Tribunal Orders Re-evaluation of Cash Deposits During Demonetization; Loss Disallowance to be Removed in Assessment.

The Tribunal allowed the appeal, directing the AO to re-evaluate the addition of Rs. 49,49,000/- for cash deposits during demonetization, citing insufficient basis for the initial decision. It also instructed the AO to remove the disallowance of carrying forward losses, emphasizing the independence of loss determinations across different assessment years.

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Issues:
1. Addition of cash deposits during demonetization period.
2. Rejection of claim of carry forward of loss.

Issue 1: Addition of cash deposits during demonetization period
The appeal was against an order confirming the addition of Rs. 49,49,000/- as cash deposited during the demonetization period. The assessee's return of income declared a loss, and the case was selected for scrutiny assessment. The assessee, a private limited company engaged in earthwork and gravel supply, deposited cash during demonetization. The Assessing Officer (AO) believed the source of the cash was unexplained and made the addition under section 68 r.w.s. 115BBE of the Act. The claim of carry forward of loss was also rejected as the return was filed after the due date. The CIT(A) upheld the AO's decision. The assessee contended that audited books and details of cash sources were provided, citing a Co-ordinate Bench decision. The Tribunal noted the audited accounts, revenue from operations, and nature of the business, finding no errors in the books. It concluded that the addition was based on surmises and conjectures, lacking a basis. The AO was directed to re-examine the issue, ensuring a fair hearing for the assessee.

Issue 2: Rejection of claim of carry forward of loss
Regarding the claim of carry forward of business loss, the Tribunal held that the AO's role was to inform the assessee of the loss amount, while the decision on carrying forward and setting off losses against future profits rested with the AO of the subsequent year. Citing a Supreme Court decision, the Tribunal emphasized that the AO determining the loss in one year did not bind the assessee for subsequent years. Consequently, the Tribunal directed the AO to remove the disallowance of carrying forward losses, allowing the assessee's appeal.

In conclusion, the Tribunal allowed the appeal, emphasizing the need for a thorough examination of the books and fair consideration of the assessee's submissions. The decision highlighted the importance of proper assessment procedures and the independence of loss carry forward determinations between different assessment years.

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