ITAT emphasizes due process in tax appeals, directs AO to verify evidence thoroughly.

The ITAT directed the AO to verify all details and evidence provided by the assessee, considering the applicable instructions and granting a proper opportunity for the assessee to justify its claim. The appeals by both the assessee and revenue were allowed for statistical purposes, emphasizing the importance of due process and thorough verification in such cases.

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Issues:
Addition made u/s. 69A r.w.s. 115BBE for cash deposited during demonetization period as unexplained.

Analysis:
The case involves cross-appeals by the assessee and revenue challenging the order passed by the National Faceless Appeal Centre for A.Y. 2017-18. The assessee, a company acting as a franchise for telecom and DTH service providers, declared a turnover of Rs.70,40,80,419/- and a profit of Rs.23,92,516/-. The main issue pertains to the addition made u/s. 69A r.w.s. 115BBE for cash deposited during the demonetization period. The assessee argued that the entire business is digitized with no human involvement in sales, and the deposits were from small customers making cash purchases. The Assessing Officer (AO) made additions without considering the turnover, leading to a total income determination of Rs. 5,82,76,300/-. The AO's order was challenged before the CIT(A) and subsequently before the ITAT.

The assessee contended that the AO's order was null and void due to non-service of statutory notice and emphasized the online nature of transactions with automated accounting. The net profit calculation at 4% was disputed as unfounded and not based on evidence. The assessee maintained computerized books of accounts, and the deposits were from small customers with audited profits of Rs.23,92,516/-. Issues were raised regarding notices sent to a defunct email address, hindering the assessee's response and resulting in an ex-parte order.

The ITAT observed that the AO's addition was based on the post-demonetization cash deposits, and due to notices sent to a non-functional email, deemed it necessary to remand the issue for verification. The ITAT referred to standard operating procedures issued by the CBDT in similar cases, highlighting the need for thorough investigation and consideration of evidence. Instructions emphasized the comparative analysis of cash deposits and sales, indicators of suspicious transactions, and the burden on the assessee to substantiate claims.

The ITAT directed the AO to verify all details and evidence provided by the assessee, considering the applicable instructions and granting a proper opportunity for the assessee to justify its claim. The appeals by both the assessee and revenue were allowed for statistical purposes, emphasizing the importance of due process and thorough verification in such cases.

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