SHRI PARSHWANATH NAGARI SAHAKARI PATHSANSTH, SATARA V. DCIT, CENTRAL CIRCLE 2(4), PUNE, PUNE

ITA 757/PUN/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5721 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-07-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 11-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR KESHARI
• Keywords: Unexplained cash credit; Opportunity of being heard; Deemed to accrue or arise in india; Benefit of exemption; CHAPTER IV
• Section: 68; 132; 142(1); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “B” BENCH : PUNE BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA.No.757/PUN/2024 Assessment Year 2017-18 Shri Parshwanath Nagari Sahakari Pathsanstha Maryadit, 75/76, Guruwar Peth, Chwadi Chowk, Karad, Dist. Satara – 415 110 Maharashtra PAN : AAAAP0511C vs. DCIT, Central Circle-2(4), Pune (Appellant) (Respondent) For Assessee : Shri Pawan Chakrapani For Revenue : Shri Ajay Kumar Keshari Date of Hearing : 08.07.2024 Date of Pronouncement : 22.07.2024 ORDER PER RAMA KANTA PANDA, V.P. : This appeal filed by the assessee is directed against the order dated 16.03.2024 of the CIT(A), Pune-12 relating to the Assessment Year 2017-18. 2. Facts of the case, in brief, are that the assessee is a Credit Cooperative Society engaged in providing credit facilities to its members. It filed its return of income for the impugned assessment year on 24.10.2017 declaring total income at Nil after claiming deduction u/s.80P of the Act. A survey action u/s.133A of the Act was carried out in the case of the assessee on 20.09.2017. The 2 ITA No.757/PUN/2024 survey investigation revealed that the Pat Sanstha had maintained unexplained benami fixed deposits. To widen the scope of the investigation, the survey action was converted into search action u/s.132 of the Act on 22.09.2017 which was concluded on 24.09.2017. Accordingly, notice u/s.153A of the Act was issued to the assessee in response to which the assessee society filed its return of income on 25.03.2019 declaring Nil income. Statutory notices u/s.143(2) and 142(1) were issued in response to which the Authorised Representative of the assessee filed the requisite details from time to time. 3. The Assessing Officer (AO) noted that the Patsanstha had total deposits of around Rs.145 crore in seven branches which was revealed at the time of search/survey which were under different schemes where rate of interest was also different. During the course of search/survey action, following major issues were noticed by the Department. i. The accounts were opened in the Patsanstha without obtaining the KYC documents of customer/members. ii. The accounts were opened and operated without knowledge of legal owners and FDs had been created in their name. iii. The accounts were opened with another Patsanstha namely M/s.Shri Sambhavnath Nagari Sahkari Patsanstha, Karad in which search action was conducted at the same time wherein it is seen that accounts were opened and operated in the names of same persons as found in M/s Shri Sambhavnath Nagari Sahkari Patsanstha Ltd without knowledge of those account holders/legal owners. 3 ITA No.757/PUN/2024 4. He observed that during the course of survey/search action, statements of various persons, in whose names FDs had been issued, were recorded on oath and they have denied to have held any FD with the Patsanstha. The AO issued summons to some of the investors and despite issue of number of summons to the FD holders, these were returned unserved stating insufficient address or person does not exists. This further strengthened the fact that FDs were issued in the names of persons without knowing them and their identity had been used for creating benami/unaccounted FD in Patsanstha. Based on the investigations conducted till the search and the results thereof, the AO held that all these FDs are unaccounted and held in benami names. Therefore, the Department attached the FDs in the names of various persons u/s.132(9B) of Act after obtaining the approval from Pr DIT (inv), Pune on 29/09/2017 and subsequently by the AO u/s.281B of the Act after obtaining the prior approval of the Pr. CIT (Central), Pune. 5. During the assessment proceedings, the AO held that in spite of ample opportunities, the assessee society could not prove the source of Fixed deposits to the tune of Rs.7,20,24,836/-. Since the assessee society could not prove the source of FDs amounting to Rs.7,20,24,836/- in spite of several opportunities granted during the search, post search proceedings as well as during search assessment proceedings, the AO held that the same were liable to be taxed as 4 ITA No.757/PUN/2024 unexplained credit u/s 68 of the Act r.w.s.115BBE. 6. The AO further noted that the assessee has claimed deduction u/s.80P. According to him, no deduction can be available u/s.80P(2)(a)(i) to the assessee on the amount of Rs.7,20,24,836/- added u/s.68. He was of the opinion that the deduction u/s.80P(2)(a)(i) is available to the whole of the amount of profits and gains of business attributable to business of banking or providing credit facilities to its members. However, the