ITO Vs Ambika Gramin Bigarsheti Sahakari Patsanstha (ITAT Pune)
The case of ITO v. Ambika Gramin Bigarsheti Sahakari Patsanstha came before the Income Tax Appellate Tribunal (ITAT), Pune, to address an appeal filed by the Income Tax Officer (ITO) against an order from the National Faceless Appeal Centre (NFAC). The dispute centered on a cash deposit of ₹1,20,45,000 made by the assessee, a credit cooperative society, during the demonetization period of November 2016. The Assessing Officer (AO) had treated this amount as an “unexplained cash credit” under Section 68 of the Income Tax Act, 1961, arguing that the society was not authorized to accept the Specified Bank Notes (SBNs) that had been demonetized.
The assessee, Ambika Gramin Bigarsheti Sahakari Patsanstha, had successfully appealed this addition before the NFAC, which had ruled in its favor. The Revenue’s appeal to the ITAT was based on several grounds, including the claim that the society’s act of accepting SBNs was an “infringement of law” and that the deposits should be treated as unexplained income.
Arguments and Factual Background
The cooperative society’s primary argument was that its deposits were from an explained source. It provided a detailed breakdown of the deposits, showing that the bulk of the funds—₹1,11,66,300—came from members as loan repayments and various deposits. The society stated that it had provided the AO with a comprehensive list of members, including their names, addresses, and PAN details, and even offered to produce the members for verification.
