ACIT, Circle-1, Jalgaon V. Bhaichand Hirachand Raisoni Multi State Co-op. Society Ltd., Jalgaon

ITA 39/PUN/2013

• Counselvise Citation: 3924514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Keywords: Unexplained cash credit; Bonafide belief; Onus to prove
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.39/PN/2013 (A.Y: 2009-10) ACIT, CIRCLE-1, JALGAON APPELLANT VS. BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OPERATIVE SOCIETY LTD., BANK STREET, NAVI PETH, JALGAON. PAN: AAAJB0353K RESPONDENT APPELLANT BY : SMT. M.S. VE RMA, CIT RESPONDENT BY : S/SHRI NI KHIL PATHAK & SANKET JOSHI DATE OF HEARING: 14.08.2014 DATE OF ORDER : 22.08.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, NASHIK, DATED 16.10.2012 FOR A.Y. 2009-10 ON THE FOLLOWING GROUND S. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A)-II NASHIK ERRED IN DELETING ADDITION OF RS.29,71,94,595/- MADE U/S 68 ON ACCOUNT UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SEC TION 68 OF I.T.ACT,1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A)-II, NASHIK ERRED IN DELETING ADDITIO N OF RS.7,79,332/- ON ACCOUNT OF INCREASED STALE CHEQUE LIABILITY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE ORDER OF THE CIT(A) BE CANCELLED AND THAT OF THE A. O. BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND THE GROUND OF APPEAL, IF FELT NECESSARY. 2 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. 2. THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY AN D PRIMARILY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBE RS. BESIDES, IT IS ALSO ENGAGED IN VARIOUS OTHER BANKING ACTIVITIES SUCH AS ACCEPTING DEPOSITS FROM MEMBERS, ISSUE OF CHEQUES A T PAR, PROVIDING LOCKERS ON RENT AND PAYMENT OF ELECTRICIT Y BILLS, INSURANCE PREMIUM AND RAILWAY RESERVATION ETC. A R ETURN DECLARING TOTAL INCOME OF RS.NIL WAS FILED AFTER CL AIMING DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. DURING ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER ISSUED 100 NOTICES U/S 133(6) OF THE ACT TO THOSE PERSONS WHO GOT AT PAR CHEQUES ISSUED BY DEPO SITING CASH ACROSS THE COUNTER (I.E. DID NOT HAVE SAVING BANK A CCOUNT IN THE SOCIETY) TO ASCERTAIN THE GENUINENESS OF THE CASH D EPOSITS. OUT OF THE 100 NOTICES, 14 NOTICES WITH REGARD TO ACCOUNT FOR RS.10,29,309/- RETURNED UNSERVED. THE ASSESSING OF FICER DID NOT FIND FAVOUR WITH THE ASSESSEE'S REPLY IN REGARD TO THESE 14 PERSONS AND HELD 14% OF THE TOTAL CASH DEPOSIT AMOU NTING TO RS.2,12,28,18,314/- (RECEIVED FROM SUCH CUSTOMERS W ITH NO BANK ACCOUNTS DURING FY 2008-09) AS UNEXPLAINED CASH CRE DIT AND ADDED RS. 29,71,94,563/- U/S 68 OF THE ACT, 1961. BESIDES, THE ASSESSING OFFICER ALSO ADDED RS.7,79,332/- ON ACCOU NT OF AVAILABILITY OF STALE CHEQUES WITH THE ASSESSEE. T HE LIST OF THE PERSONS ON WHOM NOTICES COULD NOT BE SERVED IS AS U NDER: SR. NO. NAME AMOUNT (RS.) SR. NO. NAME AMOUNT (RS.) 1 SHRI. GOPAL TALREJA 27 , 9 8 0 8 SHRI. JEEVAN BARDIYA 25,000 2 SHRI. KISHOR EKNATH DIWAN 35,000 9 SHRI.SURESH RATAN PATIL 2,75,717 3 SHRI.VIJAY PATIL 27,000 10 SHRI. MANOJKUMAR 48,000 4 M/S DISHA DISTRIBUTORS 48,000 11 SHRI. DINESH LOTWALA 25,000 5 SHRI. PRAVIN JAIN 1,86,667 12 M/S. MORYA ENTERPRISES 25,000 6 M/S MEHTA HANDLOOM 26,050 13 SHRI. CHANDRESH B. BHANDRESH 2,00,000 7 A.N. BROTHER ABDULA BALASINORWALA 34,895 14 SHRI. P. GANESH MOORTY 45,000 TOTAL 3,85,592 6,43,717 10,29,309 3 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. 