2024 (7) TMI 340
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....this appeal has agitated against the confirmation of addition by the CIT(A) of Rs. 91,87,680/-, which has been made by the Assessing Officer by treating the cash deposits made in Specified Bank Notes during the demonetization period as unexplained income of the assessee u/s 69A of the Act. 3. The brief facts of the case are that the assessee is a cooperative credit society. The assessee is engaged in the business of providing loans and advances to its members and also in trading activities in fertilizers and allied products. The Assessing Officer noted that during the period of demonetization, the assessee-society deposited a total cash of Rs. 2,20,97,000/-. The assessee-society claimed that this amount of deposits was out of repayment of ....
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....ies fertilizers and allied products to its members-farmers on credit basis. Thereafter, the amount is recovered from the debtor members-farmers by sending agents. That the amounts in Specified Notes were lying with the agents of the assessee which were collected before the commencement of the date of demonetization period i.e. 08.11.2016. On the announcement of the demonetization period, its agents were directed by the assessee-society to deposit the already collected amount with the assessee-society which was further deposited in the bank account. The ld. counsel in this respect has further submitted that the aforesaid amount was collected from the agents and deposited in the bank account on the first three days from the commencement of de....
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....that already collected amount by the agents was called for and deposited immediately in the bank account and no fresh cash sales were made and there was no violation of the RBI Circular. Even otherwise, in our view, the impugned additions are not sustainable as deposits cannot be said to be unaccounted income of the assessee u/s 69A of the Act. No doubt, the Specified Bank Notes as per the Reserve Bank of India's notification ceased to be legal tender w.e.f. 09.11.2016, the assessee made the cash sales accepting the Specified Bank Notes in in violation of the said circular of Reserve Bank of India. The action of violation of the said circular can be taken by the competent authority in this respect. However, for the purpose of Income tax Act....
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....the Act. The AO has also not stated that the assessee has not discharged the responsibility placed on it u/s 68 of the Act. Peculiarly, the AO is taking the view that the assessee was not entitled to collect the demonized notes and accordingly invoked sec.68 of the Act. I am unable to understand as to how the contraventions, if any, of the notification issued by RBI would attract the provisions of sec. 68 of the Income tax Act. In any case, I notice that the assessee has also explained as to why it has collected demonetized notes after the prescribed date of 8.11.2016. The assessee has explained that it has stopped collection after the receipt of notification dated 14.11.2016 issued by RBI, which has clearly clarified that the assessee soci....