaged in marketing of agricultural produce of its members but also engaged in trading/supply of controlled and decontrolled consumer goods like sugar, wheat etc. supplied by the Government for distribution among BPL consumers through various sub-dealers located in the Deoli tehsil. For this activity, assessee gets commission from Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. government on which tax is also deducted by the state government. This fact is evident from the 26AS statement wherein TDS of Rs. 1,81,782/- has been made on commission payment for rendering services to the government. Hence, the argument of the assessee was not acceptable in view of facts of the case and specific provisions of law on the issue. In view of above discussion, deduction claimed by the assessee was restricted to Rs. 50,000/- and the balance amount of Rs. 75,441/- was disallowed.

7. Aggrieved from the above assessment order, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here below:-

“5.1 It may be added here that all the above notices have been served on the appellant through his designated mail ID through ITBA. It can be seen from the above that in spite of several notices issued, the assessee did not submit any detailed submission to substantiate its claim. The matter is therefore decided on the basis of available records.

6. The assessee deposited a cash of Rs.27,62,000/- in Specified Bank Note during the period of demonetization. On the perusal of details filed by the assessee during the assessment proceedings, it is seen that the opening cash balance on 9.11.2016 was Rs.653/- and cash book and ledger account of the parties revealed recovery in Specified Bank Note from debtors for goods at Rs.27,62,000/- after date of announcement of demonetization. As per the Gazette Notification of the Ministry of Finance, Department of Economic Affairs dated 08.11.2016 and subsequent notification only certain entities were allowed to accept these SBN against the sale of goods only the appellant was neither such entity nor falls into any category of such entities. Though the source of money was explained by the assessee it does not fall within Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. the ambit of Gazette Notification of the Ministry of Finance, Department of Economic Affairs dated 08.11.2016. Further, appellant claimed 100% deduction u/s.80P(2)(a)(iii) of the Act of Rs. 1,25,441/-. Being a consumer cooperative society the basic deduction of Rs.50,000/- is allowed from profit as per section 80P(c)(ii). The assessee is not only engaged in marketing of agricultural produced of its member but also engaged in trading/supply of consumer products like sugar, wheat etc. supplied by the Government for distribution among below poverty line consumer. Therefore the AO restricted the deduction claim by the assessee to Rs.50,000/- and balance amount of Rs.75,441/- added to total income. During the appellate proceedings the assessee was non- responsive hence the additions made by the AO is upheld and the assessee's appeal is dismissed.

2. The principle that every Court that is to decide on a matter of dispute, inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. Nalla Thampy Vs. Shankar (1984 (Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000) 3 SCC 242. In the latter case, the Apex Court has held as under- "That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default. Where a case is called up for hearing and the party is not present, the court or the judicial or quasi-judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. That is not the function of the court or, for that matter of a judicial or quasi judicial body. In the absence of the complainant, Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. therefore, the court will be will without its jurisdiction to dismiss the complaint for non prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint on good cause being shown for the non appearance of the complainant."

6. In a decision in the case of CIT v. Gold Leaf Capital Corporation Ltd. on 02.09.2011 (ITA No.798 of 2009), the Hon'ble High Court of Delhi had held that a negligent assessee should not be given many opportunities just because that quantum of amount involved is high. Necessary course of action is to draw adverse inference; otherwise it would amount to give premium to the assessee for his negligence. When the assessee is non-cooperative, it can naturally be safely concluded that the assessee did not want to adduce evidence as it would expose falsity and non genuineness."

and the statement of facts as no corroborative evidence of any kind is submitted. Hence the above appeal of the appellant is dismissed and the order of the AO is confirmed.

9. In the end the appeal is dismissed.”

8. Feeling dissatisfied with the above order of the ld. CIT(A), the assessee preferred the second appeal before this tribunal. Apropos to the grounds raised by the assessee, ld. AR of the assessee relied upon the following written submission:-

Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. “MAY IT PLEASE BE YOUR HONOURS, Most respectfully the humble appellant is submitting herewith the WRITTEN SUBMISSIONS which are very crucial to understand facts and legality of case and same may please be considered while deciding this appeal case. WRITTEN SUBMISSIONS GROUND NO.1:ERRONEOUS ADDITION U/S.68 DURING DEMONETIZATION OF RS.27,62,000/- 1.

