VIKAS CO-OPERATIVE CREDIT SOCIETY NIYAMITH TILAVALLI ,HAVERI vs. INCOME TAX OFFICER, WARD-1, , HAVERI

This appeal at the instance of the assessee is directed against the Order of CIT(A) dated 14.05.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.

Brief facts of the case are as follows:

Aggrieved by the Assessment Order, assessee filed appeal before the First Appellate Authority (FAA). Since there were no documents / evidences submitted by the assessee during the course of proceedings before the FAA, the CIT(A) passed ex-parte Order. The CIT(A) directed the AO to grant assessee the benefit of deduction under section 80P of the Act. The CIT(A), in holding so, followed the judgment of the Hon’ble Apex Court in the case of Mavilayi Service Co- operative Bank Ltd., & Ors. Vs. CIT, reported in 431 ITR 1. However, with regard to the addition under section 69A r.w.s. 115BBE of the Act, since there were no evidence / documents submitted by the assessee, the CIT(A) confirmed the addition made by the AO.

Aggrieved by the Order of the CIT(A), assessee has filed the present appeal before the Tribunal. The learned AR submitted that assessee did not receive the notice to file evidence / written submissions from the Office of FAA as the same may have been settled in the spam folder of the assessee’s email. The learned AR submitted that the necessary details regarding source of cash deposits had been furnished before the AO and AO has erred in not examining the same by holding that the assessee is not a specified person to accept demonetized currency.

The learned Standing Counsel supported the Orders of the AO and the CIT(A).

I have heard the rival submissions and perused the material on record. Since the CIT(A)’s Order is ex-parte, in the interest of justice and equity, I am of the view that one more opportunity ought to be provided to the assessee. Accordingly, the issue of addition under section 69A r.w.s. 115BBE of the Act amounting to Rs.9,76,825/- is restored to the files of the AO (since the AO has not examined the source of cash deposits but has merely added under section 69A r.w.s. 115BBE of the Act by stating that assessee is not a specified person to accept the demonetized currency which had ceased to be a legal tender during the demonetization period). In light of the Order of the Bangalore Bench of the Tribunal in the case of M/s. Mahaveera Minority Credit Co-operative Society Ltd., Vs. ITO in (Order dated 13.06.2024), I make it clear that the addition under section 69A of the Act shall not be reiterated on the ground that assessee is not a specified person to accept the demonetized currency. The AO is specifically directed to examine the source of cash deposit as to whether it is genuine or not. If it is found to be genuine, the addition made under section 69A r.w.s. 115BBE of the Act is to be deleted. It is ordered accordingly.

In the result, appeal filed by the assessee is allowed for statistical purposes.