SHREE DURGAMATA MULTIPURPOSE COOP SOCIETY LIMITED, BELGAUM V. INCOME TAX OFFICER WARD 3, BELGAUM

ITA 18/PAN/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1317 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 03-06-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 22-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHETAN CHAUGULE
• Keywords: Principle of natural justice
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI [THROUGH VIRTUAL HEARING AT ITAT : PUNE] BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA.No.18/PAN./2024 [E-APPEAL] Assessment Year 2017-2018 Shree Durgamata Multipurpose Coop Society Limited, At Post Khairwad, Nandgad, Tal. Khanpur, Dist. BELAGAVI. PIN – 591 120 PAN AAMAS5114J Karnataka. vs. The Income Tax Officer, Ward-3, Firoj Khimajibhai Complex, Opp. Civil Hospital, Dr. Ambedkar Road, BELAGAUM PIN – 590 001. Karnataka. (Appellant) (Respondent) For Assessee : Shri Chetan Chaugule For Revenue : Shri Sridhar Dora, Sr DR Date of Hearing : 04.06.2024 Date of Pronouncement : 28.06.2024 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal for assessment year 2017-18, arises against the National Faceless Faceless Appeal Centre [in short the “NFAC”) Delhi’s Din and Order No.ITBA/ NFAC/S/250/2023-24/1056905728(1), dated 09.10.2023, in proceedings u/s.144 of the Income Tax Act, 1961 (in short ‘the Act”). Heard both the parties. Case file perused. 2 ITA No.18/PAN./2024 2. The assessee pleads the following substantive grounds in the instant appeal : 1. “Because, the learned Commissioner of Income Tax (Appeals) has passed the order and upheld the additions under section 68 of the Income Tax Act, despite appellant providing the details of members from whom cash is received, thereby deprived the natural justice. 2. Because, the Assessing Officer made additions wrongly under section 68 of the Income Tax Act, for cash credits based on deposits in bank, without going through the books of accounts maintained by the Appellant. 3. Because, the Assessing Officer and Commissioner of Income Tax Appeals is taking the view that the assessee was not entitled to collect the demonetised notes and accordingly invoked section 68 of the act is erroneous and against the legislative intent of section 68 of the Income Tax Act. 4. The appellant craves leave to add and or alter any of the grounds of appeal before or at the time of hearing.” 3. We now advert to the sole substantive issue of both the learned lower authorities action invoking sec.68 addition of unexplained cash credit representing demonetized currency notes in the relevant previous year. The Revenue’s vehement stand before us supports both the lower authorities action that 3 ITA No.18/PAN./2024 the assessee was not entitled to accept the currency notes in question in the relevant previous year and therefore, this is a fit case to invoke sec.68 of the Act. 4. The assessee’s pleadings on the other hand attributed to the source of the impugned cash deposits to the society(ies) members concerned whose details duly form part of the records all along. The CIT(A)-NFAC’s lower appellate discussion in pages 5 to 7 are fair enough in reproducing the relevant details of assessee’s particulars having deposited these cash sums. Faced with this situation and in light of the fact that there is no fundamental issue between the parties regarding these cash receipts coming from the assessee’s members only, we quote Shrijeett Finance Private Limited vs. ACIT, Jalna [2024] 162 taxmann.com 243 (Pune.) deciding the very issue against the department as under : “5. During the assessment proceedings, the AO observed that the assessee has received cash in old currency during the demonetization period between 08.11.2016 to 13.12.2016 of Rs.12,34,000/-. The assessee submitted before the AO that these amounts were deposited by their customers towards the loan installments. Assessee submitted list of customers. Assessee also submitted that all the customers were having proper KYC Documents. However, the AO made addition under section 68 of the 4 ITA No.18/PAN./2024 Act, on the ground that as per the RBI Guidelines assessee being an NBFC was not permitted to accept the old currencies which were no-more legal tender after 08.11.2016. Ld.CIT(A) confirmed the said addition. The only plea taken by the AO, ld.CIT(A) and ld.DR that as per the notification no.S.O. 3407(E) dated 08/11/2016 & S.O. 3418(E) of Ministry of Finance (Department of Economic Affairs), New Delhi dated 08/11/2016 (F. No. 10/03/2016-cy.l) only banking company defined under the Banking Regulation Act were allowed to accept demonetized currency after 08.11.2016, and NBFCs were not allowed to accept impugned currencies. 5.1 The AO made addition under section 68 of the Act. To invoke section 68 of the Act, the AO has to prove that assessee failed to file identity of the depositors, genuineness of the transaction and creditworthiness. In this case, the assessee had submitted the names of the persons from whom cash was received during the demonetization period in the form of demonetized currency. Assessee also submitted that assessee maintains all KYC documents of all these persons. The AO had not asked the assessee to produce the said KYC Documents. Rather AO has not challenged the identity of the depositors, genuineness of the transactions and creditworthiness of the depositors. In these facts and 5 ITA No.18/PAN./2024 circumstances of the case, we are of the opinion that no addition can be made under section 68 of the Act. We find support from the order of ITAT Pune Bench authored by then Hon’ble Vice-President, Shri R.S.Syal in the case of M/s.Bhagur Urban Credit Co-operative Society Ltd., Vs. ITO in ITA No.561/PUN/2022 for A.Y.2017-18 dated 03.01.2023. Therefore, the AO is directed to delete the addition of Rs.12,34,000/- made under section 68 of the Act. Accordingly, Ground No.2 and 3 are allowed.” 5. We adopt the foregoing detailed discussion mutatis mutandis to accept the assessee’s instant sole substantive ground. The impugned sec.68 addition stands deleted. Ordered accordingly. 6. This assessee’s appeal is allowed in above terms. Order pronounced in the open Court on 28.06.2024 Sd/- Sd/- [RAMA KANTA PANDA] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 28 th June, 2024 VBP/- Copy to 1. The applicant 2. The respondent 3. The Pr. CIT, Panaji concerned 4. D.R. ITAT, Panaji-Bench, Panaji. 5. Guard File. //By Order// //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.