Laxmi Devi Mahila Bahuddeshiya Sahkari Samiti Ltd. vs ITO

Parties Involved

Facts Summary

The assessee, a co-operative society engaged in providing loans to its members and accepting deposits from them, had not filed its return of income for the year under consideration. On information that the assessee had made cash deposits of Rs 6,04,35,444 and withdrawals of Rs 2,26,81,289 in its bank accounts during the year, the case was reopened and notice under section 148 of the Act was issued on 27.03.2022. In response, the assessee filed its return on 09.08.2022 declaring a total income of Rs 1,55,855. In the course of the assessment the assessee furnished a list of members having deposits of more than Rs 20,000 as on 31.03.2018, without PAN or Aadhaar, and a list of deposits below Rs 20,000 aggregating to Rs 38,54,009, and explained that the cash deposited in the bank represented recoveries of loans and daily deposits received from members in cash. The AO did not accept the explanation and, in paragraph 4.3 of the assessment order, computed the unexplained amount as under: Further, the assessee failed to provide explanation of entire cash deposit of Rs.6,04,35,444/-. The assessee society has provided the list of cash deposit less than 20,000/- by the members as on 31.03.2018 amounting to Rs.38,54,009/-. As per the discussion, the total cash deposit of Rs.3,39,00,146/- (6,04,35,444 – 38,54,009 – withdrawal by the assessee 2,26,81,289) remained unexplained in the hands of the assessee.…

Legal Issues

• 1. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.3,39,00,146/- made by AO u/s 68 of IT Act, 1961 by treating the cash deposit in the bank account to this extent as unexplained by ignoring that source of such cash deposit is the repayment of loan from the members & the daily/monthly deposits received from them as per its bye-laws.

Judgment Outcome

Decided in favour of Assessee.

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