2.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF THE ASSESSEE WITH REGARD TO IDENTITY OF CREDITORS CRED IT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE CIT(A) HA S GRANTED RELIEF TO THE ASSESSEE AFTER CALLING REMAND REPORT. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF THE REVENUE, IN TER ALIA, SUBMITTED THAT THE CIT(A) ERRED IN DELETING ADDITIO N OF RS.29,71,94,595/- MADE U/S 68 ON ACCOUNT UNEXPLAI NED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF I.T.ACT, 1961. THE CIT(A) ERRED IN DELETING ADDITION OF RS.7,79,332/- ON ACCOUNT OF INCREASED STALE CHEQUE LIABILITY. ACCORDINGLY, TH E ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTO RED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE H AS SUPPORTED THE ORDER OF CIT(A) ON THE ISSUE. 3. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS A COOPERATIVE SOCIETY, REGISTERED UNDER THE COOPERATIVE SOCIETIES ACT WITH ITS HEADQUARTER AT JALGAON. IT HAS 58 BRANCHES ALL OVE R THE STATE. IT IS GOVERNED BY ITS BYE-LAWS, RULES AND REGULATIONS UNDER THE SUPERVISION AND CONTROL OF REGISTRAR OF SOCIETIES. THE SOCIETY IS CARRYING ON THE BANKING BUSINESS PRIMARILY FOR ITS MEMBERS. THE ISSUE OF CHEQUES AT PAR CAN BE SEGREGATED IN TO TWO CATEGORIES AS OBSERVED BY THE CIT(A) VIZ. (I) CUSTOMER WHO IS HAVING ACCOUNT IN BANK WILL DEPOSIT CASH IN HIS ACCOUNT AND SIMULTANEOUSLY FILL UP WITHDRAWAL SLIP AND PAY-IN-SLIP REQUIRING THE SOCIE TY TO ISSUE CHEQUES AT PAR. (II) CUSTOMER WHO DOES NOT HAVE ACCOUNT IN THE SOCIETY, DEPOSITS CASH ACROSS THE COUNTER AND SOCIETY ISSUES AT PAR CHEQUES AS PER THEIR REQUIREMENT AFTER ACCEPTIN G THE AT PAR CHEQUE PAY-IN SLIP DULY FILLED IN BY THE SAID CUSTOMER. 3.1 THE ASSESSING OFFICER ISSUED LETTERS TO 100 CUS TOMERS WHO DEPOSITED CASH ACROSS THE COUNTER. 14 NOTICES OUT OF 100 4 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. RETURNED UNSERVED DUE TO NON EXISTENCE OF PERSONS A T THE GIVEN ADDRESSES. THE ASSESSING OFFICER THEREAFTER HELD TH AT 14% OF THE TOTAL CASH DEPOSITS BY CUSTOMERS (NOT HAVING SAVING BANK ACCOUNT IN THE ASSESSEE SOCIETY) FOR PURCHASING AT PAR CHEQUES WAS UNEXPLAINED BECAUSE 14 NOTICES OUT OF 100 NOTIC ES SENT U/S 133(6) OF THE ACT TO SUCH CUSTOMERS RETURNED UNSERV ED. THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.29,71, 94,563/- U/S 68 OF THE ACT TREATING THE SAME AS UNEXPLAINED CASH CREDITS. THESE 14 PERSONS HOWEVER, ACCOUNTED FOR ONLY RS.10, 29,309/-. THE ASSESSEE HAS OPPOSED THE APPLICATION OF SECTION 68 OF THE ACT IN ITS CASE. FOR THE SAKE OF CONVENIENCE, THE PROV ISIONS OF SECTION 68 IS REPRODUCED BELOW:- WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OP INION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE SUM SO C REDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE A SSESSEE OF THAT PREVIOUS YEAR. 3.2 THE ASSESSING OFFICER IN HIS REMAND REPORT DATE D 05.09.2012 HAS GIVEN THE FOLLOWING INFORMATION IN R ESPECT OF 14 PERSONS TO WHOM NOTICES REMAINED UNSERVED. SR. NO. PARTY NAME TRANSACTIONS OF AT PARD.D. LETTER ISSUED, SERVICE ON REED. REPLY DATE REMARKS 1 GANESH MOORTY M/S SATYANARAYAN BOOK DEPOT, JALGAON D.D. RS. 45,000/- TAKEN ON 21/10/2008 I/R OF UMA PAPER MART, SHIVKASHI 12/07/2012 13/07/2012 20/06/2012 THE PERSONS HAS COMMUNICATION WERE DONE WITH 2 MANOHAR SADIYA (JEEVAN BARDIA) 269, BALIRAM PETH, JALGAON D.D. OF RS. 25,000/- TAKEN ON 18/09/2008 I/R OF M/S GANGAPATHY LYYER OF DINDIVUL 12/07/2012 13/07/2012 NOT GIVEN AS NO REPLY IS RECEIVED. GENUINENESS OF TRANSACTION NOT PROVED. 