Spandana Sphoorty Financial Limited Vs ACIT (ITAT Hyderabad)
ITAT Hyderabad held that addition towards cash deposited during demonetization period cannot be approved since explanation of assessee is rejected without verification and also Standard Operation Procedures [SOP] provided in CBDT instruction No. 3/2017 dated 21/02/2017 also not followed. Accordingly, matter set aside to file of AO.
Facts- The assessee is a non-banking financial company (NBFC), engaged in the business of extending unsecured microfinance loans to women borrowers from low-income households through the Joint Liability Group model.
During the course of the assessment proceedings, it was observed by the AO that the assessee company had deposited cash in its bank accounts during the demonetization period, i.e., 09.11.2016 to 30.12.2016 aggregating to Rs. 135,62,10,311/-. AO, out of the total cash deposits had identified collections in SBN’s amounting to Rs. 56,41,00,000/-. Accordingly, the A.O held the amount of cash deposits (SBN’s) of Rs. 56.41 crores as having been sourced from the unexplained money of the assessee company u/s. 69A of the Act. CIT(A) dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Held that the A.O., while so concluding, ought to have carried out necessary verifications in line with the SOP provided in the CBDT Instruction No.3/2017, dated 21/02/2017. We thus, in the backdrop of our aforesaid deliberations are of a firm conviction that the view taken by both the authorities below, who have without carrying out any verifications summarily rejected the assessee’s explanation regarding the source of the subject cash deposits (SBNs) of Rs. 56.41 crores made in its bank accounts, and held the same as having been sourced out its unexplained money made an addition of the said amount under Section 69A of the Act, cannot be approved as such on our part. We are of the view that the matter, in all fairness, requires to be set aside to the file of the AO, who is directed to verify the explanation of the assessee company regarding the source of the cash deposits (SBNs) of Rs. 56.41 crores (supra) made in its bank accounts during the demonetization period by strictly following the CBDT Instruction No. 3/2017, dated 21/02/2017. We, thus, set aside the matter to the file of the AO in terms of our aforesaid directions.