1. That the appellant is cooperative society formed under cooperative moment of government. The society was formed with registrar of society Rajasthan with the object to provide agriculturist farmers original genuine agricultural products at most reasonable price. The appellant society purchases goods from manufacturers co operative society of which appellant is member like IFFCO (Indian farmers fertilizer cooperative) etc. and appellant society sales goods to farmers being member of society which are located in small village and remote area of Deoli Panchyat Samiti, Distt: Tonk. All these buyers are members of appellant society, the appellant society carried out work of supplying of seed, fertilizer and pesticides with the object to provide good quality product at reasonable rate to end user i.e. farmers. In such manner appellant society deal and do transaction with members for the member to the member and this society is duly controlled by Chief Officer as appointed by Rajasthan State Government.

2. That during demonetization period i.e. from 09.11.2016 to 18.11.2016 (demonetization period:09.11.2016 to 31.12.2016), the appellant society has received old SBN currency notes from its members which being Debtor's recovery which was shown in the financial statements. That entire transaction are undertaken with its members only of which source is verifiable as this is received against outstanding dues of supply made of agricultural items. That Ld AO while passing assessment order has grossly erred in doing addition into total income of Rs.27,62,000/- of old SBN Notes. These cash funds were received from its members only and for which audited books of accounts, documents and other relevant documents were submitted before Ld AO during assessment proceedings and these are found to be genuine by assessing officer and there is no dispute about its sanctity and genuineness of cash received.

3. That Ld AO while passing assessment order vide para no.4.1 has stated that "There is no dispute with regard to the fact that assessee accepted old currency notes (SBN or demonetized currency notes) during course of demonetization period. This fact has been admitted by the assessee and is also evident from the cash book and the ledger accounts of the parties.

4. That vide para no.5.1 it is stated by Ld AO that "Though the source of money of Rs.27,62,000/- introduced in its books of accounts is identifiable, still Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. it cannot be treated as explained source in terms of section 68 in the absence of elements of genuineness of the of the transaction and legality of the currency notes/ money introduced in the books of accounts."

5. That cash which is deposited by appellant society was received from its members being small farmers (Debtors as in books of society) and which are clearly identified and ascertained to be correct by Ld AO during assessment proceedings and for which specific mention is there in assessment order at para no.4.9 of assessment order (page no.8-9 of Assessment order) wherein it is finding given by Ld AO that "It is pertinent to mention that though the source of money of Rs.27,62,000/- introduced in its books of accounts is identifiable, still it can not be treated as as explained source in absence of elements of legality of currency notes/ money introduced in the books of accounts and genuineness of the transaction between two parties."

6. That Ld AO after check of complete books of accounts has given a categorical finding that there is genuine debtors i.e. farmers from whom cash was received and which was deposited in bank account. And further to submit that such receipt is upto 18.11.2017 only and not thereafter. Chart showing deposit of SBN notes is enclosed and marked as Annexure-1. That appellant has not withdrawn cash from bank account. In other words it can be said that these payments are found to be received from genuine source only i.e. from members, farmers and there is no doubt about its source, identification, creditworthiness of payment received by society. That Ld AO with the view that since the currency notes have lost its legal tender after declaration of demonetization and therefore they are covered within the parameter of section 68 of IT Act whereas provision of Section 68 state that- Section 68 Cash Credits - "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year: Provided that where the sum so credited consist of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless,- (a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory..... That for being coverage of any transaction there must be three ingredients for levying of provision of Section 68 of IT Act:-

(i) Identification of person who is paying sum (ii) Genuineness of transaction (iii) Creditworthiness of person paying the sum That in the present case all above three ingredients are fulfilled. (1) IDENTIFICATION OF PERSON: That appellant society do not deal with any of the person prior to taking him as member in the society and when any person is taking as member, then he is required to fill membership and alongwith membership form his Identification Card, Farm Jamabandi, Aadhar Card are required to be deposited with society. Copies of some of membership form with regard to such facts are enclosed and marked as Annexure- 1.