5 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. 3 SHRI MANOJ KUMAR C/O MANOJ KUMAR DAYARAM & CO. 115, POLAN PETH, DANA BAZAR, JALGAON D.D. RS. 48,000/- TAKEN ON 11/04/2008 I/R OF TARUNKUMAR MANOJKUMAR AHEMADABAD 12/07/2012 13/07/2012 18/07/2012 THE PERSON HAS COMMUNICATED THAT, NO TRANSACTION WERE DONE WITH 4 A. N. BROTHERS ABDULA N BALASINNORWA LA, 160, BHAVANI PETH, JALGAON D.D. RS. 34,895/- TAKEN ON 13/01/2009 I/R OF AONALI IBRAHIM BHAI, UJJAIN 12/07/2012 13/07/2012 NO GIVEN AS NO REPLY IS RECEIVED. GENUINENESS OF TRANSACTION NO PROVED. 5 PRAVIN S. JAIN, KHANDWA WALEKA WADA, 91 BALAJI PETH, JALGAON. D.D. RS. 1,86,667/- TAKEN ON 05/01/2009 I/R OF SWANTA ENTERPRISES MUMBAI 12/07/2012 13/07/2012 27/07/2012 D.D. RS. 2,10,117/- TAKEN ON 05/01/2009 I.E. D.D. IS NOT OF RS. 1,86,662/-. 6 KISHOR EKNATH DIWAN, HEENA DRESS MATERIAL & GAUN HOUSE 1 ST FLOOR, CENTRAL FULE MARKET, JALGAON D.D: RS.35,000/- TAKEN ON 29/04/2008 I/R OF K. RATILAL AMHADABAD. 12/07/2012 13/07/2012 NOT GIVEN AS NO REPLY IS RECEIVED. GENUINENESS OF TRANSACTION NOT PROVED. 7 GOPAL TALREJA, C/O. KISHANCHAND MUKUNNMAL TALREJA, GOPAL COLLECTION, S. NO. 53, FULE MARKET, JALGAON D.D. RS. 27,980/- TAKEN ON 10/05/2005 I/R OF BHAGWATI AMHEDABAD 12/07/2012 13/07/2012 23/07/2012 THE PERSON HAS COMMUNICATED THAT NO TRANSACTIONS WERE DONE WITH ASSESSEE. 8 CHANDRESH B. BHADRESHWAR A A/P PALDHI, TAL. DHARANGAON DIST- JALGAON D.D. RS. 2,00,000/- TAKEN ON 02/01/2009 I/R OF IDEA CELLULAR, AURANGABAD 12/07/2012 NOT SERVED RETURN BY THE POSTAL AUTHORITY ON 23/07/12 -- AS THE LETTER COULD NOT BE SERVED FOR REMARKS IN COL. NO.5 GENUINENESS OF TRANSACTION NOT PROVED. 9 M/S. MOURYA ENTERPRISES 71 DR. AMBEDKAR COMPLEX, CHOPDA, DIST- JALGAON D.D. RS.25,000/- TAKEN ON 04/07/2008 I/R OF IDEA CELLULAR LTD. AURANGABAD 12/07/2012 SENT BY REGD. POST NOTICE NOT RECEIVED BACK FROM POSTAL AUTHORITY. -- GENUINENESS OF TRANSACTION NOT PROVED DUE TO REMARKS IN COL NO. 5. 6 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. 10 SURESH RATAN PATIL H. NO. 33, PAILAD FARSHI ROAD, AMALNER DIST. JALGAON DD RS. 2,75,717/- TAKEN ON 19/01/2009 I/R OF CHUNILAL MOTIRAM GINNING FACTORY JALGAON 12/07/2012 NOT SERVED RETURN BY THE POSTAL AUTHORITY ON 23/07/12 WITH REMARKS THAT ' LEFT ADDRESSEE' -- AS THE LETTER COULD NOT BE SERVED FOR REMARKS IN COL. NO.5 GENUINENESS OF TRANSACTION NOT PROVED. 11 RAJESH SHANTILAL SARAF, DISHA DISTRIBUTORS 191 BAZAR PETH, CHOPDA DIST., JALGAON D.D. RS. 48,000/- TAKEN ON 13/06/2008 I/R OF EVERYDAY INDUSTRIES PVT. LTD. 12/07/2012 SENT BY REGD. POST. NOTICE NOT RECEIVED BACK FROM POSTAL AUTHORITY -- GENUINENESS OF TRANSACTION NOT PROVED DUE TO REMARKS IN COL . NO.5 12 VIJAY PATIL, C/O PATEL PHOTO PATIL DARWAJA, CHOPDA DIST. JALGAON D.D. RS. 27,000/- TAKEN ON 03/10/2008 I/R PHOTO DEALS MUMBAI 12/07/2012 NOT SERVED RETURN BY THE POSTAL AUTHORITY ON 23/07/2012 WITH REMARKS THAT 'NOT TRACEABLE ON THE GIVEN ADDRESS -- AS THE LETTER COULD NOT BE SERVED FOR REMARKS IN COL. NO.5 GENUINENESS OF TRANSACTION NOT PROVED 13 MEHTA HANDLOOMS, 58 FULE MARKET, JALGAON D.D RS. 26,050/- TAKEN ON 22/08/2008 I/R OF PLAZMA ELECTRIC PVT. LTD. 12/07/2012 RETURN BY THE NOTICE SERVER ON 16/07/2012 STATING THAT NO SUCH SHOP ON THE GIVEN ADDRESS -- INSPECTOR ALSO REPORTED THAT ON THE SAID ADDRESS PRESENTLY SHOP IN THE NAME OF BEAUTY CENTRE IS RUNNING & NO SUCH SHOP IS AT THE GIVEN ADDRESS. 