MALDA CO-OPERATIVE AGRICULTURE & RURAL DEVELOPMENT BANK LTD.,MALDA V. I.T.O., WARD - 3(2), KOLKATA, KOLKATA

ITA 1138/KOL/2024

AI Insights

The case involves the Malda Co-operative Agriculture & Rural Development Bank appealing against the order of the CIT(A), which confirmed the addition of demonetized currency (SBNs) collected from its members and deposited in the bank's accounts. The Assessing Officer had initially treated these deposits as unexplained income, asserting that the assessee was not a specified category of banking institution entitled to collect SBNs. The Tribunal, however, found that the assessee had provided sufficient evidence regarding the deposits, including details of each member and the amounts deposited, which were against loans and other liabilities owed to the bank. The Tribunal referenced a similar case involving the Bongaon Cooperative Credit Society Limited to support its decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312347 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: Bongaon Cooperative Credit Society Limited vs. ITA No.1101/Kol/2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJA SENGUPTA
• Assessee Lawyers: N. C.MONDAL
• Keywords: Bad and doubtful debts

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER आयकर अपील सं/ITA No.1138/KOL/2024 (निर्धारण वर्ा / Assessment Year : 2017-2018) Malda Co-operative Agriculture & Rural Development Bank, Unnayan Bhawan, 17/A, Rabindra Avenue, Malda-732101 Vs ITO, Ward-3(2), Malda PAN No. :AADCM 6569 J (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri N.C.Mondal, FCA रधजस्व की ओर से /Revenue by : Shri Raja Sengupta, CIT-DR सुनवाई की तारीख / Date of Hearing : 30/04/2025 घोषणा की तारीख/Date of Pronouncement : 30/04/2025 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order dated 30.03.2024, passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, passed in DIN & Order No.ITBA/NFAC/S/250/2023- 24/1063680358(1), for the assessment year 2017-2018. 2. Shri N.C.Mondal, FCA appeared on behalf of the assessee and Shri Raja Sengupta, CIT-DR appeared on behalf of the revenue. 3. It was submitted by the ld. AR that the only issue in assessee’s appeal was against the action of the ld. CIT(A) in confirming the addition representing the demonetized currency being the Specified Bank Notes (SBN) collected by the assessee from its members and deposited in the accounts. It was the submission that the Assessing Officer held that the assessee was not a specified category of banking institution which was entitled to collect the SBNs from its members. It was the submission that ITA No.1138/KOL/2024 2 these amounts which represented SBNs were the deposits made by its members against loans and other liabilities owed by them to the bank. It was the submission that for the purpose of the provisions of Section 80P of the Act, the assessee is deemed as a bank. It was the submission that if the assessee had not collected the said amounts from its members, the amounts could have become bad debts. It was the submission that on account of business exigencies, the assessee had taken receipts as given by the members. It was the submission that the details of each member and the amounts and the notes as given by each of the members, were available and were produced before the Assessing Officer. It was the submission that the addition as made by the Assessing Officer and as confirmed by the ld. CIT(A) is liable to be deleted. 4. In reply, ld. CIT-DR submitted that the Assessing Officer in page 11 at para 6.2.3 has brought out the banks which are entitled to collect the SBNs. It was the submission that the assessee is not one of the banks as mentioned, who is authorized to collect SBNs. It was the submission that the ld. CIT(A) has also considered the facts in depth when he has dismissed the appeal of the assessee. It was the prayer that the order of the ld. CIT(A) and that of the ld. Assessing Officer be upheld. 5. In reply, ld. AR also placed before us a copy of the order of the coordinate bench of the Tribunal in the case of Bongaon Cooperative Credit Society Limited, passed in ITA No.1101/Kol/2023, order dated 18.11.2024. ITA No.1138/KOL/2024 3 6. We have considered the rival submissions. A perusal of the facts in the present facts clearly shows that the assessee has produced the details of the persons from whom the SBNs have been collected by the assessee. The assessee, admittedly, a primary cooperative society and is entitled to deduction u/s.80P of the Act but it is not a cooperative bank as per the terms of the provisions of Section 80P(4) of the Act. Be that as it may, the assessee has also categorically admitted that the amounts received in the form of SBNs are from its members and these receipts are against the loan liabilities that are owed by the said members to the assessee. When a debtor is being realized when a bank would not be looking at the issue as to whether the notes are SBNs or not, the interest of the bank lies to recover its loans. The details of the members who have deposited the SBNs were also very much available before the Assessing Officer. If at all the Assessing Officer wanted to examine the same, it was very much opened to him. The Assessing Officer, however, chose to disregard the persons, who have deposited the SBNs and has sought to treat the receipts as unexplained income of the assessee, which is a credit cooperative society. The repayments of the loans from the members are very much available in the accounts of the assessee. The amounts have come in cash book only. The source of all the deposits has also been explained by the assessee. The identity of the debtors is also very much available before the Assessing Officer. The statement against the loan accounts are also available before the Assessing Officer. Thus, clearly the identity, genuineness and the ITA No.1138/KOL/2024 4 creditworthiness of the receipts of the SBNs from its members are also proved and consequently the same cannot be treated as an unexplained income in the hands of the assessee. This being so, we are of the view that the addition as made by the Assessing Officer and as confirmed by the ld. CIT(A) is unsustainable and consequently we delete the same. 7. In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 30/04/2025. Sd/- (RAKESH MISHRA) Sd/- (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 30/04/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// "