M/S. MAHAVEERA MINORITY CREDIT CO-OPERATIVE SOCIETY LIMITED,VIJAYANAGAR vs. INCOME TAX OFFICER, WARD-1 & TPS , HOSPET

ITA 528/BANG/2024Status: DisposedITAT Bangalore13 June 2024AY 2017-1817 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO and CIT(A) erred by not examining the source of the cash deposit, focusing solely on the unauthorized acceptance of SBNs. Relying on a previous ITAT ruling, the Tribunal stated that the mere violation of notifications in accepting SBNs does not automatically make the source unexplained, especially if the business pattern remains consistent.

What were the facts?

The assessee, a credit co-operative society, deposited Rs. 83,81,878/- in Specified Bank Notes (SBNs) during the demonetization period. The Assessing Officer (AO) treated this as unexplained cash credit under Section 68, as the society was not authorized to accept SBNs after they ceased to be legal tender.

What were the issues?

Whether cash deposits made in SBNs during demonetization, despite being accepted by an unauthorized entity, can be treated as unexplained income under Section 68 without examining the source of funds. Whether the violation of RBI notifications regarding SBNs automatically invalidates the explanation for cash deposits.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 69

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Income Tax Appellate Tribunal, A BENCH : BANGALORE

Before: SHRI GEORGE GEORGE K & SHRI WASEEM AHMED

For Appellant: Smt. Sunaiana Bhatia, CA
For Respondent: Shri. Ramnathan, Addl. CIT(DR)(ITAT), Bengaluru
Hearing: 12.06.2024Pronounced: 13.06.2024

Per George George K, Vice President:

This appeal at the instance of the assessee is directed against the order of CIT(A) dated 25.01.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called 'the Act'). The relevant Assessment Year is 2017-18. 2. The grounds raised read as follows:

1.

The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2.

The learned CIT[A] is not justified in upholding the addition of Rs. 83,81,878/- being cash deposited during the demonetization period treated as unexplained cas

The order continues below.

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