14 DINESH LOTWALA, C/O MANISH RAJANKANT LOTWALA EXCESS COMPUTING SYSTEM, S.NO.9, GROUND FLOOR, GOLANI MARKET, JALGAON D.D. RS.25,000/- TAKEN ON 18/10/2008 I/R OF JAGDAMBA OPTICS PVT. LTD. DELHI. 12/07/2012 RETURN BY THE NOTICE SERVER ON 16/07/2012 STATING THAT NO SUCH PERSON ON THE GIVEN ADDRESS -- INSPECTOR ALSO REPORTED THAT SHRI MANISH LOTWALA WAS PRESENT IN THE SHOP. HOWEVER, HE STATED THAT NO SUCH PERSON IN THE NAME OF DINESH LOTWALA IS IN THE SAID SHOP ALSO HE DENIED THE TRANSACTIONS DONE WITH THE ASSESSEE 3.3 THE ASSESSEE DURING THE APPELLATE PROCEEDINGS V IDE LETTER DT. 04.10.2012 ENCLOSED AN AFFIDAVIT DT. 04.10.2012 FRO M SHRI. RAJESH SHANTILAL SARAF, DISHA DISTRIBUTORS, 191, BA ZAR PETH, 7 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. TAL.CHOPDA, JALGAON, INTER ALIA, STATING THAT HE HA D TAKEN A CHEQUE PAYABLE AT PAR FROM THE ASSESSEE SOCIETY ON 13.06.2008 FOR RS.48,000/- IN FAVOUR OF M/S.EVERYDAY INDUSTRIE S (P) LTD. SIMILARLY, AN AFFIDAVIT DT. 04.10.2012 ON OATH FROM M/S.MORYA ENTERPRISES, 71, SR.AMBEDKAR COMPLEX, CHOPDA, JALGA ON HAS BEEN FURNISHED CONFIRMING PURCHASE OF AT PAR PAYABL E CHEQUE FROM THE ASSESSEE ON 04.07.2008 FOR RS.48,000/- IN FAVOUR OF IDEA CELLULAR LTD. THE ASSESSEE HAS ALSO FURNISHED SIMILAR AFFIDAVITS FROM SHRI VIJAY PATIL, C/O PATEL PHOTO, CHOPDA (JALGAON) (CHEQUE PURCHASED ON 03.10.2000 FOR RS.27,000/- IN FAVOUR OF PHOTO DEALS, MUMBAI); SHRI SURESH RATAN PATIL, JALG AON (CHEQUE PURCHASED ON 19.01.2009 FOR RS.2,75,717/- IN FAVOUR OF CHUNILAL MOTIRAM GINNING FACTORY, JALGAON); SHRI GOPAL TALRE JA, JALGAON (CHEQUE PURCHASED ON 10.05.2008 FOR RS.27,980/- IN FAVOUR OF BHAGWATI, AHMEDABAD); SHRI KISHOR EKANTH DIWAN, JAL GAON (CHEQUE PURCHASED ON 29.04.2008 FOR RS.35,000/- IN FAVOUR OF RATILAL, AHMEDABAD). THE ASSESSEE HAS ALSO FURNISH ED IDENTITY PROOF AND PAY-IN-SLIPS IN RESPECT OF THE ABOVE PERS ONS. SHRI GOPAL TALREJA HAD EARLIER DENIED BEFORE THE ASSESSI NG OFFICER HAVING PURCHASED ANY CHEQUE FROM THE ASSESSEE SOCIE TY. THE ASSESSEE HAD FURNISHED ALL THE RELEVANT DETAILS SUC H AS COPIES OF THE PAY-IN-SLIPS, DETAILS OF CHEQUES PAYABLE AT PAR AND DATE OF THEIR CLEARING TO PROVE THE AUTHENTICITY OF THE TRA NSACTIONS IN ALL THE 14 CASES NAMELY SHRI GANESH MOORTY, SHRI JEEVAN BARDIYA (MANOHAR SADIYA), SHRI MANOJ KUMAR C/O MANOJKUMAR D AYARAM & CO, A. N. BROTHER, PRAVIN S JAIN, KISHOR EKNATH D IWAN, GOPAL TALREJA CHANDRESHWARA BHADRESHWARA, M/S MORYA ENTER PRISES, SURESH RATAN PATIL, DISHA DISTRIBUTORS, VIJAY PATIL , MEHTA HANDLOOM AND DINESH LOTWALA. THE ASSESSING OFFICER SEEMS TO HAVE RELIED UPON THEIR STATEMENTS WITHOUT CONFRONTI NG THEM WITH THE DOCUMENTATION MADE BY THE LATTER IN THE ASSESSE E SOCIETY FOR PURCHASE OF THE CHEQUES. ALL THESE DETAILS WERE MA DE AVAILABLE TO THE ASSESSING OFFICER BY THE ASSESSEE. IN THE CASE OF MORYA 8 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. ENTERPRISES, SHRI SURESH RATAN PATIL, DISHA DISTRIB UTORS AND VIJAY PATIL, IT WAS STATED THAT THESE PERSONS HAVE EITHER CLOSED