The Karnataka Cooperative Credit Society Ltd. Vs ITO (ITAT Bangalore)
Cash Deposits by Co-operative Society Members Cannot Be Taxed u/s 69A Merely for Receiving Old Currency Notes-Bengaluru ITAT Deletes Demonetisation Addition
Bengaluru ITAT deleted the addition made under section 69A in the hands of a co-operative credit society in respect of cash deposited during the demonetisation period. The Assessing Officer had treated the entire cash deposit in old currency notes as unexplained money on the grounds that the society had not filed its return of income and was not authorised to receive specified bank notes after demonetisation.
The Tribunal observed that the assessee had, in response to the show cause notice, furnished date-wise details of cash deposits, including the names, share numbers, addresses, occupations and Aadhaar numbers of the members, demonstrating that the deposits represented amounts received from members towards savings accounts, pigmy deposits and loan repayments. It also noted that the accounts of the co-operative society were statutorily audited under the Karnataka Co-operative Societies Act.
The ITAT held that the Assessing Officer was duty-bound to examine the evidence furnished and could not reject the explanation merely because the assessee had not filed its return of income. Once the identity of the members and the source of the deposits were established, the burden cast upon the assessee stood discharged. The Tribunal further clarified that receipt of old currency notes from members during the demonetisation period, even if unauthorised, cannot by itself justify an addition under section 69A. What is relevant is whether the source of the money is explained, and not merely whether the old notes were accepted. Since there was no allegation that the deposits originated from third parties or unaccounted sources, the addition was unsustainable. Accordingly, the Tribunal set aside the orders of the lower authorities and allowed the appeal of the assessee.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 03/07/2025 in respect of the A.Y. 2017-18.