assessee cannot claim that the fictitious FDs represent business income from its members. According to the AO, the onus of proving the same was on the assessee as deduction was claimed by it. The AO relied upon the decision of the Hon. Kerala High Court in the case of Mundela Service Co-Op Bank Ltd. Vs. ITO [2018] 96 taxmann 355 (Kerala) wherein it was held that the assesses being a primary agricultural credit cooperative society would not be entitled to benefit of exemption u/s.80(P)(2)(a)(i) in respect of cash credit brought to tax u/s.68. He accordingly held that the assessee is not entitled to the deduction u/s 80P in respect of the amount of Rs.7,20,24,836/- added u/s.68. Further, since these unexplained Fixed Deposits totalling to Rs.7,20,24,836/- were treated as Unexplained Cash Credits u/s 68 of the IT Act, the same were charged to tax as per the provisions of section 115BBE of the Act. 5 ITA No.757/PUN/2024 7. Before CIT(A), it was contended that out of the total deposits of Rs.7,20,24,836/- an amount of Rs.1,35,53,000/- in respect of 59 depositors had already been treated by the Authority under the Benamai Property Act as the Benamai Transactions and accordingly the seizure of the F.D. Certificates in their cases had been made and subsequently the entire amount of Rs. 1,35,53,000/- had been confiscated u/s.29 of the Benami Property Act, 1988. Hence, further addition of the said amount by the Assessing Officer tantamounts to double addition of the same income, which is not permitted under the Income Tax Act. It was also argued that even addition u/s.68 also qualifies for deduction u/s. 80P of the I.T. Act, 1961. 8. However, the ld. CIT(A) was not satisfied with the arguments advanced by the assessee and confirmed the addition made by the Assessing Officer by observing as under : 4.3 Brief facts of the case are that the appellant an AOP namely M/s Shri Parshwanath Nagari Sahakari Patsanstha Maryadit, Karad (hereinafter the Patsanstha or the appellant) is a credit co-operative society operating from Karad, Maharashtra. It is involved in the business of money lending by accepting the deposits from customers/members (similar to banking business). A survey action u/s.133A of the Act was carried out in the Patsanstha on 20.09.2017. Survey Investigation revealed that the Patsanstha had maintained unexplained Benami fixed deposits. To widen the scope of the investigation, the survey action was converted into a search action under section 132 of the Act on 22.09.2017 which was concluded on 24.09.2017. 4.4 During the investigation it was revealed that the Patsanstha had total deposits of around Rs. 145 crore in seven branches. The deposits were under different schemes where rate of interest was also different. During the course of search/survey action, following major issues were noticed by the Department. 6 ITA No.757/PUN/2024 1. The accounts were opened in the Patsanstha without obtaining the KYC documents of customer/members. 2. The accounts were opened and operated without knowledge of legal owners and FDs had been created in their name. 3. The accounts were opened with another Patsanstha namely M/s Shri Sambhavnath Nagari Sahkari Patsanstha, Karad in which search action was conducted at the same time wherein it is seen that accounts were opened and operated in the names of same persons as found in M/s Shri Sambhavnath Nagari Sahkari Patsanstha Ltd without knowledge of those account holders/legal owners. 4.5 During the course of survey/search action, statements of various persons in whose name FDs had been issued were recorded on oath. The outcome of statements is narrated by the AO in detail. 4.6 From the detailed discussion in the assessment order, it can be seen that number of summons issued to the FD holders had been returned unserved stating insufficient address or person does not exists. This further strengthened the fact that FDs were issued in the name of persons without knowing them and their identity had been used for creating benami/unaccounted FD in Patsanstha. Based on the investigations conducted till the search and the results thereof, it was held that all these FDs being unaccounted and held in benami names. Therefore, the Department attached the FDs in the names of varous persons u/s 132(9B) of Act after obtaining the approval from Pr DIT (inv), Pune on 29/09/2017 and subsequently by the AO u/s.281B of the Act after obtaining the prior approval of the Pr. CIT ( Central), Pune. 4.7 During the assessment proceedings, the AO held that in spite of ample opportunities, the assessee society could not prove the source of Fixed deposits to the tune of Rs.7,20,24,836/-. Thus, as the assessee society could not prove the source of FDs amounting to Rs.7,20,24,836/- in spite of several opportunities during the search, post search proceedings as well as during search assessment proceedings, the same were liable to be taxed as unexplained credit u/s 68 of the Act. 7 ITA No.757/PUN/2024 4.8 It is seen that the appellant failed to explain the source of the fixed deposits to the tune of Rs.7,20,24,836/- even after giving ample opportunities. As the appellant failed to explain the nature and source of the fixed deposits to the tune of Rs.7,20,24,836/-, the same were treated as the income of the appellant for AY 2017- 18. 