Tribunal Orders Reassessment of Unexplained Cash Deposits, Emphasizes Detailed Verification & Compliance with CBDT Instructions.

The Tribunal partially allowed the appeal, remanding the case to the AO for reevaluation of unexplained cash deposits during the demonetization period. It emphasized the necessity for detailed verification of the assessee's claims and adherence to CBDT instructions. The Tribunal ruled against double taxation by noting that presumptive tax should not apply if section 68 is invoked, directing the AO to reassess the deposits and business income accordingly. The appeal was allowed for statistical purposes, ensuring proper examination of the evidence and compliance with legal standards.

---

---

Issues:
1. Addition of unexplained cash deposits during demonetization period under section 68 of the Act.
2. Presumptive tax levied on business credits by the Assessing Officer at 8%.

Analysis:
1. The case involved the assessment of an individual with various sources of income, including rental, agricultural, and other income, who deposited a significant amount during the demonetization period. The Assessing Officer (AO) treated the cash deposits as unexplained money under section 68 of the Act and taxed it under section 115BBE. Additionally, the AO presumed 8% income on total bank credits in two accounts and added it as business income. The Commissioner of Income Tax (Appeals) upheld the AO's decision in an ex-parte order due to the assessee's non-response to notices. The Tribunal considered the grounds related to cash deposits during demonetization and the presumptive tax levied by the AO.

2. The Tribunal referred to CBDT instructions emphasizing the need for verification in cases of substantial cash deposits or sales. It highlighted indicators of suspicious activities like backdating of cash or fictitious sales during the demonetization period. The Tribunal directed the assessee to provide necessary details to substantiate the claim and establish the genuineness of the deposits. If proven as business receipts, 8% would be considered as income, with the balance treated as unexplained under section 68. The AO was instructed to verify all details and evidence submitted by the assessee in line with the applicable instructions.

3. Regarding the presumptive tax issue, the Tribunal noted that the AO had already invoked section 68 for the unexplained cash deposits. As the issue was remanded for fresh consideration, levying presumptive tax on the entire cash deposit would result in double addition. Therefore, the Tribunal decided in favor of the assessee, sending the appeal back to the AO for reevaluation of the cash deposits during demonetization as per the directions provided.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, emphasizing the need for proper verification and consideration of the relevant instructions in assessing the unexplained cash deposits and business income.

---