7. That there are several judicial pronouncements wherein it has been held that in absence of any ingredient addition u/s.68 can not be made however in the present case there is absence of all the ingredient and therefore no addition u/s.68 can be made. That Ld AO has not reported any single instance in the entire assessment order and thus it is quiet loud and clear that most genuine source of cash received by appellant society was deposited in bank account.

8. That Ld AO has verified the relevant documents consisting of membership form which are first filled up from agriculturist before making him as member of society and wherein his identification documents are collected and only then he is taken as member in society. Copy of application form is enclosed and marked as Annexure-2. Therefore there is no issue remains of genuineness of Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. transaction undertaken with any member from whom funds are received by appellant society (i.e. debtor recovery).

9. That Ld AO merely on the pretext that as old SBN Currency notes are received by appellant society and therefore these are falling within criteria of section 68 and added into total income which is absolutely illegal and unjustified and beyond the mandate of the Section 68 of 1.T. Act.

10. That below are the cases wherein it is held that SBN currency note deposited during demonetization wherein all criteria/ parameters are fulfilled, then there is no ground for sustaining any addition u/s.68:- (1) ITO, ward 1 & TPS Vs. Jyoti Co-operative Credit Society Ltd. (ITAT- Bangalore) Order dated 28.01.2025 It is decided that acceptance of SBN notes after dt. 08.11.2016 by credit co- operative society from its members after 08.11.2016 is not hit by the provision of Section 68 looking to fact and circumstance of the case. That RBI Notifications are not with reference to section 68 of Income tax Act. That while deciding this the Hon'ble Bench has placed reliance upon in case of Shri Bhageeratha Pattina Sahakari Sangha Niyamita, Hosadurga wherein the ITAT has held that acceptance of demonetizd currency does not attract application of section 68 of Act. That in case of Yagnaralkya Souhaudha Credit Co Ltd. Vs. ITO in dt.06.01.2023 and Sritherumalleshwsara Co-operative Society Vs. ITO in ITA No.187/Bang/2024, whose facts and circumstances are identical to the facts and circumstances of the appellant case. In view of the above, the AO is directed to delete the addition of Rs. 1.78 Crore made u/s.68 of the IT Act 1961. That while deciding the case it is observed by Bench and reproduced para no.14 and 15 in above order, which are reiterated as below:- 14. I heard Ld DR on this issue and persued the record. I notice that the AO has not doubted the submissions of the assessee that the submissions of the assessee that the above said amount represented collection of money in the normal course of carrying on the business of the assessee i.e. it represents money remitted by the members of the assessee society towards repayment of the loan taken by them and also towards pigmy deposits etc. The Ld AR submitted that the assessee has duly recorded in its books of account of the transaction of collection of money as well as deposits made into bank account. Thus I notice that the assessee has explained the nature and source of the above said amount which was in turn deposited by the assessee society in its bank account and further, all these transaction have been duly recorded in the books of account. Hence, the above said deposit cannot be considered as "unexplained money" in the hands of the assessee.

