Non-resident assessee eligible for section 144C assessment without requiring section 92CA(3) order

ITAT Pune held that a non-resident assessee was eligible for assessment under section 144C without requiring an order under section 92CA(3), as the word "and" in the provision should be read as "or" to avoid absurd results. The tribunal ruled that procedural law amendments apply retrospectively to pending cases. However, regarding cash deposits under section 69A, ITAT found that cash withdrawn from one bank account remains available for deposit in another within two days, and the assessee's explanation supported by brother's affidavit was credible. The addition was deleted, favoring the assessee on this issue.

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Issues Involved:
1. Validity of initiation of reassessment proceedings.
2. Applicability of provisions of section 144C of the Income Tax Act.
3. Addition of cash deposits under section 69A of the Income Tax Act.

Summary:

Issue 1: Validity of Initiation of Reassessment Proceedings
The appellant challenged the validity of the reassessment proceedings initiated under section 147 of the Income Tax Act. The Assessing Officer had issued a notice under section 148 based on information about cash deposits made by the appellant, which led to the belief that income had escaped assessment. The Dispute Resolution Panel (DRP) upheld the validity of the reassessment proceedings, confirming the addition of unexplained cash deposits.

Issue 2: Applicability of Provisions of Section 144C of the Income Tax Act
The appellant contended that the Assessing Officer should not have exercised jurisdiction under section 144C of the Act, arguing that the provisions apply only to eligible assessees, including Non-Residents, from the assessment year 2020-21 onwards. The Tribunal clarified that the procedural law, being retrospective, applies to all pending cases, and since the reassessment proceedings were conducted after the amended provisions came into effect (w.e.f. 1.4.2020), the Assessing Officer was justified in adhering to section 144C. The Tribunal dismissed the appellant's contention, stating that the word "and" in sub-clause (i) of sub-section (15) of section 144C should be read as "or," indicating two separate categories of eligible assessees.

Issue 3: Addition of Cash Deposits under Section 69A of the Income Tax Act
The appellant challenged the addition of Rs. 1,21,40,000/- as unexplained cash deposits. The Tribunal noted that the appellant had explained the sources of the cash deposits, including withdrawals from bank accounts and money borrowed from his brother. The Tribunal found that the Assessing Officer and DRP had unreasonably disbelieved the appellant's explanation, despite the short interval between withdrawals and deposits. The Tribunal emphasized that cash withdrawn from the bank is generally treated as available for subsequent deposits unless there is evidence to the contrary. The Tribunal reversed the lower authorities' decision and directed the Assessing Officer to delete the addition of Rs. 1,21,40,000/- made under section 69A of the Act.

Conclusion:
The appeal filed by the assessee was partly allowed. The Tribunal upheld the validity of the reassessment proceedings and the applicability of section 144C but reversed the addition of cash deposits under section 69A, directing the deletion of the addition.

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