4.9 The appellant had claimed deduction u/s 80P. The AO held that no deduction can be available u/s 80 P(2)(a)(i) to the appellant on the amount of Rs. 7,20,24,836/- added u/s 68. The deduction u/s 80 P(2)(a)(i) is available to the whole of the amounts of profits and gains of business attributable to business of banking or providing credit facilities to its members. The appellant cannot claim that the fictitious FDs represent business income from its members. The onus of proving the same was on the appellant as deduction was claimed by it. Further, the AO relied upon the decision of the Hon. Kerala High Court in the case of Mundela Service Co-Op Bank Ltd. Vs. ITO [2018] 96 taxmann 355 (Kerala) wherein it was held that the assesses being a primary agricultural credit cooperative society would not be entitled to benefit of exemption under section 80(P)(2)(a)(i) in respect of cash credit brought to tax under section 68. The relevant portion of the decision is reproduced here. "5. Section 68 of the Act provides that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers explanation about the nature and source thereof or the explanation offered him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. The fact that the petitioner has credited in their books of account cash receipts to the tune of Rs.27,67,41,372/- and the fact that despite several notices, the assessee has not divulged the source thereof, are facts which are not in dispute. In the said circumstances, the assessing officer cannot be found fault with for having brought the said amount to tax under section 68 of the Act. The question to be considered therefore is as to whether the petitioner is entitled to the benefit of exemption in respect of the said income under section 80P(2)(a)(i). 6. Ext.P8, of course, is a decision rendered in an identical matter. Ext.P8 is seen rendered solely relying on the decisions of IT AT, Nagpur and IT AT, Pune in the matters referred to by the learned counsel for the petitioner, of which, the issue in the decision rendered by ITAT, Pune was whether the income brought to tax on account of disallowance of expenditure is entitled to exemption under section 80P(2)(a)(i) of the Act which has nothing to do with Ext.P8 case. Of course the issue in the decision of the ITAT, Nagpur was almost identical. I am unable to agree with the view taken by the ITAT. Cochin in Ext.P8 decision as also the view taken by the ITAT. Nagpur in the decision relied on in Ext.P8. for if the said view is accepted, assessees who are entitled to the benefit of exemption under section 80P(2)(a) (i) of the Act can bring in illicit money into business without 8 ITA No.757/PUN/2024 fear of consequences. Further, profits and gains of business is a matter covered by Chapter IV of the Act and Section 68 of the Act is one falling under Chapter VI of the Act dealing with aggregation of income. This also fortifies the view that has been taken as above." 4.10 Thus, the AO rightly relied on the decision of Hon ! ble Kerala High Court and held that the appellant is not entitled to the deduction u/s 80P in respect of the amount of Rs. 7,20,24,836/- added u/s 68. Further, as these unexplained Fixed Deposits totalling to Rs. 7,20,24,836/- were treated as Unexplained Cash Credits u/s 68 of the IT Act, the same were charged to tax as per the provisions of section 115BBE of the Act. 4.11 The Appellant has not filed any new arguments different than the ones made during the assessment proceedings. It has merely reiterated the contentions made before the AO. The crux of the arguments of the appellant is that whatever additions are made by the AO u/s 68 of the Act would still be entitled for deduction u/s 80P of the Act. The AO has rightly rebutted this argument relying on the case of Mundela Service Co-Op Bank Ltd. Vs. ITO [2018] 96 taxmann 355 (Kerala). Hence, I do not find any reason to deviate from the same. 4.12 The appellant has further contended that out of the total deposits of Rs. 7,20,24,836/- an amount of Rs 1,35,53,000/- in respect of 59 depositors had already been treated by the Authority under the Benamai Property Act as the Benamai Transactions and accordingly the seizure of the F.D. Certificates in their cases had been made and subsequently the entire amount of Rs. 1,35,53,000/- had been confiscated u/s. 29 of the Benami Property Act, 1988. Hence, further addition of the said amount by the Ld. Assessing Officer tantamounts to double addition of the same, income, which is not permitted under the Income Tax Act. In this regard, it is pertinent to note that provisions of the Benami Law are in addition to provisions contained in any other law. These are not designed to be mutually exclusive. Thus, in any given situation all three laws i.e. Income Tax Law, PMLA as well as Benami Law can be invoked simultaneously if violation has taken place or offence has been committed in respective laws. Thus, the contention of the appellant that the action under IT Act as well as PBPT Act amounts to double addition is devoid of merit and cannot be accepted. 