15. The case of the AO is is that the assessee has collected the demonetized notes after 08.11.2016 in violation of the notification issued by RBI. Acordingly, Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. he has taken the view that the above said amounts represents unexplained money of the assessee. I am unable to understand the rationale in the view taken by the AO. I noticed that the AO has invoked the provisions of section 68 of the Act for making this addition. I also noticed that the assessee has also complied with the requirements of section 68 of the At. The Ao has also nto staed that he assessee has not discharged the responsibility placed on it u/s.68 of the Act. Peculiarly the AO is taking the view tha the assessee was not entitled to collect the demonized noes and accordingly invoked section 68 of the Act. I am unable to understand as to how the contraventions, if any, of the notification issued by RBI would attract the provisions of section 68 of the IT Act. In any case, I notice that the assessee has also explained as to why it has collected demonetized noes after the prescribed date of 08.11.2016. 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 & circumstances of the case. Accordingly I set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this disallowance." (copy of order is enclosed and placed in paper book) That there is no amendment has ever been made in the Income tax Act wherein any provision which restrict to assessee to accept old SBN note may be classified it as falling u/s.68 of IT Act. Therefore action of Ld AO and further action of Ld CIT (A) in confirming same may please be held as illegal and be deleted. GROUND NO.2:ERRONEOUSLY LEVYING TAX U/S.115BBE FOR TAXING INCOME FOR THE ASSESSMENT YEAR:2017-18 WHEREAS PROVISION IS MADE EFFECTIVE FROM 01.04.2017 1 That Ld AO has grossly erred in levying tax u/s.115BBE of Income Tax Act wherein tax is levied @60% of total income merely by treating income as unexplained income and for which addition is made into total income u/s.68 of IT Act whereas provision of section 115BBE has come into existence w.e.f. 01.04.2017 only and is not applicable for impugned period. That provision of Section 115BBE is introduced by Finance Act-2017 and therefore after getting assent from President it has become operative from financial year 2017-18 onwards and therefore it is applicable for those transaction which are related to financial year 2017-18 onwards and not prior. Whereas Ld AO has levied tax u/s.115BBE by erroneously treating it as applicable for A/year 2017-18 whereas it is not mandate of Government of India.

3. That accordingly similar is view taken by various judicial forms in cases below:- (i) Dy. CIT Vs. Rai Bahadur Narain Singh Sugar Mills Ltd. (ITAT Delhi Bench) 2025-174 taxmann.com 1233 (Delhi Trib.) Wherein while deciding the levy of provision of Section 115BBE the reference is taken from judgment of Madras High Court in the Writ petition in the case of S.M.I.L.E. Microfinance Ltd. v. ACIT [W.P. (MD) Nos. 2078 of 2020 & 1742 of 2020, dated 19-11-2024 wherein it has held that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. And accordingly the AO is directed to tax the addition under normal provision of tax and not under the provisions of 115BBE. (ii) Dy Commrr of Income Tax Vs. Sanjaybhai Mansukhbhai Patel (ITAT Surat Bench) It is decided about scope of levy of tax for Assessment Year 2017-18 and wherein assessing officer has levied tax u/s.115BBE of cash deposited during demonetization period and taxed @60% u/s.115BBE. Tribunal held that amended provisions of section 115BBE are prospective in nature and not applicable for assessment year 2017-18 and directed Assessing Officer to tax remaining addition at normal rate of tax and applicable surcharges, if any, under section 115BBE. Thereafter Revenue filed instant miscellaneous application against order of Tribunal It was noted that instant miscellaneous application filed by revenue for rectification of Tribunal's order under section 254(2) was to review order and not rectify any apparent mistakes from record, therefore there was no any mistake which could be said to be apparent within meaning of section 254(2), therefore instant miscellaneous application was dismissed. (iii) Vijaya Hospitality and Resorts Ltd. Vs. CIT (2020-114 Таxmann.com 91 Kerala High Court) Section 115BBE, read with sections 68, 71 and 263, of the Income-tax Act, 1961- Tax on income referred to in section 68 to section 69D (Set of loss) Assessment year 2013-14 -During year, assessee filed its return of income Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. and claimed set off of carried forward loss(unabsorbed portion of depreciation) Same was allowed Principal Commissioner invoked revision under section 263 on ground that assessee's income included deemed income being unexplained cash credit under section 68 which is not classified under any heads of income under section 14; therefore, set off of brought forward loss against this deemed income was not correct-Whether amendment brought in section 115BBE(2) by Finance Act, 2016 whereby set off of losses against income referred to in section 68 was denied, would be effective from 1-4-2017 Held, yes Whether, therefore, during relevant assessment year, there was no bar existed with respect to allowing set off of carried forward unabsorbed depreciation on fixed assets against deemed income under section 68. (iv) S.M.I.L.E. Microfinance Ltd. Vs. ACIT (order dt.19.11.2024) (Madras High Court Madurai Bench) It is held that amended provision of section 115BBE is applicable w.e.f. 01.04.2017 and not prior to that date. That Hon'ble High Court has stated vide para no. 17 In the aforesaid objects and reasons nowhere it is stated that due to "demonetization" the unaccounted money ought to be charged 60% rate of tax. It only states that step had been taken to curb black money by withdrawing specified bank notes of denomination of Rs.500 and Rs.1000. And also states that people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object "that instead of allowing people to find illegal ways of converting their black money into black again it is evident that the government is intended to impose the same for future transactions. Especially the use of word "again" in the object would clearly indicate it is for future transaction i.e. from 01.04.2017. Therefore this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut off date. And for prior transaction the revenue is empowered to impose only 30% rate of tax. (v) Karimtharuvi Tea Estate Ltd. Vs. State of Kerala (60-ITR-262) - Supreme Court That it is held that it is well settled that the IT Act, as it stands amended on the first day of April of any financial year must apply to the assessment of that year. Any amendment in the Act which come into force after the first day of April of a financial year, would not apply to the assessement for that year, even if the assessment is actually made after the amendments come into force. In the instant case, there is no escape from the conclusion that the Surcharge Act not being retrospective by express intendment, or necessary implication, it can not be made applicable from 1 April, 1957 as the Act came into force on 1st September of that year. Since the Surcharge Act was not the law in force on 1 April, 1957 no surcharge could be levied under the said Act against the appellant in the Assessment Year 1957-58. (vi) Mahesh Kumar Saini Vs. ITO 7(4), Jaipur ITAT Jaipur Bench ITA No.: 362/JPR/2025 Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. That Hon'ble Bench has decided that amended provision of Section 115BBE is not applicable for A/Year 2017-18 and it is operative for succeeding year i.e. from Assessment Year 2018-19. (copy of all above Judgments are enclosed herewith). That in light of all above judicial pronouncements it is quiet explicit that amended provision of Section 115BBE is not applicable for assessment year 2017-18 and is applicable from 01.04.2017 i.e. from Assessment Year 2018- 19 onwards. Therefore action of Ld AO by levying tax @60% and which is confirmed by Ld CIT(A) may please be held as illegal and be deleted. It is humbly requested to kindly consider these judicial pronouncements and appeal of appellant society may please be allowed & oblige.”

