2023 (3) TMI 1502 - AT - Income Tax

Unexplained cash credit u/s 68 read with section 115BBE - cash deposited during demonetization period - HELD THAT - It is observed that assessee is a Co-operative Credit Society engaged in the business of providing credit facilities and accepting deposits from its members. It is registered under section 9 of the Maharashtra Cooperative Societies Act. The assessee provided detailed list of customers from whom such banned currency notes were accepted as deposits and these were duly credited to those customers accounts. The assessee submitted during assessment proceedings that identity of persons and nature of deposits were duly explained and all relevant records were filed hence section 68 was not applicable in assessee s case. There is no dispute that all those persons were members of the assessee society. Once the assessee has filed all the relevant details regarding the depositors the onus shifts on the revenue. The AO has not carried out any independent inquiries and merely added the amounts u/s 68. Addition made by AO under section 68 are not maintainable. Accordingly AO is directed to delete the addition - Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the issue of deletion of addition made by the Assessing Officer on account of cash deposited during demonetization period, treating it as unexplained cash credit u/s 68 of the Income Tax Act, 1961.

Details of the Judgment:

Issue 1: Addition of cash deposits during demonetization period

The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the A.Y. 2017-18 regarding the addition of Rs. 1,21,99,435/- made by the Assessing Officer on account of cash deposited in a saving bank account during the demonetization period. The Assessing Officer observed that the assessee, a Co-operative Society, had accepted cash in old currency from its members during the demonetization period. The assessee argued that it had provided all necessary details regarding the deposits, including the identity of depositors and genuineness of transactions. The assessee contended that as a cooperative credit society, it cannot ask depositors to prove creditworthiness. The ITAT Pune Bench referred to a similar case and held that the addition made by the AO under section 68 was not maintainable. The ITAT directed the AO to delete the addition of Rs. 1,21,99,435/-, dismissing the grounds of appeal raised by the Revenue.

Decision:
The ITAT Pune Bench held that the addition made by the AO under section 68 was not maintainable in the case of a Co-operative Society accepting cash deposits during the demonetization period. The ITAT directed the AO to delete the addition of Rs. 1,21,99,435/-, following the precedent set in a similar case. Consequently, the appeal of the Revenue was dismissed.

Conclusion:
The ITAT Pune Bench ruled in favor of the assessee, a Co-operative Society, stating that the addition made by the Assessing Officer under section 68 for cash deposits during demonetization was not justified. The ITAT directed the deletion of the added amount, emphasizing the importance of proving identity and genuineness of transactions in such cases.

This summary provides a detailed overview of the judgment, focusing on the issues involved and the decision rendered by the ITAT Pune Bench.