4.13 Thus, in view of the above discussion, the addition of Rs. 7,20,24,836/- made by the AO u/s 68 of the Act is upheld. The Grounds No. 1 to 8 of the appellant are, therefore, DISMISSED. 9 ITA No.757/PUN/2024 Ground No. 9 : 5. Vide this ground of appeal, the appellant challenged the taxing at the rate prescribed u/s.115BBE of the Act on the total income computed by the AO at Rs.7,20,24,836/- which was the same amount added to the income on account of unexplained cash credit. However, as the Ground No.1 to 8 are already dismissed, this ground being in respect of charging the tax rate in respect of the impugned amount, is consequential in nature, and also deserves to be DISMISSED. Accordingly, the ground no.9 of the appellant is dismissed.” 9. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds : “1. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals)-12, Pune [hereinafter CIT(A)] erred in dismissing the appeal of the appellant society filed against the Assessment Order passed by the Ld. Assessing Officer assessing the total income of the appellant at Rs.7,20,24,840/- as against the income declared in the return of income truly and correctly at Rs. Nil. The Appellate Order so passed by the Ld. CIT(A) without due application of mind deciding the grounds raised against invoking the provisions of section 68 of the Act by the Assessing Officer duly confirmed by him being arbitrary, illegal and bad-in-law be quashed. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)-12, Pune erred in dismissing the appeal of the appellant society filed against the Assessment Order passed by the Ld. Assessing Officer making addition of Rs.7,20,24,840/- on account of unexplained cash credits u/s.68 of the Act and confirming such addition in spite of the fact that necessary details and evidences proving the identity of the depositors, creditworthiness of the depositors and genuineness of the transactions made by them for the deposits in most of the cases had been furnished ignoring and without appreciating the facts that the assessee society is engaged only in providing credit facilities to its members and accepting deposits from the members and the said activities had been carried out in accordance with the Rules and Regulations under the Maharashtra Co-operative Societies Act, 1960 and therefore such credits could not be treated as appellant’s unexplained cash credit u/s. 68 of the Act being arbitrary, illegal and bad-in-law be deleted. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)-12, Pune erred in dismissing the appeal of the appellant society filed against the Assessment Order passed by the Ld. Assessing Officer making addition of Rs.7,20,24,840/- on account of 10 ITA No.757/PUN/2024 unexplained cash credits u/s.68 of the Act and confirming such addition despite the fact that the appellant intended to produce the 164 depositors for examination before the Assessing Officer vide submission dated 10/12/2019 during assessment proceedings wherein discrepancies were noted by the Department as mentioned in para 5 of the assessment order which request had not been acceded to by the Assessing Officer and he treated the deposits made by the depositors to the extent of Rs.7,20,24,840/- as appellant’s unexplained cash credits u/s.68 of the Act which being arbitrary, illegal and bad-in-law be deleted. 4. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)-12, Pune erred in dismissing the appeal of the appellant society filed against the Assessment Order passed by the Ld. Assessing Officer making addition of Rs.7,20,24,840/- on account of unexplained cash credits u/s.68 of the Act and confirming such addition despite the fact that necessary details / evidences/ explanation had been given by the appellant society before him during assessment proceedings vide submission dated 19/11/2019, filed on 10/12/2019 and prior to the same always in response to notice issued u/s.142(1) of the Act issued by the Assessing Officer and further ignoring and without appreciating the facts that the identity of the depositors, their credit worthiness and genuineness of transactions were beyond the question as the said depositors were the members of the appellant society who could only be the depositors furnishing KYCs while opening such deposit accounts and therefore the same could not be treated as appellant’s unexplained credit u/s.68 of the Act by the Assessing Officer and so also confirmed by the Ld.CIT(A). The addition so made by the Assessing Officer and confirmed by the Ld. CIT(A) being arbitrary, illegal and bad-in-law be deleted. 5. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)-12, Pune erred in dismissing the appeal of the appellant society filed against the Assessment Order passed by the Ld. Assessing Officer making addition of Rs.7,20,24,840/- on account of unexplained cash credits u/s.68 of the Act and confirming such addition denying the appellant’s claim of deduction u/s.80P(2)(a)(i) of the Act ignoring and without appreciating the facts that the deposits from the depositors to that extent added by the Assessing Officer were taken by the appellant society in course of carrying out its business of providing credit facilities to its members as permitted under the Maharashtra Co-operative Society Act, 1960 wherein it was registered as a Co-operative Society and therefore such income qualified for deduction u/s.80P(2)(a)(i) of the I.T. Act, 1961. Therefore, denial of deduction u/s.80P(2)(a)(i) in the case of the appellant society by the Assessing Officer and upholding such denial of deduction by the Ld. CIT(A) being arbitrary, illegal and bad-in-law resulting into addition of Rs.7,20,24,840/- be deleted. 11 ITA No.757/PUN/2024 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-12, Pune erred in dismissing the appeal of the appellant society filed against the Assessment Order passed by the Ld. Assessing Officer making addition of Rs.7,20,24,840/- on account of unexplained cash credits u/s.68 of the Act and confirming such addition despite and charging tax on the rate specified u/s. 115BBE of the said Act ignoring and without appreciating the facts that the addition u/s.68 of the Act made by the Assessing Officer was itself arbitrary, illegal and bad-in-law as none of the fixed deposits was unexplained before the Ld. Assessing Officer and due submissions were made from time to time thereby furnishing the relevant details/ particulars/ evidences in most of the depositors and in few cases wherein the depositors not attended against summons/ notices, the appellant intended to produce them for verification before the Assessing Officer which opportunity was not provided by him effecting such addition u/s.68 of the Act and application of tax rate u/s. 115BBE of the Act which being arbitrary, illegal and bad-in-law, such addition made by the Assessing Officer duly confirmed by the Ld. CIT(A) be deleted without charging any tax. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-12, Pune erred in dismissing the appeal of the appellant society filed against the Assessment Order passed by the Ld. Assessing Officer making addition of Rs.7,20,24,840/- on account of unexplained cash credits u/s.68 of the Act and confirming such addition despite ignoring and without appreciating the facts that an amount of Rs.1,31,18,930/- had already been considered by the Benami Prohibition Unit (BPU), Pune under the Prohibition of Benami Property Transactions Act, 1988 (PBPTA, 1988) by the said Authority and therefore further such addition in the assessment order was tantamount to double addition of the same income on which the appellant had paid the tax and interest under the said PBPTA, 1988. The said addition of Rs.1,31,18,930/- included in the deemed income u/s.68 added by the AO of Rs.7,20,24,836/- and confirmed by the Ld. Assessing Officer since was arbitrary, illegal and bad-in-law be deleted. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-12, Pune erred in dismissing the appeal of the appellant society and confirming the charging of interest u/s. 234A, 234B, 234C and 234D of the I.T. Act 1961 by the Assessing Officer which interest charged be deleted. 9. The appellant craves leave to add, alter, amend, withdraw, modify, change or substitute any ground or grounds of appeal or to add any new ground or grounds of appeal during or before the hearing of the appeal.” 12 ITA No.757/PUN/2024 10. The ld. Counsel for the assessee submitted that despite voluminous details given before the AO and the CIT(A) neither of the authorities have gone through the same and the ld. CIT(A) sustained the addition made by the AO u/s.68 of the I.T. Act, 1961 which is not in accordance with law. The ld. Counsel for the assessee thereafter drew the attention of the Bench to the following written submission: “5. The appellant humbly submits that the Ld. CIT(A) though had quoted the submissions made by the assessee appellant dated 22/11/2021 in para 4.1, page Nos. 6 to 30 and further submission dated 06/07/2023 in para 4.2, page Nos. 30 to 33 of the appellate order. However, he made no discussion regarding the detailed submission made by the appellant stating the facts in appellant’s case along with the various judicial decisions cited before him in such detailed lengthy the submissions inter-alia contending that in view of the facts as stated in the said submissions and the judicial decisions relied upon by the assessee appellant, the Ld. Assessing Officer was not justified in holding and treating the fixed deposits lying in the names of various depositors with the appellant Patsanstha which had been deposited by the depositors while carrying out the regular business activates of the appellant of providing credit facilities to its members and accepting deposits from them who are the appellant’s depositors/customers. In fact, no discussion was made by the Ld. CIT(A) refuting the submission and contention of the appellant on the facts and also on various judicial decisions cited contending before him as to how the Ld. Assessing Officer had not considered the appellant’s claim and contention that all such deposits were made by the member