SHRI BHAGYAJYOTI URBAN CREDIT SOUHARD SAHAKARI NIYAMIT,BELAGAVI vs. PRINCIPAL COMMISSIONER OF INCOME TAX, HUBLI

आदेश / ORDER

PER R.S.SYAL, VP :

This appeal by the assessee is directed against the order dated

29-03-2022 passed by the Pr.CIT, Hubli under section 263 of the

Income-tax Act (hereinafter also called `the Act’) in relation to the

assessment year 2017-18.

assessee is a Cooperative Urban Credit Souhard Niyamit, which

filed its return declaring total income at Nil after claiming deduction

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u/s.80P. The Assessing Officer (AO) noticed on verification of

bank statements that the assessee had deposited total cash of

Rs.59,14,000/- in various banks after demonetisation (09-11-2016 to

30-11-2016) in old currency notes. On being called upon to explain

its stand, the assessee submitted details of various amounts

deposited in different bank accounts and also explained that these

cash deposits were out of closing cash balance as on 08-11-2016.

The assessee also furnished a list of persons who had deposited cash

before the demonetisation along with their names and amounts. A

copy of subsidiary day book from 01-11-2016 to 30-11-2016 was

also filed. The AO perused the cash book along with other details

filed and noticed that the closing cash balance as on 08-11-2016

was Rs.60,64,247/-, out of which a sum of Rs.59,14,000/- was

deposited after demonetization during the permitted window. He,

therefore, accepted the assessee’s stand. The ld. Pr.CIT held the

assessment order to be erroneous and prejudicial to the interest of

the Revenue on the ground that the AO did not enquire into the

reasons for the delay in deposit of old currency notes and further did

not verify as to how the cash balance as on 08-11-2016 was made

up. This is how, he set aside the assessment order and directed the

3 ITA No.41/PAN/2023 Bhagyajyoti Urban Credit Souhard Sahakari Niyamit

AO to frame the assessment afresh. Aggrieved thereby, the assessee

has come up in appeal before the Tribunal.

relevant material on record. It is seen that the assessee is a Urban

Credit Souhard Sahakari Niyamit. It had normal cash balance of

Rs.60,64,247/- as on 08-11-2016. When the AO enquired about the

reasons for deposit of such cash in tranches, the assessee submitted

that the Managers of the respective banks requested it to make

deposits in stages so that a large number of people queuing for

depositing cash in bank on such days could also be accommodated.

That was the raison d’etre for which the assessee deposited cash in

various bank accounts on 10-11-2019, 11-11-2019, 12-11-2019,

13-11-2019, 14-11-2019, 16-11-2019, 17-11-2019, 04-12-2019 and

05-12-2019 out of closing cash balance as on 08-11-2016 at

Rs.60.64 lakh. A sum of more than Rs.54 lakh, out of the total cash

deposit of Rs.59.14 lakh, was deposited between 10-11-2019 to

17-11-2019. The assessee produced the cash book before the AO

and also furnished the list of people who had deposited cash before

the demonetisation period along with their names and amounts. The

AO examined cash book of the assessee and the other relevant

material and resultantly got satisfied with the tendered explanation.

4 ITA No.41/PAN/2023 Bhagyajyoti Urban Credit Souhard Sahakari Niyamit

The ld. Pr.CIT jettisoned the view point of the AO by simply

recording that he did not make further investigation as to how the

cash balance of Rs.60.64 lakh was available on 08-11-2016 and

further as to why the amount was not deposited in one go. In fact,

the assessee had given explanation before the AO on both these

scores by submitting the details of persons who had deposited cash

with it up to 08-11-2016 backed by the subsidiary day book from

01-11-2016 to 30-11-2016. Not only that, the assessee also placed

on record the reasons for depositing cash in tranches on different

dates, being, the request made by the Bank Managers urging to

deposit cash in stages so that other customers standing in long

queues may also get opportunity of depositing cash. The ld. Pr.CIT

simply found the explanation fantastic without pointing out any

defect in the cash book which was produced before the AO as well

showing the availability of closing cash balance as on 08-11-2016 at

Rs.60.64 lakh. He further could not find out any flaw in the

assessee’s explanation that it was at the instance of the Bank

Managers that the cash was deposited in parts on different dates so

as to facilitate other customers as well.

5 ITA No.41/PAN/2023 Bhagyajyoti Urban Credit Souhard Sahakari Niyamit

is erroneous and it is prejudicial to the interest of the revenue, is

sina quo non for the revision. Contextually, there can be two

situations calling for revision, viz., one where the AO does not

make enquiry and accepts the assessee’s version; and second where

the enquiry is conducted and thereafter the assessee’s view point is

accepted. In case of the former, there can be no fetters on the power

of the CIT to revise the assessment order which becomes erroneous

for the AO accepting the assessee’s stand on certain points which

required examination from the perspective of tax collection. The

second situation can be where the AO conducted proper enquiry and

then accepted the assessee’s version, with or without making the

necessary discussion in the assessment order. Revision in such a

later situation can take place only when the CIT first shows the

erroneous nature of the assessment order, which is possible only by

pointing out the flaws in the AO’s understanding of the transaction

or appreciation of the facts or reaching the conclusion. No revision

in such a situation can take place in a generalized manner by

levelling sweeping charges of the improper verification, without

spelling out or pinpointing the specific reasons where the AO

flawed leading to the passing of an erroneous order, which is

prejudicial to the interest of the Revenue. Without a specific

6 ITA No.41/PAN/2023 Bhagyajyoti Urban Credit Souhard Sahakari Niyamit

detection and the mention of the error in the assessment order in

such a situation, the revisionary order itself becomes wanting.

conducted the enquiry but also recorded the explanation given by

the assessee in the assessment order along with his reasons for

accepting the same. The ld. Pr.CIT, without pointing out any

specific infirmity in the assessment order, has characterized the

assessment order erroneous and prejudicial to the interest of the

Revenue in a generalized manner. In our considered opinion, this

approach, in the present set of facts and circumstances, cannot be

countenanced. We, therefore, vacate the impugned order.

Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 14th November, 2023 सतीश

7 ITA No.41/PAN/2023 Bhagyajyoti Urban Credit Souhard Sahakari Niyamit

आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The respondent 2. 3. DR, ITAT, Panaji Bench, Panaji गाड� फाईल / Guard file 4.

आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune

Date 1. Draft dictated on 13-11-2023 Sr.PS 2. Draft placed before author 14-11-2023 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *