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TMI Blog2022 (6) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... I 1243 - ITAT BANGALORE] we hold that the addition made u/s 68 of the Act is not justified. A.R also submitted that the SBNs have been collected by the assessee prior to the appointed date of 31.12.2016, i.e., only from 31.12.2016, the assessee is precluded from accepting SBNs from its members. In this view of the matter, the reasoning relating to contravention of rules of RBI also fails. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the impugned disallowance.- Appeal of assessee allowed. - ITA No. 593/Bang/2021 - - - Dated:- 1-6-2022 - Shri B.R. Baskaran, Accountant Member For the Appellant : Shri Rajeev Nulvi, Advocate For the Respondent : Shri Ganesh R. Ghale Standing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the AO assessed the amount of Rs.36,16,262/- as unexplained cash deposit u/s 68 of the Act. The ld CIT(A) also confirmed the said addition. 3. The ld. A.R submitted that an identical addition made in the hands of Sri Bhageeratha Pattina Sahakara Sangha Niyamitha vs. ITO (ITA No.646/Bang/2021 dated 18-02-2022) on identical circumstances has been deleted by the SMC bench of Bangalore Tribunal. 4. The Ld D.R, on the contrary, submitted that the assessee was barred from collecting the demonetised notes and hence the AO has made the impugned addition. 5. In the rejoinder, the Ld A.R submitted that the provisions of sec. 5 of Specified Bank Notes (Cessation of liability) Act, 2017 specifies that on and from the appointed day, no per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s towards repayment of loan, Pigmy collection, etc. The A.O. noticed that the Government has announced demonetization on 8.11.2016, whereby then existing Rs.1000/- Rs.500/- currency notes were declared not to be legal tender. The A.O. took the view that the assessee has collected the above said amount after 8.11.2016, which is not permitted. Accordingly, the A.O. took the view that the above said amount represents unexplained money of the assessee and assessed the same u/s 68 of the Act. The A.O. also charged income tax on the above said deposit as per provisions of section 115BBE of the Act. The Ld. CIT(A) also confirmed the same. 13. The Ld. A.R. submitted that, under the provisions of section 68 of the Act, the assessee s liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove said deposits were collected by the assessee prior to 14.11.2016 and it cannot be considered as violation of any of the Provisions of the Act. Accordingly, he submitted that the A.O. was not justified in invoking the provisions of section 68 of the Act. 14. I heard Ld. D.R. on this issue and perused the record. I notice that the A.O. has not doubted the submissions of the assessee that the above said amount of Rs.24,47,500/- represents collection of money in the normal course of carrying on of business of the assessee, i.e., it represents money remitted by the members of the assessee society towards repayment of the loan taken by them and also towards pigmy deposits, etc. The Ld A.R submitted that the assessee has duly recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lected 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 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. 6. In the instant case, there is no dispute with regard to the fact that sources for making deposit of Rs.36.36 lakhs by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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