depositors of the appellant and the appellant had obtained all required details and documents for KYCs while accepting such deposits and therefore the appellant could prove and establish by even producing the said member depositors before the Assessing Officer so as to prove the identity and credit-worthiness of such depositors and also the genuineness of such transactions of deposits and, therefore, the same could not be held as appellants unexplained credits u/s.68 of the Act. The appellant humbly submits that as no discussion was made by the Ld. CIT(A) controverting the appellant’s claim, in both the submissions thereby providing cogent reasons, the appellate order passed by him was against the principles laid down in section 250(6) of the I.T. Act, 1961 and therefore on this ground itself the order of the Ld. CIT(A) is deserved to be set-aside/quashed. Therefore, as raised in ground Non, the appellant humbly prays 13 ITA No.757/PUN/2024 before the Hon’ble Bench to quash/set-aside the said appellate order passed by the Ld. CIT(A). 5.1 In regard to addition made by the Ld. Assessing Officer of Rs.7,20,24,836/- on account of unexplained credits owing to deposits taken by the appellant Patsanstha during its regular course of business as its only activity is accepting deposits from member depositors and providing credit facilities to its members, neither the Ld. Assessing Officer in the detailed submissions made before him on 27/08/2019, 27/08/2018 and 26/03/2019 and also the Ld. CIT(A) in the submissions made before Mm dated 22/11/2021, 06/07/2023 and 08/11/2023 had given any specific findings in their orders as to why and how such submission and contention of the appellant were not acceptable to them. The appellant humbly submits before the Hon’ble ITAT as below: - i. The entire amount of Rs.7,20,24,840/- pertaining to fixed deposits were deposited and owned by the member depositors whose details including names, address, KYCs details while opening such deposits account had been furnished before the Ld. .Assessing Officer who merely for the facts that certain depositors did not attend to the summons issued by him u/s.131/133(6) of the Act during assessment proceedings had taken an overall view that the deposits in the names of all the depositors could not be explained by the appellant and therefore the same were appellant’s unexplained credits u/s.68 of the Act. It is humbly contended that for the reasons that some depositors did not respond to the notices and so also some notices could not be served/delivered to the depositors, when the appellant had furnished before the Assessing Officer their PAN, Aadhar Cards, Voter Id Cards as in the case may be, the deposits made by the said depositors with the appellant patsanstha could not be treated as appellant’s unexplained credits u/s.68 of the Act, as had been allegedly held by the Assessing Officer and so also confirmed by the Ld. CIT(A) on surmises and conjectures. ii. The appellant offered the Assessing Officer to produce 164 depositors for examination before him vide submission dated 10/12/2019 in respect of the deposits made by them with the appellant patsanstha in which various discrepancies were noted by the search party and the Assessing Officer as mentioned in para 5 of the assessment order, but the Ld. Assessing Officer had not accede to the appellant’s request and on the other hand deposits represented in their names of Rs.7,20,24,840/- for which all their KYCs in the form of full names, address, PANs, Aadhar Cards, Voter Id Cards as in the case may be had been furnished before the Assessing Officer and such documents also mostly were available 14 ITA No.757/PUN/2024 during the course of search action itself, had been treated by the Assessing Officer as appellant’s unexplained credits only because some of the said depositors had not attended before the Assessing Officer against notice u/s.131/133(6) of the Act or some notices could not been served and some of them had denied of making such deposits. The appellant humbly contends that all such deposits were made by the said 164 depositors and necessary KYCs had been furnished before the Income Tax Authorities and only for their non- compliance before the Assessing Officer for the reasons unknown to the appellant, the said amount could not be held as appellant’s unexplained credits u/s.68 of the Act. iii. The Ld. Assessing Officer and also the Ld. CIT(A) had not appreciated the facts that the notices u/s.133(6) and summons u/s.131 of the Act had been issued only in few cases out of total 343 cases (depositors) and only in respect of few cases the said notices either could not be served or if served the depositors had not attended before him for examination. Therefore, based on such findings of few cases, a general blanket view could not be taken regarding all the member depositors who had deposited Rs.7,20,24,840/- as appellant’s unexplained credits u/s.68 of the Act. iv. The Ld. Assessing Officer had totally denied the appellant’s request to produce the 164 depositors in whose names the total amount of deposits of Rs.7,20,24,840/- were found during