THEIR BUSINESS OR LEFT THE PLACE HENCE NOTICE COULD NOT BE SERVED. IT WAS ALSO FOUND CORRECT THAT SOME PERSONS FOR FEA R OF THE DEPARTMENT MIGHT NOT HAVE ACKNOWLEDGED THE CORRECT POSITION AS WAS THE CASE WITH MORYA ENTERPRISES, SHRI SURESH RA TANLAL PATIL, DISH DISTRIBUTORS AND SHRI VIJAY PATIL WHO EARLIER DENIED THAT THEY PURCHASED ANY CHEQUE FROM THE ASSESSEE. HOWEV ER, WHEN CONFRONTED BY THE ASSESSEE WITH THE PAY-IN-SLIPS DU LY FILLED IN BY THEM, THEY ACCEPTED THE TRANSACTION AND FILED AFFID AVITS IN THIS REGARD. THE CIT(A) HAVING PERSONALLY PERUSED THE C OPIES OF THE PAY-IN-SLIPS WHICH HAVE BEEN FURNISHED BY THE ASSES SEE. 3.4 THE EXACT PROCEDURE INVOLVED IN THE TRANSACTION OF ISSUING CHEQUE PAYABLE AT PAR AGAINST CASH DEPOSIT ACROSS T HE COUNTER IS THAT A CUSTOMER INTENDING TO BUY A CHEQUE PAYABLE A T PAR COMES TO THE SOCIETY BRANCH, FILLS UP THE PAY-IN-SLIP MEA NT FOR PURCHASING AT PAR CHEQUE AND HANDS IT OVER TO THE C LERK WHO FILLS UP THE COMMISSION AMOUNT ETC. THE CUSTOMER THEN DE POSITS CASH WITH THE CASHIER WHO AFFIXES CASH RECEIVED STA MP. THE CLERK THEN FEEDS THE INFORMATION IN THE SYSTEM AND GENERA TES CHEQUE WITH DETAILS OF PAYEE, PLACE WHERE PAYABLE AT, AMOU NT AND MAKES IT 'CROSSED' OR 'A/C PAYEE'. THE INSTRUMENT THEN G OES TO THE 'PASSING OFFICER' FOR VERIFICATION WHO THEN PUTS HI S SIGNATURE ON THE CHEQUE. THE INSTRUMENT THEREAFTER GOES TO THE MANAGER WHO ALSO SIGNS THE CHEQUE BEFORE FINALLY HANDING IT OVE R TO THE CUSTOMER. THE ENTIRE TRANSACTION IS COMPLETED IN 1 0 MINUTES WITHOUT OPENING BALANCE OR CLOSING BALANCE. 3.5 THE HDFC CHEQUES (PAYABLE AT PAR) ARE ISSUED AS THERE IS AN AGREEMENT BETWEEN THE ASSESSEE AND THE HDFC IN T HIS REGARD. AS IS EVIDENT FROM THE ABOVE, THE CASH IS NOT CONVE RTED INTO ANY TYPE OF DEPOSIT I.E. FIXED OR RECURRING. 9 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. 3.6 THE CHEQUES ARE PRESENTED IN THE CLEARING HOUSE S OF THE RESPECTIVE PLACES AND FINALLY THE ASSESSEE'S ACCOUN T IS DEBITED. IN VIEW OF THE FACTS, THE APPLICATION OF SECTION 68 OF THE ACT IN THE CASE OF A TRANSACTION INVOLVING CASH DEPOSIT AGAINS T PURCHASE OF A CHEQUE PAYABLE AT PAR IN THE HANDS OF THE ASSESSEE, WHICH DOES NOT KEEP THE DEPOSITED CASH IN THE FORM OF FIXED / RECURRING DEPOSIT, IS NOT JUSTIFIED. THE ASSESSEE SOCIETY IN FACT WORKS AS A FACILITATOR FOR ISSUING CHEQUES AT PAR FOR WHICH IT IS CHARGING COMMISSION WHICH IS SHOWN IN ITS INCOME. MERELY BE CAUSE A FRACTION OF THE NOTICES RETURNED UN-SERVED WILL NOT MAKE ANY CASE FOR ANY ADVERSE INFERENCE IN REGARD TO GENUINENESS OF THE CASH DEPOSITS FOR ISSUE OF CHEQUES AT PAR. THERE HAS TO BE A CONCRETE EVIDENCE ON RECORD TO SUGGEST THAT THE SOCIETY WAS RECEIVING CASH IN FICTITIOUS NAMES TO HELP THE TAX EVADES. NO SUC H MATERIAL IS AVAILABLE EITHER IN THE ASSESSMENT ORDER OR IN THE SUBSEQUENT REMAND REPORT. 3.7 IN THE PRESENT CASE THE ASSESSEE HAS SUFFICIENT LY ESTABLISHED THE IDENTITY OF THE PERSONS FROM WHOM THE MONEY HAS BEEN ACCEPTED. THE ASSESSEE HAS BEEN ABLE TO PROVIDE TH E LEGAL DOCUMENTS SUCH AS COPY OF LICENSE UNDER SHOP AND ESTABLISHMENT ACT, 1949 WHICH IS A SUFFICIENT AND L EGITIMATE PROOF THAT THE SHOP SO NAMED THEREIN WAS IN EXISTEN CE. THERE IS NO CONTROL OF THE ASSESSEE OVER THE BUSINESSMEN AS THEY MAY SHIFT PLACES AND IT IS NOT FOR THE ASSESSEE TO KEEP A TRACK OF THE SAME. IN FEW CASES THAT BUSINESSMEN HAVE CLOSED TH EIR BUSINESSES AND HENCE THE NOTICE WAS BOUND TO COME B ACK UNSERVED. HENCE, NON-SERVING OF NOTICE AS NON-PROV ING OF IDENTITY IS NOT JUSTIFIED MORE PARTICULARLY WHEN OT HER STATUTORY PAPERS WERE ON RECORD. 