Loading judgment…
Facts
The assessee, a co-operative society, made cash deposits of Rs. 15,58,500/-. The Assessing Officer (AO) treated these deposits as unexplained income under Section 69A r.w.s. 115BBE of the Income Tax Act, making an addition of Rs. 9,76,825/-, and also denied the benefit of deduction under Section 80P of the Act.
Held
The Tribunal held that since the CIT(A)'s order was ex-parte, an opportunity should be given to the assessee. The issue of addition under Section 69A r.w.s. 115BBE was restored to the AO for examination of the genuineness of cash deposits, with a clarification that the addition should not be reiterated solely on the ground that the assessee is not a specified person to accept demonetized currency.
Key Issues
Whether the addition made under Section 69A r.w.s. 115BBE for cash deposits is justified without proper examination of the source, and whether the assessee is eligible for deduction under Section 80P.
Sections Cited
69A, 115BBE, 80P, 250, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC - C” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K
Per George George K, Vice President:
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:
Assessee is a Co-operative Society. On the basis of information that assessee had made cash deposits of Rs.15,58,500/- for the Assessment Year 2017- 18, assessee was directed to explain the source of cash deposit. During the course of assessment proceedings, it was submitted that cash deposits are out of recovery of loan, pigmy collections, deposits from members of the assessee society.
Further, it was submitted that assessee is entitled to deduction under section 80P of the Act. The AO completed the assessment under section 144 of the Act (Order dated 22.11.2019). The AO made an addition of Rs.9,76,825/- by treating cash deposit as unexplained income under section 69A r.w.s. 115BBE of the Act. The AO gave due credit to cash in hand as on 08.11.2016. The AO was of the view that assessee was not one of the specified persons to accept demonetized currency and therefore the said amount is not a legal tender and made the above said addition under section 69A r.w.s. 115BBE of the Act. The AO also denied the benefit of deduction under section 80P of the Act.
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.