Mustafabad Farmers Service Co-operative Society Limited, Jagadhri V. ITO, Ward -5, Yamunanagar

ITA 535/CHANDI/2022

AI Insights

The case involves the Mustafabad Farmers Service Co-operative Society Limited, which appealed against the order of the Commissioner of Income Tax (Appeals) upholding the addition of Rs 224,829 under section 69A of the Income Tax Act due to cash deposits in bank during the demonetization period. The society argued that it was permitted to accept old currency notes during the demonetization period as per a notification from the Ministry of Finance and a letter from the Haryana State Co-Operative Apex Bank Ltd. The Tribunal found merit in the society's request for another opportunity to present its case and set aside the matter to the AO for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127567 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 01-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 30-06-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 142(1); 143(2); 69A

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “एस.एम.सी” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH ी व म संह यादव, लेखा सद%य BEFORE: SHRI. VIKRAM SINGH YADAV, AM ITA No. 535/Chd/2022 Assessment Year : 2017-18 Mustafabad Farmers Service Co- operative Society Limited C/o C.A. Ajay Kumar Jain SCO 80-81 4 th Floor Sector 17C, Chandigarh The ITO Ward-5 Yamunanagar PAN NO: AAETA6323N Appellant Respondent ! " Assessee by : Shri Ajay Jain, C.A # ! " Revenue by : Shri Akashdeep, JCIT, Sr. DR $ % ! & Date of Hearing : 02/03/2023 '()* ! & Date of Pronouncement : 03/03/2023 आदेश/Order PER VIKRAM SINGH YADAV, AM: This is an appeal filed by the Assessee against the order of the Ld. CIT(A), NFAC, Delhi dt. 30/05/2022, pertaining to A.Y. 2017-18 wherein the assessee has taken the following ground of appeal: 1. That the Ld. Commissioner of Income Tax- (Appeals) has wrongly upheld the addition of Rs 224,829 u/s 69A on account of cash deposit in bank during demonetization period . 2. That the Ld. Commissioner of Income Tax- (Appeals) has wrongly upheld the application of provisions of section 69A read with 115BBE on cash sale which were deposited in bank. 2. Briefly, the facts of the case are that the assessee filed its return of income on 14/10/2017 declaring total loss of Rs. 5,72,339/-. The case of the assessee was selected for scrutiny through CASS on account of large cash deposits during the demonetization period. Notice under section 143(2) and 142(1) were issued. During the course of assessment proceedings, the assessee was asked to explain the source of cash deposited amounting to Rs. 53,95,000/- during the period of demonetization. In response, the assessee filed its submissions and on perusal of the reply so submitted by the assessee, the AO observed that the assessee society is registered under the co- 2 operative society Act and is engaged in the business of providing finance to its members, and during the period of demonetization, the assessee society has shown cash sales of Rs. 2,24,829/- which was deposited in specified old currency notes and the assessee was further issued a show cause as to why the same should not be deemed as unexplained money under section 69A of the Act. However in absence of any reply submitted by the assessee, the same was brought to tax in the hands of the assessee under section 115BBE of the Act. 3. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). However the appeal of the assessee was dismissed as exparte qua the assessee on account of non prosecution. 4. During the course of hearing, the Ld. AR prayed that the assessee society be allowed one more opportunity to put forward its submission on merit of the case. It was submitted that the assessee is a cooperative society which is allowed to receive the old currency notes during the demonetization period and in this regard, our attention was drawn to the notification no. S.O. 3408(E) dt5. 08/11/2016 issued by the Ministry of Finance wherein it has been specified that the Central Government hereby declared that the specified bank notes shall not be ceased to be legal tender w.e.f 09/11/2016 until 11/11/2016 in respect of transaction for purchase at consumer cooperative stores operated under authorization of Central or State Government. It was accordingly submitted that the assessee was permitted to receive old currency notes during the demonetization period. Further, reference was drawn to the letter issued by Haryana State Co-Operative Apex Bank Ltd. dt. 12/11/2016 and it was submitted that even as per the contents of the said letter issued by the Apex Cooperative Bank, the assessee was allowed to receive old currency notes during the demonetization period. It was accordingly pleaded that the assessee may be allowed an opportunity to put forward these documents for necessary consideration before the Ld. CIT(A) and basis the same the matter may be decided. 5. The Ld. DR is heard who did not raise any objection where the matter is set aside to the file of the Ld. CIT(A). 3 6. After hearing both the parties and considering the prayer made by the AR, what is relevant to examine is whether the assessee co-operative society engaged in providing finance to its members can equally receive deposits in specified currency notes towards the sale of goods and whether the case of the assessee falls under the aforesaid notification so issued by the Ministry of Finance or not. In the interest of substantial justice, I believe that the assessee deserve one more opportunity and given that even before the AO, the assessee could respond to the show-cause, it would be more appropriate that the matter is set-aside to the file of the AO instead of the ld CIT(A). In the result, the matter is set-aside to the file of the AO to examine and consider the matter afresh as per law after providing reasonable opportunity to the assessee. Needless to say, the assessee shall not abuse this opportunity and shall appear before the AO and file necessary submissions/documents as called for. The AO shall ensure that the proceedings are completed in a time bound manner preferably within two months of receipt of this order. 7. In the result, appeal of the assessee is allowed for statistical purposes. (Order pronounced in the open Court on 03/03/2023) Sd/- व म संह यादव (VIKRAM SINGH YADAV) लेखा सद%य / ACCOUNTANT MEMBER AG Date: 03/03/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File