3.8 REGARDING THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSEE IS REGISTERED UNDER MSCS ACT, 2002 AND KEEPS REGULA R BOOKS OF ACCOUNT WHICH WERE AUDITED YEARLY. THE ASSESSEE IS DOING AT PAR 10 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. CHEQUE TRANSACTIONS AND ISSUING ACCOUNT PAYEE CHEQU ES AT DISCOUNTED RATES AND THUS GATHERING THE BUSINESS FR OM ITS CUSTOMERS. THE ASSESSEE HAS SUBMITTED THE PROOFS O F THE CLEARING OF THE CHEQUES FROM ITS BANK ACCOUNTS WHIC H ARE DULY VERIFIED. IT HAS ENTERED INTO AN AGREEMENT WITH HD FC BANK TO THIS EFFECT. ALL THE ACCOUNT PAYEE CHEQUES AS SHOW N IN THE LIST OF 14 PERSONS, ARE CLEARED FROM THE BANK ACCOUNTS OF T HE ASSESSEE. THUS, THE ASSESSEE HAS DULY PROVED THE GENUINENESS OF THE TRANSACTIONS. THE ONLY 14 NOTICES OUT OF 100 REMAI NED UNSERVED IN THE FIRST GO. THE ASSESSEE HAD FURNISHED THEIR ID PROOF IN THE FORM OF VISITING CARD / SHOP ACT LICENSE / SALE BIL L ETC. TO ESTABLISH IDENTITY OF THE PERSONS AND EXISTENCE OF THEIR BUSINESS. THE AT PAR CHEQUES ISSUED TO THESE 14 PERSONS WERE CLEARED BY THE BANK CONCERNED. THIS ITSELF PROVES THAT SUCH C ASH DEPOSITS DID NOT CONSTITUTE ASSESSEE'S MONEY BUT WERE MADE B Y THESE PERSONS TO OBTAIN AT PAR CHEQUES. THE ASSESSING OFF ICER HIMSELF HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSE SSEE SOCIETY WAS ISSUING CHEQUES PAYABLE AT PAR IN OTHER CITIES TO ITS MEMBERS AS WELL AS NON-MEMBERS AGAINST CASH DEPOSITS. ISSU ING OF THESE 'AT PAR PAYABLE' CHEQUES IS FACILITATED THROUGH AN ARRANGEMENT WITH A BANK WHICH HAS MULTIPLE BRANCHES IN A CITY A ND CHEQUES DRAWN BY IT ARE PAYABLE AT PAR ON ITS BRANCHES LOCA TED THROUGHOUT THE COUNTRY. THE ASSESSING OFFICER HAS M ENTIONED IN THE ASSESSMENT ORDER THAT THIS SYSTEM OF OBTAINING 'PAYABLE AT PAR' CHEQUES IS CHEAPER THAN GETTING THE DEMAND DRA FTS MADE ON WHICH A HIGHER COMMISSION IS GIVEN TO THE ISSUING B ANK. IT IS A NORMAL PRACTICE FOR A SOCIETY TO ENTER INTO AN ARRA NGEMENT WITH A BANK FOR ISSUING AT PAR PAYABLE CHEQUES. MOREOVER, NO APPROVAL FROM RBI IS REQUIRED IN THIS REGARD. IN THE PRESEN T CASE, THE ASSESSEE SOCIETY HAD THIS SORT OF ARRANGEMENT WITH HDFC. 3.9 AS REGARDS APPLICABILITY OF SECTION 68 OF THE A CT, THE ITAT, PUNE IN THE CASE OF SHRI MAHAVIR NAGARI SAHAKARI PA T VS. DCIT 11 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. [(2002) 74 TTJ PUNE 793] HAS HELD THAT PROVISIONS O F SECTION 68 OF THE ACT CAN BE APPLIED EVEN IN THE CASE OF CO-OP ERATIVE CREDIT SOCIETY AS SECTION 68 OF THE ACT DOES NOT MAKE ANY DISTINCTION BETWEEN A BANKING CONCERN AND NON-BANKING CONCERN. WHEN THE ACCOUNTS WERE MAINTAINED BY THE ASSESSEE AND CASH C REDITS APPEAR IN SUCH BOOKS OF ACCOUNTS, THEN PROVISIONS O F SECTION 68 OF THE ACT WOULD BE APPLICABLE AND THE INITIAL BURD EN TO ESTABLISH THE GENUINENESS OF THE CASH CREDITS WOULD BE ON THE ASSESSEE, THOUGH THE NATURE OF ONUS MAY VARY FROM CASE TO CAS E. IT WAS FURTHER HELD THAT ONUS TO PROVE IDENTITY, CAPACITY AND GENUINENESS MAY NOT BE THAT HEAVY ON ASSESSEE IN TH E CASE OF THIRD PARTY DEPOSITS VIS-A-VIS DEPOSITS FROM FRIEND S AND RELATIVES. IN