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2025 Supreme(Online)(ITAT) 7625
INCOME TAX APPELLATE TRIBUNAL (KOLKATA BENCH)
SHRI GEORGE MATHAN, J, SHRI RAKESH MISHRA, ACJ
Sridharpur Co-Operative Bank – Appellant
Versus
ITO, Ward-3(2), Burdwan – Respondent
ITA No.: 672/KOL/2024
For the Appellants/Petitioners: M. Goenka, S. Goenka
For the Respondents: Praveen Kishore
Deposits during the demonetization period cannot be automatically classified as unexplained income if proper records and evidence are provided, affirming due process in tax assessment.
Headnote:(A) Income Tax Act, 1961 - Section 68 - Demonetization period - Appeal against CIT(A) order upholding addition of SBN deposits as unexplained income - Assessee's deposits during demonetization challenged for lack of authority to accept deposits - The appeal was admitted after condoning delay due to reasonable cause shown by the assessee. (Paras 1.1, 5.6)
(B) Burden of proof lies with the appellant to demonstrate the genuineness of deposits - Assessee provided detailed lists of depositors and explanations which were not satisfactory according to the lower courts. The law requires that any unexplained cash deposited must be properly accounted for to avoid illicit income classifications. (Paras 5.5, 5.7)
Facts of the case:
The appellant, a Primary Agricultural Co-operative Credit Society, received deposits totaling Rs. 10,07,14,500/- in demonetized currency notes, which were initially accepted due to confusion during the demonetization process. The lower authorities deemed this amount unexplained income under Section 68 due to perceived inadequacies in demonstrating the receipts' legitimacy.
Findings of Court:
The court found that adequate records were maintained, and that mere reception of SBNs does not automatically classify funds as unexplained. There was insufficient evidence presented by the department to justify the addition. The appeal from the lower court's decision was evaluated against previous tribunal decisions favoring the treatment of such deposits. Thus, the ruling favored the appellant’s submissions, allowing for a reconsideration of the case.
Issues: The core issue revolved around the classification and justification of the SBN deposits as unexplained income and the legitimacy of the procedures employed by the assessing authorities.
Ratio Decidendi: The Tribunal ruled that the additional amount in question must be correctly justified, and if the appellant provided verifiable evidence, the addition under Section 68 could be contested and found unjustifiable. (Paras 11, 12, 13)
Result: Appeal allowed.
| Table of Content |
|---|
| 1. assessment of the appeal and procedural adherence. (Para 1 , 2 , 3) |
| 2. clarification on legal standing during demonetization. (Para 5 , 6) |
| 3. final ruling on appeal outcomes. (Para 7) |
| 4. validity of proofs for cooperative entities regarding deposits. (Para 8 , 9) |
| 5. clarification of judicial precedents. (Para 10) |
ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 30.01.2024.
1.1. The Registry has informed that the appeal is barred by limitation by 3 days. Though the assessee has not filed any petition for condonation of delay however, at the time of hearing, Ld. Counsel for the assessee submitted explaining the reasons for the delay in filing the appeal. After considering the same, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1) That the Learned CIT (Appeal) NFAC has erred in upholding the addition made by the A.O. under section 68 of the I.T Act, 1961 money deposited in S.B.N. during the Demonetization period of Rs. 100714500/- as unexplained income which is grossly illegal and unwarranted and unjustified.
2) That the Learned A.O. disallowed money deposited by members during Demonetization period under section 68 as unexplained income on the ground that the assesses was not authorized to receive S.B.N. during demonetization period was unjustified and not as per provisions of the section 68.
3) That section 68 of the I.T. Act, 1961 states as follows:
"where any sum is found credited in the books of the assesses maintained in any previous year and the assesses offers no expatiation about the notice and sources thereof or the explanation offered buy him is not on the opinion of the Assess sing Officer satisfactory sum so credited may be charged to income tax as the income of the assesses.
4) That the assesses submitted full list of S.B.N. deposited with name and address of the depositor together with PAN of depositor of Rs. 50000/- or more and the same fact is acknowledge by the A.O. in his assessment order. He did not verify the nature of deposit and its genuiness and did not confirm the same by giving notice to the depositor to verify its geniuses of the deposits' made and disallowed the sum as unexplained income which is grossly unjust and unlawful. A complete list of the depositor is attached paper Book Page 35 ΤΟ 103
5) That some part of the above list and some confirmation of the depositors were given to the Commissioner of Income Tax (Appeal) NFAC. He also did not verify the geniuses of the deposits and upheld the decision of the A.O. which is illegal and unjustified
6) That the charge of the Learned CIT (Appeal) NFAC that the infrastructure of the bank is not capable to receive S.B.N. of Rs. 100714500/- was baseless. The society has ten branches and have following the working hours. As per certificate of the society attached. As per book paper book page 117.
7) That the above deposit was recorded in day book of bank branches and cannot be added back on suspicion.
8) That the Learned A.O. & CIT (Appeal) NFAC did not mention why the explanation offered by the assesses was unsatisfactory which is bad in law. The A.O. did not issue any show came notice to the assesses before invoking section 68 which is unjust and unlawful.
9) That all over India District Central Co-Operative banks, Urban Co-Op. banks and primary Agricultural co-Op. societies doing banking business accepted S.B.N. during 09/11/16 to 14/11/16 and the R.B.I. has exchanged all the S., B.N. received after inspection by NABARD and special audit by C