the course of assessment proceedings thereby furnishing necessary details/evidences/explanation regarding the said deposits and the depositors and in response to the notice issued u/s.142(1) of the Act on 11/12/2019 it was explained by the appellant as to how the identity and credit- worthiness of the creditors/depositors and genuineness of transactions, the three criteria had been fulfilled by the appellant in its case and the appellant could produce them and prove the same before the Assessing Officer once opportunity was provided. The Assessing Officer however had not allowed any further opportunity adhering to appellant’s request and for the reason that some notices could not be served upon the depositors or some of the depositors had not attended though the notices were served and some though attended had denied of making such deposits, had treated the entire amount of Rs.7,20,24,840/- representing in the names of 164 depositors as appellant’s unexplained credits u/s.68 of the Act. v. The Ld. Assessing Officer even had ignored the facts that the appellant is a Co-operative credit society registered under the Maharashtra Cooperative Society Act, 1960 and therefore all its income whether added to the total income for any reason or other denying its return income filed declaring Nil income would qualify for deduction u/s.80P(2)(a)(i) of 15 ITA No.757/PUN/2024 the I.T. Act, 1961. Though the appellant had claimed that there was no unexplained credit as far as in respect of deposits made by the member depositors of Rs.7,20,24,840/-, without prejudice to the said claim, even if the Ld. Assessing Officer intended to make any addition to the total income, the same also would had qualified for deduction u/s.80P(2)(a)(i) of the Act, as otherwise no such violation of the provisions of the said section could be pointed out by the Ld. Assessing Officer in the assessment order. This fact had not been considered by the Assessing Officer while passing the assessment order and so also by the Ld. CIT(A) in the appellate order so passed. vi. The appellant humbly re-iterates its submissions made both before the Ld. Assessing Officer and the Ld. CIT(A) factually and legally wherein the facts have been stated in detail and various judicial decisions had been cited inter-alia contending that in view of the facts of the case of the appellant and the various judicial decisions cited and relied upon before them, the Assessing Officer was not justified in treating the amount of Rs.7,20,24,840/- as appellant’s unexplained credits u/s.68 of the Act and so also the Ld. CIT(A) without making any discussion about the appellant’s contention and submission duly was not justified in confirming such addition thereby dismissing the appeal of the appellant without adjudicating the grounds of appeal raised before him discussing the said grounds and the issues raised in such grounds. All the submissions made before the Ld. Assessing Officer during assessment proceedings and before the Ld. CIT(A) during appellate proceedings are submitted with this submission in a Paper Book for kindly perusal of the Hon’ble Bench. vii. The Ld. Assessing Officer was also not justified in making addition of the amount of Rs.1,35,53,000/- being fixed deposits in the names of 59 depositors included in the amount of Rs.7,20,24,836/- held as unexplained credits u/s.68 of the Act by him ignoring totally the facts that the said amount had already been confiscated u/s.29 of the Prohibition of the Benami Property Act, 1988 and therefore once the said amount had been confiscated holding the same belonged to benamidars, the same if added u/s.68 of the Act as unexplained credits would tantamount to double taxation of the same amount. When the deposits amounts had been confiscated, in the humbly opinion of the appellant, in appellant’s case the same could not be treated as unexplained credits u/s.68 of the Act. The Ld. CIT(A) also had not appreciated the above contention of the appellant submitted before him inter-alia contending in para 4.12 of the appellate order contending that “in this regard, it is pertinent to note that provisions of the Benami Law are in addition to 16 ITA No.757/PUN/2024 provisions contained in any other law. These are not designed to be mutually exclusive. Thus, in any given situation all three laws i.e. Income Tax Law, PMLA as well as Benami Law can be invoked simultaneously if violation has taken place or offence has been committed in respective laws. Thus, the contention of the appellant that the action under IT Act as well as PBPT Act amounts to double addition is devoid of merit and cannot be accepted”. The appellant humbly contends that in its opinion, for the reasons given above, the Ld. CIT(A) was not justified in holding the above view. 5.2 In view of the facts of the case of the appellant as discussed above, it is humbly contended that the Ld. Assessing Officer had wrongly added and treated the amount of Rs.7,20,24,836/- as appellant’s unexplained credits u/s.68 of the Act in the assessment order and so also charging tax on the same at the rate prescribed u/s.115BBE of the Act and the Ld. CIT(A) also was not justified factually and legally in confirming the said addition in the appellate order and, therefore, the addition so made by the Assessing Officer duly confirmed by the Ld. CIT(A) may kindly be deleted and obliged. 