CASE OF THIRD PARTY DEPOSITS IT WOULD BE SUFFICI ENT IF THE IDENTITY OF THE CASH-CREDITOR IS ESTABLISHED AND THE SAID CR EDITOR CONFIRMS THE SAME. BANKING CONCERNS ARE NOT SUPPOSED TO ASK THE DEPOSITORS ABOUT THE SOURCE OF MONEY. FOR THESE RE ASONS IN THE CASE OF BANKING CONCERNS, IT HAS BEEN HELD THAT THE ONUS ON THE ASSESSEE WOULD BE DISCHARGED IF IT IS ESTABLISHED T HAT SUCH ASSESSEE HAS ACTED WITH DUE DILIGENCE AND CAUTION W HILE ACCEPTING DEPOSITS. IN THE CASE BEFORE US, THE ASS ESSEE HAS PROVIDED IDENTITY OF THE PERSONS TO WHOM NOTICES CO ULD NOT BE SERVED. THE ASSESSING OFFICER HAS MADE IN DEPTH EN QUIRY IN REGARD TO THESE 14 PERSONS AND HIS FINDINGS ARE AVA ILABLE IN THE REMAND REPORT DT. 05.09.2012. IN THIS BACKGROUND, THERE IS NOTHING ON RECORD TO SUGGEST THAT CASH DEPOSITS MAD E WITH THE ASSESSEE SOCIETY FOR ISSUING 'PAYABLE AT PAR' CHEQU ES BY THESE 14 PERSONS BELONGED TO THE ASSESSEE. AS STATED ABOVE, THE INCOME DERIVED BY THE ASSESSEE SOCIETY COMPRISING OF INTER EST, LOCKER CHARGES AND OTHER CHARGES COLLECTED FROM THE MEMBER S / NON- MEMBERS OF THE SOCIETY ON ACCOUNT OF VARIOUS SERVIC ES PROVIDED BY IT I.E. ISSUE OF CHEQUES PAYABLE AT PAR, RAILWAY RESERVATIONS, DEPOSIT OF INSURANCE PREMIUM ETC. THE RATE AT WHIC H INTEREST IS COLLECTED ON EACH TYPE OF LOAN IS PRESCRIBED. THE SOCIETY IS 12 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. SUBJECT TO INSPECTION PERIODICALLY BY THE CO-OPERAT IVE REGISTRAR AND CONCERNED AUTHORITIES. THE ACCOUNTS ARE SUBJEC T TO AUDIT BY THE COOPERATIVE AND ALSO U/S 44AB OF THE ACT. 3.10 ADDRESSES OF ALL THE PERSONS ON WHOM NOTICE S U/S 133(6) OF THE ACT COULD NOT BE SERVED HAVE BEEN PROVIDED T O THE ASSESSING OFFICER. WHILE DEPOSITING THE AMOUNTS, T HESE PERSONS HAVE SIGNED THE RELEVANT PAY-IN-SLIPS, CHEQUES 'PAY ABLE AT PAR' WERE ISSUED TO THEM AS PER THEIR REQUEST. THESE CHE QUES HAVE SUBSEQUENTLY BEEN DEBITED FROM THE SOCIETY'S ACCOUN T. AS STATED ABOVE, THE SOCIETY HAS ARRANGEMENT WITH HDFC BANK F OR ISSUING CHEQUES PAYABLE AT PAR ON ALL THE BRANCHES OF THE L ATTER. AGREEMENT BETWEEN THE SOCIETY AND THE HDFC BANK HAS NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. THE CASH DEPO SITED BY THESE PERSONS DID NOT REMAIN WITH THE SOCIETY. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE CASH WAS KEPT IN THE FORM OF FDS OR ANY OTHER FORM OF DEPOSITS. THE 'SOCIETY' IS RE ASONABLY FOLLOWING THE 'KNOW YOUR CUSTOMER' (KYC) NORMS IN C ASE OF MEMBERS. IN VIEW OF ABOVE, THE CIT(A) WAS JUSTIFIE D IN HOLDING THAT NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. MOREOVER, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO K EEP TRACK OF ITS NON-MEMBERS DEPOSITORS. IT IS NOT DISPUTED THAT TH E DEPOSITS WERE MADE IN A.Y. 2009-10 AND THE ENQUIRIES WERE MA DE IN NOV- DEC 2011 I.E. AFTER A GAP OF ALMOST 30 MONTHS. THE RE IS A POSSIBILITY OF SOME PEOPLE MOVING FROM ONE PLACE TO ANOTHER. MOREOVER, THE ITAT, PUNE IN THE CASE OF MAHAVIR NAG ARI SAHAKARI PAT (SUPRA) HAS ALSO HELD THAT INTEREST EARNED BY T HE SOCIETY WILL BE EXEMPT U/S 80P(2)(A)(I) OF THE ACT, IF IT SATISF IED THE CONDITIONS LAID DOWN IN THAT SECTION. THE CASH CREDITS, EVEN I F TAXED, WILL BE CONSIDERED AS INCOME FROM THE SAME BUSINESS I.E. PR OVIDING CREDIT FACILITIES TO THE MEMBERS AND, ACCORDINGLY, THEY WILL ALSO BE ENTITLED TO DEDUCTION U/S 80P OF THE ACT AND THUS, THE ENTIRE INCOME OF THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P OF THE ACT 13 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. AND ACCORDINGLY, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESS EE SOCIETY. 