Tribunal orders fresh assessment by AO following CBDT guidelines for demonetization cash deposits

The Tribunal upheld the ld.Pr.CIT's order, directing a fresh assessment by the AO following CBDT guidelines for cash deposits during the demonetization period. Emphasizing the importance of thorough examination and proper verification, the Tribunal set aside the AO's assessment order, citing inadequate verification by the AO. The appeal of the assessee was allowed for statistical purposes.

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Issues:
Challenge to revisionary powers exercised by ld.Pr.CIT u/s 263 of the Act for passing a fresh assessment order.

Analysis:
The appeal was filed against the order passed by the ld.Pr.CIT exercising revisionary powers u/s 263 of the Act. The case involved the assessment of income where the AO had made certain observations and completed the assessment. However, the ld.Pr.CIT found the AO's order to be erroneous and prejudicial to the interest of revenue. The ld.Pr.CIT specifically noted that the AO had not conducted a thorough enquiry as per CBDT guidelines, especially regarding cash deposits during the demonetization period. The ld.Pr.CIT issued show cause notices to the assessee, who did not appear, leading the ld.Pr.CIT to decide the matter based on available records. The ld.Pr.CIT relied on various judgments to support the decision.

The assessee contended that all necessary compliances were met during the assessment proceedings, and the AO had not disputed any issues raised by the ld.Pr.CIT. The assessee argued that the AO had correctly assessed the income, and there was no error in the order passed. The ld.AR of the assessee also presented additional documents to support their case. On the other hand, the ld.DR supported the ld.Pr.CIT's order, emphasizing the lack of proper enquiry by the AO, especially regarding demonetization period cash deposits.

Upon thorough examination, the Tribunal observed that the AO had not adequately examined the details related to cash deposits during the demonetization period, as per CBDT guidelines. The Tribunal noted the absence of verification regarding cash deposits, loans, embezzlement, and interest-free advances. The Tribunal agreed with the ld.Pr.CIT's decision to set aside the AO's assessment order and direct a fresh assessment in accordance with the law and CBDT guidelines. The Tribunal referred to a similar case decided by a coordinate bench, emphasizing the importance of proper verification and examination in such cases.

In conclusion, the Tribunal upheld the ld.Pr.CIT's order, directing the AO to conduct a fresh assessment following CBDT guidelines for cash deposits during the demonetization period. The Tribunal emphasized the need for a thorough examination and proper verification in such cases, as demonstrated in the cited case. The appeal of the assessee was allowed for statistical purposes.

Order pronounced in court on 27th day of September, 2022.

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