2014 (2) TMI 977 - AT - Income Tax

Power of the CIT(A) for setting aside the assessment passed by AO Held that - Assessee contended that the CIT (A) has enabled the Assessing Officer to make such inquiry as he deems fit to verify the cash statement to be produced by the assessee - The CIT (A) has deleted the addition made by the Assessing Officer and it is not a case of setting aside the assessment and remitting the matter to the Assessing Officer - the directions given by the CIT (A) were not required to be given and the same are liable to be expunged thus, the order of the CIT(A) upheld Decided against Revenue.

Summary

Issues:
- Empowerment of CIT (A) to set aside assessment post 01.06.2001

Analysis:
1. The appeal pertains to the Assessment Year 2009-10 against the CIT (A)'s order dated 26.12.2011. The main contention raised was whether the CIT (A) had the authority to set aside an assessment post 01.06.2001.

2. The Assessing Officer observed a significant difference between the income declared by the assessee and the total cash deposits in the bank account. The AO treated a portion of the cash deposits as unexplained despite the assessee's explanation that they were from cash withdrawals on hand. The CIT (A) partially allowed the appeal, emphasizing that the AO failed to prove the cash withdrawn was spent elsewhere or that the assessee's turnover did not justify presumptive income determination under sections 44AD and 44AE of the IT Act.

3. The CIT (A) directed the assessee to produce a cash statement and explained the source of the deposits. The AO was instructed to verify the details and make inquiries to determine if the cash deposits were unexplained based on specific criteria. The CIT (A) concluded that the AO's allegation of unexplained cash deposits was not sustainable based on the evidence provided by the assessee.

4. During the appeal hearing, the Department contended that the CIT (A) erred in setting aside the assessment post 01.06.2001. However, the counsel for the assessee supported the CIT (A)'s decision, highlighting that the addition made by the AO was deleted, and the CIT (A) did not remit the matter back to the AO but allowed further inquiry.

5. The ITAT Delhi noted that the CIT (A) did not set aside the assessment but deleted the addition made by the AO. The directions given by the CIT (A) were deemed unnecessary and were expunged. Consequently, the ITAT upheld the CIT (A)'s order while expunging the directions given by the CIT (A).

6. Ultimately, the ITAT dismissed the department's appeal, confirming the CIT (A)'s order but expunging the unnecessary directions. The judgment clarified the distinction between setting aside an assessment and deleting an addition, emphasizing the CIT (A)'s authority post 01.06.2001.