6. The appellant is filing a Paper Book duly indexed, containing various details and documents which may kindly be considered. It is certified that documents so filed in this Paper Book had already been furnished before the Ld. Assessing Officer during assessment proceedings and also before the Ld. CIT(A) during the appellate proceedings, as in the case may be and/or such documents are already available in the records of the above Authorities.” He accordingly submitted that he has no objection if the matter is restored to the file of AO with a direction to examine the various details furnished by the assessee, examine the various depositors and pass appropriate order in accordance with law. 11. The ld. Departmental Representative on the other hand heavily relied on the order of the AO and the CIT(A) and submitted that the assessee, despite opportunities granted, could not substantiate with evidence to the satisfaction of the authorities regarding the source of 17 ITA No.757/PUN/2024 fixed deposits. Therefore, the CIT(A) was fully justified in upholding the addition made by the AO. 12. So far as the claim of the assessee for deduction u/s.80P(2)(a)(i) which is not granted, he submitted that when the addition is made u/s.68 of the I.T. Act no benefit u/s.80P(2)(a)(i) of the Act can be given. He accordingly submitted that since the order of the CIT(A) is in accordance with law, the same should be upheld and the grounds raised by the assessee should be dismissed. 13. We have heard the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also gone through the various decisions relied on by both the sides. We find the AO in the instant case made addition of Rs.7,20,24,836/- u/s.68 of the I.T. Act on the ground that the assessee could not explain the source of deposit of Rs.7,20,24,836/- made in the name of different persons, the various summons/notices issued u/s.131/133(6) were returned unserved and that the assessee is not entitled to deduction u/s.80P of the Act on the addition made u/s.68 of the I.T Act. We find the ld. CIT(A) upheld the action of the AO, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the ld. Counsel for the assessee that all such deposits were made by the member depositors of the assessee Patsanstha and that the assessee had obtained all required details and documents or 18 ITA No.757/PUN/2024 KYCs while accepting such deposits. Merely because some of the creditors did not respond to the notices/summons issued u/s.131/133(6), the lower authorities cannot make addition of the entire amount u/s.68 of the I.T. Act. He submitted that despite giving voluminous details before the lower authorities they have not considered the same in the right perspective. It is also his submission that given an opportunity the assessee is in a position to produce all those depositors for the examination of the AO and discharge the onus cast on the assessee in terms of section 68 of the I.T. Act, 1961. 14. It is an admitted fact that during the course of search/ survey and assessment proceedings, the notices which were issued to some of the depositors were returned unserved because of insufficient address or party not in existence. Similarly, in some cases they have not responded to such notices. It is also an admitted fact that some of the depositors have denied to have made any such deposit in the Patsanstha and have expressed their ignorance to the KYC details available on the record of the Patsanstha. As per the provisions of section 68 of the I.T. Act, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the identity and credit worthiness of the creditor and the genuineness of the transaction. However, at the same time, it is also an admitted fact that on the basis of the statement of some of the depositors the 19 ITA No.757/PUN/2024 AO has made the addition of Rs.7,20,24,836/- u/s.68 of the I.T. Act in respect of the depositors. Since it is the submission of the ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate with evidence to the satisfaction of the AO regarding the identity and credit worthiness of the Fixed Deposit holders and the genuineness of the transaction by producing the depositors for the examination of the AO, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of AO with a direction to grant one last opportunity to the assessee to substantiate its case by producing the Fixed Deposit holders along with all the relevant details to his satisfaction. The AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 15. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 22.07.2024. Sd/- Sd/- [MS. ASTHA CHANDRA] [RAMA KANTA PANDA] JUDICIAL MEMBER VICE PRESIDENT Pune, Dated : 22 nd July, 2024 satish 20 ITA No.757/PUN/2024 Copy to : 1. The applicant 2. The respondent 3. The Pr. CIT, Pune concerned 4. D.R. ITAT, B-Bench, Pune 5. Guard File. By Order //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.