The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) held that the burden of proof is on the assessee to establish genuineness of deposit during the demonetization period.
The present appeal has arisen out of against the order of CIT(A), NFAC for the AY 2017-18. The grounds of appeal raised by the assessee are as reproduced: “Treatment of Deposit of cash to the bank during the period of demonetization as unexplained income under Section 68 is bad in law need to be quashed.”
The assessee is a cooperative credit society engaged in providing credit facilities to its members, filed its return of income for the assessment year under consideration declaring Nil income after claiming Chapter VI-A deduction of Rs. 41.71 Lakhs under Section 80P of the Income Tax Act, 1961. It was noticed that the assessee has been collecting membership fees accepting deposits and providing credit facilities to the members.
The Assessing Officer (AO) on behalf of revenue noted that the assessee had deposited Specified Bank Notes [SBN’s] received from its members during the period of demonetization into its bank account no. 220 amounting to Rs. 38,82,000/- and in bank account no.20589 amounting to Rs. 54,58,000/- with Shri. M. Visvesvaraya Co-operative Bank Ltd, Shankar Mutt Road Bangalore. In the course of the assessment proceedings, the assessee had explained that its members had deposited the SBN’s with the assessee and in turn, the assessee had deposited the said SBN’s in the Bank.
The Counsel for the appellant contended that the authorities below have not verified the genuineness and has rejected the claim of the assessee by considering the said deposits to be unexplained cash credit.
Judicial member Perbeena pillai observed that, “We are aware of the fact that not every deposit during the demonetisation period would fall under the category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash.”
Accordingly the grounds raised by the assessee were allowed for statistical purposes. In result, the appeal filed by the assessee was allowed for statistical purposes.
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