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Facts
The assessee, a credit co-operative society, deposited Rs. 15,58,000 in its bank account during the demonetization period. The Assessing Officer (AO) added this amount as unexplained money. The assessee claimed the deposit belonged to its members and that it is eligible for deduction under Section 80P, hence did not file a return of income.
Held
The Tribunal found that the assessee deserves another opportunity to substantiate its claim that the cash deposit was received from its members. Directions were given to the assessee to submit member details and KYC information, and to produce the cash book to demonstrate the opening balance.
Key Issues
Whether the cash deposit made by the assessee society in its bank account during demonetization period can be added in the hands of the assessee as unexplained money, or if it pertains to deposits by its members.
Sections Cited
133(6), 142(1), 131, 144, 69A, 80P
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDARARAJAN K.
Per Prashant Maharishi, Vice President
This appeal is filed by Prathmika Krushi Pattina Sahakari Sanga Niyamit Otihal (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the ld. CIT(Appeals) [ld. CIT(A)] dated 02.11.2024 confirming the addition of Rs.15,58,000 appearing in Syndicate Bank of the assessee as cash deposit as unexplained money.
The brief facts of the case show that assessee is a credit co- operative society who deposited Rs.15,58,000 in its saving banks
account maintained at Bijapur Dist. Central Co-op. Bank, Sindagi Branch. The ld. AO issued letter u/s. 133(6) of the Income-tax Act, 1961 (the Act) to the assessee on 19.9.2017 which was served on 23.10.2017 asking name & PAN of the person who deposited money along with income-tax return and source of funds with them. No reply was received. Therefore, a notice u/s. 142(1) was issued on 12.2.2018 to file return of income which was not responded. Summons u/s. 131 was also issued to the President, CEO, which was also not responded to. Meanwhile information collected by the ld. AO shows that assessee has deposited Rs.15.58 lakhs in the above bank account during 09.11.2016 to 30.12.2016. A notice u/s. 144 was also issued which was also not responded to, thereby the ld. AO passed assessment order u/s. 144 of the Act making an addition of Rs.15.58 lakhs in the hands of assessee as unexplained money u/s. 69A of the Act on account of cash deposit for no information is available.
The assessee filed appeal before the ld. CIT(A) wherein it was submitted that assessee is a co-operative society providing credit facilities to its members and is eligible for deduction u/s. 80P, therefore it did not file return of income. It was further stated that cash deposited in the bank account of assessee society belongs to members of assessee, who are identifiable and therefore same cannot be added in the hands of assessee u/s. 69A of the Act. The submission of the assessee was forwarded to the AO, who submitted a remand report stating that assessee has been asked to furnish various details during the assessment proceedings which assessee failed to do. The ld. CIT(A) on receipt of the remand report, passed the appellate order noting that during the remand proceedings, the ld. AO issued a notice to assessee, however, assessee did not submit any information. Accordingly, addition was confirmed. On confirmation of such addition, assessee filed appeal before us wherein assessee has raised a solitary ground that such addition could not have been made in the hands of assessee.
The assessee was issued a notice of hearing fixing the date of hearing on 02.122024, but none appeared on behalf of assessee and therefor appeal is decided on merits of the case.
The ld. DR vehemently supported the orders of lower authorities. The statement of facts filed before us by the assessee is also perused. We find that according to statement of facts, it was the submission of the assessee that the above cash deposit is pertaining to the deposit by the members and therefore there cannot be any income in the hands of assessee society. Regarding non- appearance before the ld. AO even in the remand proceedings, the assessee has stated that assessee is not aware of any notice issued because of the reason that assessee is located in a remote place and none of the employees or office bearers of the assessee are computer conversant. It was further stated that during the demonetisation period assessee has deposited a total sum of Rs.40,67,000 out of which only Rs.15.58 lakh was questioned by the ld. AO. The cash deposit of Rs.40.67 lakhs is out of the closing cash balance of Rs.13,79,686 and only Rs.13,31,000 an dRs.14,92,000 were further received from the members on 09.11.2016 & 10.11.2016. Thus, total cash deposited in the bank account is the sum received from the members. The assessee also submitted the details of RS.28,24,255 for cash deposit in bank account where the source is receipt from the members and wherefrom the members received such sum. On careful analysis of statement of facts, we find that receipt from members is on account of RD, FD or return of loan. Therefore, we find that in view of the statement of facts filed before us, assessee deserves one more opportunity to substantiate that the cash deposit is received from members and assessee society has properly maintained their KYC information with respect to those members. In view of this, we restore the whole issues in appeal of the assessee back to the file of the ld. AO, with a direction to the assessee to submit the name, address and KYC details of members from whom the cash is received during the demonetisation period. With respect to the opening balance of cash available, same is also required to be demonstrated by producing the regular cash book before the AO. Therefore, we restore ground no.2 of the appeal back to the file of ld. AO and direct the assessee to produce the necessary information before him which may be examined by the ld. AO and decide the issue on merits of the case. If the assessee can prove that money is received from members and assessee has maintained proper KYC
details of those members in accordance with various directions, the addition deserves to be deleted. If the assessee fails to show that money is received from members, but there is no KYC details available, the addition deserves to be confirmed. Needless to say that addition should be made only after giving an opportunity of hearing to the assessee. Accordingly ground no.2 of the appeal is allowed with the above directions.
All other grounds of appeal are general in nature and therefore dismissed.
In the result, the appeal of the assessee is partly allowed for statistical purposes.