THE KHOJKIPUR PRIMARY AGRICULTURE COOPERATIVE SOCIETY LTD.,AMBALA vs. ITO, WARD-5, AMBALA
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आयकर अपील"य अ"धकरण,च"डीगढ़ "यायपीठ, च"डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “B” CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ITA No 865/CHD/2023 "नधा"रण वष" / Assessment Year : 2017-18 Ward-5, VPO Khojkipur, Ambala District Ambala, Haryana "थायीलेखासं./PAN NO: AADAT5290K अपीलाथ"/Appellant ""यथ"/Respondent
( Physical Hearing ) "नधा"रती क" ओर से/Assessee by: Shri Jaspal Sharma, Advocate राज"व क" ओर से/ Revenue by : Shri Vivek Vardhan, JCIT, Sr.DR सुनवाई क" तार"ख/Date of Hearing : 21.08.2024 उदघोषणा क" तार"ख/Date of Pronouncement : 23.08.2024 आदेश/Order Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 2.11.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
The assessee in this appeal has agitated against the confirmation of addition by the CIT(A) of Rs.73,80,000/-, which has 865-c-2023- The Khojkipur Primary Agriculture Cooperative Society Ltd., District Amabla 2 been made by the Assessing Officer by treating the cash deposits made in Specified Bank Notes during the demonetization period as unexplained income of the assessee u/s 68 of the Act.
The brief facts of the case are that the assessee is a cooperative credit society. The assessee is engaged in the business of providing loans and advances to its members. The Assessing Officer noted that during the period of demonetization, the assessee-society deposited a total cash of Rs.73,80,000/-. The assessee-society claimed that this amount of deposits was out of deposits received from the members of the society. The details of such deposits were furnished before the Assessing Officer. Books of accounts and other documents as asked for by the Assessing Officer were also produced by the assessee-society for examination. The assessee-society also furnished a written submission explaining the reasons and source of cash deposits during the demonetization period. The Assessing Officer after scrutiny of the record noted that the assessee-society had collected cash deposits during the demonetization period in Specified Bank Notes which ceased to be legal tender w.e.f. 09.11.2016 vide Central Government Gazette Notification No.2652 dated 08.11.2016 issued under sub- section (2) of section 26 of the Reserve Bank of India Act, 1934. The Assessing Officer noted that since the aforesaid Specified Bank Notes ceased to be legal tender w.e.f. 08.11.2016, however, the assessee has accepted the said Specified Bank Notes, therefore, the said amount deposited by the assessee in the bank account was to be treated as unexplained money of the assessee u/s 68 of the Act. Accordingly, the Assessing Officer added the said amount into the income of the assessee.
865-c-2023- The Khojkipur Primary Agriculture Cooperative Society Ltd., District Amabla 3
The ld. CIT(A) confirmed the additions so made by the Assessing Officer.
At the outset, the ld. counsel for the assessee has submitted that the aforesaid amount was collected from the members and deposited in the bank account on the first three days from the commencement of demonetization period. He has further submitted that the provisions of section 68 of the Act were not applicable in this case. That the source of the deposits was duly explained to the Assessing Officer, therefore, it cannot be said to be unexplained income of the assessee.
The ld. DR however has relied upon the findings of the lower authorities.
We have heard the rival contentions and gone through the record. In this case, the ld. counsel has explained that the amount in question was already collected from the farmers-members and the same was further deposited by the assessee-society in the bank account. The ld. counsel has duly explained that the amount in question was collected and deposited during the first three days of the demonetization period. In our view, the impugned additions are not sustainable as deposits cannot be said to be unaccounted income of the assessee u/s 68 of the Act. No doubt, the Specified Bank Notes as per the Reserve Bank of India’s notification ceased to be legal tender w.e.f. 09.11.2016 and the assessee accepted the Specified Bank Notes in violation of the said circular of Reserve Bank of India. The action for violation of the said circular can be taken by the competent authority in this respect. However, for the purpose of Income tax Act, what is to be examined is as to whether the said amount received by 865-c-2023- The Khojkipur Primary Agriculture Cooperative Society Ltd., District Amabla 4 the assessee was unexplained income of the assessee u/s 68 of the Act? The assessee has duly explained the source of deposits, which has also been accepted by the Assessing Officer. The only contention of the Assessing Officer is that the assessee has violated the notification of the Central Government dated 08.11.2016 and accepted the Specified Bank Notes. For that, it is for the competent authority who may take action against the assessee as may be provided/applicable in relevant law. However, for the purpose of either section 68 or 69 of the Act, the said deposits cannot be treated as unexplained income of the assessee. Our above view is fortified by the decision of the Coordinate Bangalore Bench of the Tribunal in the case of ‘Sri Bhageeratha Pattina Sahakara Sangha Niyamitha vs. ITO’ in ITA No.646/Bang/2021 order dated 18.02.2022. The relevant part of the order is reproduced as under:
“15. The case of the A.O is that the assessee has collected the demonetized notes after 8.11.2016 in violation of the notifications issued by RBI. Accordingly, he has taken the view that the above said amounts represents unexplained money of the assessee. I am unable to understand the rationale in the view taken by A.O. I noticed that the AO has invoked the provisions of sec.68 of the Act for making this addition. I also noticed that the assessee has also complied with the requirements of sec.68 of the Act. The AO has also not stated that the assessee has not discharged the responsibility placed on it u/s 68 of the Act. Peculiarly, the AO is taking the view that the assessee was not entitled to collect the demonized notes and accordingly invoked sec.68 of the Act. I am unable to understand as to how the contraventions, if any, of the notification issued by RBI would attract the provisions of sec. 68 of the Income tax Act. In any case, I notice that the assessee has also explained as to why it has collected demonetized notes after the prescribed date of 8.11.2016. The assessee has explained that it has stopped collection after the receipt of notification dated 14.11.2016 issued by RBI, which has clearly clarified that the assessee society should not collect the demonetized notes. Accordingly, I am of the view that the deposit of demonetized notes collected by the assessee from its members would not be hit by the provisions of section 68 of the Act in 865-c-2023- The Khojkipur Primary Agriculture Cooperative Society Ltd., District Amabla 5 the facts and circumstances of the case. Accordingly, I set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete this disallowance.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.”
In view of the above discussion, the addition made/confirmed by the lower authorities in the case of the assessee on this issue is not sustained and the same is accordingly ordered to be deleted.
In the result, the appeal of the assessee stands allowed. Order pronounced in the Open Court on 23.08.2024. ( KRINWANT SAHAY) Judicial Member “rkk.”
आदेशक"""त"ल"पअ"े"षत/ Copy of the order forwarded to : 1. अपीलाथ"/ The Appellant
""यथ"/ The Respondent 3. आयकरआयु"त/ CIT
"वभागीय""त"न"ध, आयकरअपील"यआ"धकरण, च"डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड"फाईल/ Guard File
आदेशानुसार/ By order, सहायकपंजीकार/
