O R D E R

PER WASEEM AHMED, ACCOUNTANT MEMBER :

This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 30/04/2024 in DIN No.ITBA/NFAC/S/250/2024-25/1064471698(1) for the assessment year

2017-18.

2. The only issue raised by the assessee is that the learned CIT-A erred in confirming the addition made by the AO under section 69 of the Act amounting to Rs. 55,10,634.00 representing the cash deposited in the bank during the demonetization period.

3. The assessee in the present case is an AOP and filed the return of income declaring income at Rs. NIL after claiming the deduction under Chapter-VI-A of the Act. There was cash deposit by the assessee of specified banknotes in its bank during the demonetization period. The source of such cash deposit was explained by the assessee, stating that it has received money in cash from its members which was deposited in the bank. However, the AO found that the specified banknotes is no more a legal tender effective from 9th November 2016 by virtue of the gazette notification bearing No. 2652 dated 8 November 2016. Accordingly, the cash received by the assessee from its members is valueless but the same has been deposited by the assessee in its bank during the demonetization period which represents the value in its bank accounts. Accordingly, the AO treated the same as unexplained money of the assessee and added under section 68 of the Act to the total income of the assessee.

4. Aggrieved assessee preferred an appeal to the ld. CIT-A who confirmed the order of the AO.

5. Being aggrieved by the order of the ld. CIT-A, the assessee is in appeal before us.

6. The ld. AR before us filed a written submission and a paper book running from pages 1 to 7 and 1 to 56 and contended that source of money in the hands of the assessee was accepted by the AO during the assessment proceedings. Such source of cash deposit has been treated as unexplained money under section 68 of the Act merely on the reasoning that this money was accepted after 8th of November 2016 when such specified banknotes were no more legal tenders. However, in such facts and circumstances the various Tribunals have deleted the addition made by the revenue authorities. To this effect, the ld. AR before us drawn our attention on the order of the ITAT in the case of Mahaveera Minority Credit Co-operative Society Ltd versus ITO in ITA No. 528/Bang/2024 wherein such addition was deleted by the ITAT vide order dated 13 June 2024.

7. On the other hand, the ld. DR before us vehemently supported the order of the authorities below.

8. We have heard the rival contention of both the parties and perused the material available in record. In the present case, the assessee claimed to have received money in SBN after 8 November 2016 which was deposited in the bank account during the demonetisation period. As per the revenue, the SBN were not the legal tender during the relevant time and therefore such currency was nothing but a piece of paper having no value. But the assessee by accepting such SBN during demonetisation and then depositing such SBN in its bank account during the demonetisation period has got the benefit of equivalent value in the new currency which was representing the unexplained money of the assessee and therefore the same was added under the provisions of section 68/69A of the Act.

9. It is the admitted position that the specified bank notes (cessation of liabilities) Act 2017 provides that no person shall knowingly or voluntarily hold, transfer, or receive any specified bank note on and from the appointed date i.e. 31st day of December 2016. Before 31st December 2016 i.e. between 9th November 2016 to 30th December the banks, and other institution such as petrol pumps, hospitals, Government Department were allowed to accept SBN with certain restrictions. In other words, up to the appointed date, the Government of India and RBI were bound to exchange the SBN once they are tendered for exchange until 30th December