S. No. Particulars Page No. 1. Written submissions 1-8 2. Membership from with members identification 9-17 document and agricultural land Jamabandi 3. Application for delay condonation (better application) 18-25 with society’s internal note sheet explaining reason for delay in filing of appeal. 4. Application for submission of additional ground. 26

15. The case of the A.O is that the assessee has collected the demonetized notes after 8.11.2016 in violation of the notifications issued by RBI. Accordingly, he has taken the view that the above said amounts represents unexplained money of the assessee. I am unable to understand the rationale in the view taken by A.O. I noticed that the AO has invoked the provisions of sec.68 of the Act for making this addition. I also noticed that the assessee has also complied with the requirements of sec.68 of the Act. The AO has also not stated that the assessee has not discharged the responsibility placed on it u/s 68 of the Act. Peculiarly, the AO is taking the view that the assessee was not entitled to collect the demonized notes and accordingly invoked sec.68 of the Act. I 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 Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. 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.”

On being consistent to the finding so recorded in the above order serviced by the assessee we considered that ground and direct the Krya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. ld. AO delete the disallowance of Rs. 27,62,000/- made in the case of the assessee. The other ground for charge of tax 115BBE became academic since we have directed to delete the addition u/s 68 of the Act.

The bench noted that as regards the issue of deduction claimed u/s. 80P of the Act no arguments were rendered and therefore, we have no reason but to confirm the view of the ld. CIT(A).

Ground for charge of interest u/s. 234A/B/C of the Act is consequential in nature.

In the result, the appeal of the assessee is Partly Allowed.

Order pronounced in the open Court on 03/11/2025.

Sd/- Sd/- ¼Mk0 ,l- lhrky{eh½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 03/11/2025 *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Karya Vikraya Sahakari Samiti Ltd. Deoli, Tonk. 2. izR;FkhZ@ The Respondent- ITO, Ward, Tonk.