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Facts
The assessee, a Co-operative Housing Society, failed to file its return of income on time for AY 2017-18. Upon notice, it filed a return admitting a loss. During demonetization, it deposited Rs. 19,72,626 in Specified Bank Notes (SBNs). The Assessing Officer (AO) added this amount to the assessee's income under Section 69A of the Income Tax Act.
Held
The Tribunal held that both the AO and the Ld.CIT(A) failed to apply their mind to the facts of the case, particularly the assessee's submission that the deposits were repayments of loans and interest from members, which were duly accounted for. The Tribunal found that no proper evidence was called for or considered to disprove the assessee's claim.
Key Issues
Whether the addition of Rs.19,72,626/- under Section 69A of the Income Tax Act, representing SBN deposits during demonetization, was justified without proper consideration of the assessee's explanation and evidence.
Sections Cited
69A, 139(1), 142(1)(i), 80P(2)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, A BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
V. The ITO, Ward-1, Tiruchengode. (प्रत्यर्थी/Respondent) Mr.S. Bhupendran, Advocate Mr.P.K.Senthil Kumar, Addl.CIT 12.11.2024 31.12.2024 आदेश / ORDER
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee Co-operative Housing Society Ltd., against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short "the Ld.CIT(A)"), Delhi, dated 01.07.2024 for the Assessment Year (hereinafter in short "AY") 2017-18.
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(AY 2017-18) M/s. SLM HSG49 Thiruchengodu Taluk Co-op. Housing Society Ltd. The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the action of the AO making addition u/s.69A of the Income Tax Act, 1961 (hereinafter in short "the Act") cash deposits/Specified Bank Notes (SBNs) to the tune of Rs.19,72,626/- during demonetization period between 08.11.2016 to 30.12.2016. The brief facts are that the assessee is a Co-operative Housing Society Ltd., which didn't file its return of income (ROI) for AY 2017-18 within the time given u/s.139(1) of the Act and filed its Rol pursuant to the notice issued u/s.142(1)(i) of the Act on 27.07.2018 admitting loss of Rs.40,98,134/-. The AO noted that the assessee has deposited cash/SBN's to the tune of Rs.17,06,000/- on 11.11.2016 and Rs.2,66,500/- on 14.11.2016 (total Rs.19,72,500/-). So, he directed the assessee to prove the nature and source of the SBNs deposited during demonetization period to the tune of Rs.19,72,626/- which was responded by the assessee stating that the said cash were repayment of various types of loans/including interest received from its members. However, the AO being not satisfied with the reply of the assessee has made the addition of Rs.19,72,626/- because despite demonetization was announced on 08.11.2016, the assessee deposited SBNs which assessee couldn't have deposited in its account unless it fell under the exceptions; and after making the addition u/s.69 of the Act, the AO discussed about the deduction claimed by assessee u/s.80P(2)(a) from Para No.5 :: 3 ::
(AY 2017-18) M/s. SLM HSG49 Thiruchengodu Taluk Co-op. Housing Society Ltd. onwards, even though, the assessee didn't make any claim under the said section. The AO held the belated Rol as invalid and didn't allow the loss claimed by the assessee and added Rs.19,72,626/- u/s.69 of the Act. Aggrieved by the action of the AO, the assessee filed appeal before the Ld.CIT(A) against the action of the AO making the addition u/s.69A of the Act to the tune of Rs.19,72,626/- which according to assessee was nothing but repayment of loans and interest from its members and duly accounted for it in its books of accounts regularly maintained by it. According to the Ld.CIT(A), the assessee failed to produce any evidence to substantiate its assertion that the cash/SBN's deposited was repayment of loan & interest from members and that it was duly accounted for in its books. Therefore, he confirmed the action of the AO. Assailing the action of the Ld.CIT(A), the Ld.AR brought to our notice that the Ld.CIT(A) has not applied his mind while passing the impugned order. Drawing our attention to Page Nos.8 to 13 of the impugned order, he pointed out to us that the Ld.CIT(A) has discussed about the claim of sec.80P of the Act, which was never claimed by assessee and wrongly cut & pasted by the AO as well as the Ld.CIT(A). We find that the Ld.CIT(A) has not called for any evidence from the assessee to substantiate its claim that SBN's were repayment of loan with interest from its member and which facts were duly reflected in its regular books of accounts. According to the assessee, it had filed all the relevant documents to :: 4 ::
(AY 2017-18) M/s. SLM HSG49 Thiruchengodu Taluk Co-op. Housing Society Ltd. substantiate its claim before the authorities. Be that as it may, a perusal of both the orders, reveal that there has been total non-application of mind on the part of the Ld.CIT(A) as well as the AO while passing the orders as noted supra; and in that process also confirmed the addition u/s.69A of the Act on the ground that assessee didn't file any evidence. In this regard we note that the AO has passed the assessment order without considering the crucial fact/submissions of the assessee that deposits were made by the Members of the assessee society [repayment of loan along with interest]. Therefore, the addition made per se is found to be vitiated for not disproving the assessee's aforesaid assertion that deposits were made by the Members of the assessee society and therefore, we set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO with a direction to adjudicate the claim of the assessee regarding deposit of SBNs during demonetization period in the light of judicial precedents on the issue and the relevant facts in the case of assesee. The AO is at liberty to call for the relevant documents and the assessee to file all relevant documents to substantiate the nature and source of the deposits and thereafter, the AO to decide the same in accordance to law. The assessee is at liberty to file for condonation of delay in filing of belated RoI before the competent authority if advised to do so; and the AO to frame de novo assessment after hearing the assessee.
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(AY 2017-18) M/s. SLM HSG49 Thiruchengodu Taluk Co-op. Housing Society Ltd. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 31st day of December, 2024, in Chennai.