Addition under section 68 of the Income Tax Act, 1961 is not allowable when the enquiry and investigation as per CBDT Instructions on cash deposited in post demonetisation period which is necessary to be not done, the Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has restored the issue for fresh adjudication.
M/s. Bhavana Cooperative Credit Society Niyamita, the assessee is a cooperative credit society engaged in providing credit facilities to its members. The assessee deposited Rs. 43,10,760/- during the post-demonetization between 09/11/2016 and 30/12/2016. TheAO made an addition of said amount as income of the assessee u/s. 68 of the income tax act, on the ground, that the assessee ought not to have accepted SBN which was no longer a legal tender.
The AO assessed Rs. 67,54,833/- as regular income of the assessee after a proportionate disallowance of Rs. 24,44,073/ u/s 80P(2)(a)(i) from Gross total income of Rs. Nil and made addition of Rs.43,10,760/- u/s. 68 r.w.s. 115BBE. On appeal CIT(A), confirmed the order of the AO.
Shri V. Srinivasan, the counsel for the assessee stated that the assesseeaccommodated its members by extending its services by accepting the money deposited by them and no benefit has accrued to the assessee from the deposit of demonetised currency notes because the assessee has merely acted as an intermediator in utilising old currency which ceased to be accepted as a legal tender.
Further alleged that authorities below have not verified the genuineness and have rejected the claim of the assessee by considering the said deposits to be unexplained cash credit. On the contrary, the counsel appeared for revenue, Shri Praveen Karanthrelied on the orders passed by the authorities below.
A Coram of Shri Chandra Poojari, AM and Smt. Beena Pillai, JM viewed that the various standard operating procedures laid down by the central board of direct taxes issued from time to time give a hint regarding what kind of investigation, enquiry, and evidence the assessing officer was required to take into consideration to assess such cases.
Further observed that it is important to examine whether the case of the assessee falls into any of the above parameters are not and the assesseewas directed to establish all relevant details to substantiate its claim in line with the above application instructions.
“The burden is on the assessee to establish the genuineness of the deposit to fall outside the scope of unaccounted cash. The AO shall verify all the details/evidence filed by the assessee based on the above direction and consider the claim in accordance with the law”, the Tribunal held.
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