Agora Microfinance India Ltd. Vs ITO (ITAT Mumbai)
Summary: The assessee, Agora Microfinance India Ltd., is an NBFC engaged in micro-finance business, extending small-value loans to borrowers belonging to economically weaker sections and recovering the loans through periodic instalments. The loans were stated to have been sanctioned after compliance with Know Your Customer (KYC) norms prescribed by the Reserve Bank of India.
For Assessment Year 2017-18, the assessee had filed its return declaring Nil income after setting off brought-forward losses. The return was selected for scrutiny through CASS primarily to examine cash deposits, particularly those made during the demonetisation period. The Assessing Officer noticed total cash deposits of ₹23.35 crore during the relevant previous year, of which ₹3,88,90,827 related to the period commencing 09.11.2016. The audited financial statements disclosed receipt of ₹1,38,84,000 in Specified Bank Notes (SBNs) from loan borrowers between 09.11.2016 and 30.12.2016. Bank information, however, showed SBN deposits of ₹1,56,47,500, comprising ₹1,36,17,500 with Kotak Mahindra Bank and ₹20,30,000 with HDFC Bank.
The Assessing Officer noted that the cash book showed an opening SBN balance of ₹2,56,000 as on 08.11.2016. After giving credit for that amount, he treated ₹1,53,91,500 as unexplained cash credit under section 68 of the Income-tax Act and subjected it to tax under section 115BBE.