3.11 A SIMILAR VIEW HAS BEEN TAKEN BY ITAT, PUNE I N THE CASE OF DCIT VS SHRI AGRASEN SAH. PATSANSTHA MARYAD IT (ITA NO.L459,1460/PN/2005) FOLLOWING THE RATIO OF ITAT, PUNE IN THE CASE OF SHRI MAHAVIR NAGRI SAHAKARI PAT SANSTHA (SU PRA). THE ONUS OF THE ASSESSEE TO ESTABLISH CASH CREDITS IS L IMITED TO MAINTAIN A SYSTEMATIC RECORD. THE ASSESSEE SOCIETY HAS DISCHARGED ITS ONUS BY PROVIDING ADDRESSES OF DEPOS ITORS, THEIR IDENTITY PROOF AND DETAILS OF TRANSACTIONS ENTERED INTO WITH THEM. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSE SSEE HAS ATTRIBUTED ADVICE TO AVOID TAX. MOREOVER, THERE IS NO EVIDENCE WITH THE ASSESSING OFFICER THAT THE DEPOSITS MADE B Y THE DEPOSITORS REPRESENT THE INCOME OF THE SOCIETY. TH E SOCIETY AS STATED EARLIER, TO THE BEST OF ITS CAPABILITY AND E FFORTS, GATHERED THE CURRENT ADDRESSES AND DETAILS OF BUSINESS ACTIV ITIES IN RESPECT OF THE 14 CUSTOMERS ON WHOM NOTICES COULD NOT BE SE RVED IN THE FIRST GO. IN THIS BACKGROUND, THE ASSESSING OFFICE R WAS NOT JUSTIFIED TO MAKE THE ADDITION BY INVOKING THE PROV ISIONS OF SECTION 68 OF THE ACT. EVEN ON MERITS, THE ADDITIO N OF RS.29,71 , 94,563/- MADE BY THE ASSESSING OFFICER U/S 68 OF TH E ACT @ 14% OF TOTAL CASH DEPOSITS ON THE BASIS OF NU MBER OF NOTICES RETURNED UNSERVED I.E. 14 NOTICES OUT OF 10 0 NOTICES (14%) IS COMPLETELY IRRATIONAL. EVEN IF THE ASSESSING OF FICER WAS UNDER THE BONAFIDE BELIEF THAT PROVISIONS OF SECTION 68 O F THE ACT WERE APPLICABLE IN THE ASSESSEE'S CASE, HE SHOULD HAVE A DDED BACK TOTAL AMOUNT OF RS.10,29,309/- INVOLVED IN RESPECT OF THESE 14 PERSONS ONLY. IN VIEW OF ABOVE, THE CIT(A) WAS JUST IFIED IN DELETING THE ADDITION IN QUESTION. 4. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF RS. 7,79,332/- ON ACCOUNT OF STALE CHEQUES, MADE BY THE ASSESSING OFFICER. IN 14 ITA NO.39 OF 13 BHAICHAND HIRACHAND RAISONI MULTI STATE CO-OP. SOCIETY LTD. APPEAL, THE CIT(A) HAS OBSERVED THAT IT IS A LIABIL ITY PAYABLE ON DEMAND AND THEREFORE, COULD NOT BE TREATED AS INCOM E. ANYBODY HAVING A STALE CHEQUE MAY REQUEST THE SOCIETY TO RE -VALIDATE THE SAME. THE ADMISSION OF THE SAME AS INCOME DURING T HE ASSESSMENT PROCEEDINGS WAS NOT CORRECT AND ADMISSIO N WAS MADE UNDER THE IMPRESSION THAT THE SAID INCOME WOUL D BE SET OFF AGAINST THE LOSSES IN THE MSEB COMMISSION AND AT PA R CHEQUE BUSINESS. THE ASSESSING OFFICER HAS HOWEVER, NOT C ONSIDERED THE SAME IN THE ASSESSMENT ORDER. THERE IS A LOSS OF R S.52,85,340/- WHICH HAS NOT BEEN EXAMINED OR MENTIONED BY THE ASS ESSING OFFICER IN THE ASSESSMENT ORDER. IN VIEW OF ABOVE, THE CIT(A) HAS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED I N MAKING THE ADDITION OF RS.7,79,332/- ON ACCOUNT OF STALE CHEQU ES. THIS REASONED FINDING OF CIT(A) WHEREBY, HE HAS DELETED THE ADDITION OF RS.7,79,332/- ON ACCOUNT OF STALE CHEQUES, NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF AUGUST, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 22 ND AUGUST, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II, NASHIK 4) THE CIT-II, NASHIK 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE