2022 (11) TMI 524 - AT - Income Tax

Revision u/s 263 - As per CIT, AO has not examined the details with respect to cash deposits made during the demonetization period - HELD THAT - AO has not examined the details with respect to cash deposits made during the demonetization period. AO should have been examined in depth the source of the cash deposited during the demonetization period. DR has rightly pointed out that CIT has rightly exercised his revisionary powers u/s 263 and the AO has failed to do discharge his duty in accordance with law. Therefore, the assessment order passed u/s 143(3) of the Act has rightly been set aside by the CIT in exercising his jurisdictional power is upheld. The similar issue has been decided by the coordinate bench of the Tribunal in the case M/s Bhoopalam Marketing Services Pvt. Ltd 2022 (11) TMI 331 - ITAT BANGALORE - Appeal of the assessee is treated as allowed for statistical purposes.

Summary

Issues:
1. Jurisdictional power exercised by the Principal Commissioner of Income Tax under Section 263 of the Act.
2. Adequacy of examination by the Assessing Officer regarding cash deposits during the demonetization period.

Analysis:
1. The appeal was filed against the order passed by the Principal Commissioner of Income Tax (Pr.CIT) under Section 263 of the Income Tax Act. The appellant contended that the Pr.CIT erred in exercising jurisdiction under Section 263, alleging that all material evidence was produced during assessment proceedings. However, the Pr.CIT found that the Assessing Officer (AO) did not adequately examine the source of cash deposits during the demonetization period. The Pr.CIT issued show cause notices to the assessee, but no response was received. Relying on various judgments, the Pr.CIT set aside the AO's order and directed a fresh assessment. The Tribunal upheld the Pr.CIT's decision, emphasizing the importance of thorough examination of cash deposits during demonetization.

2. The Assessing Officer's failure to delve into the details of cash deposits during the demonetization period was a crucial issue. The appellant argued that all necessary details were submitted, and the AO was satisfied during the assessment proceedings. However, the Pr.CIT observed a lack of detailed examination by the AO, leading to the order being set aside. The Tribunal concurred with the Pr.CIT's decision, citing a similar case where a remand was ordered for a de novo verification of cash deposits post-demonetization. The Tribunal directed the AO to conduct a thorough examination in line with specified instructions and to provide the appellant with a fair opportunity to present its case. The appeal was allowed for statistical purposes, emphasizing the burden on the assessee to substantiate the genuineness of cash deposits during demonetization.

This comprehensive analysis highlights the core issues of jurisdictional power under Section 263 and the necessity for a detailed examination of cash deposits during the demonetization period, as addressed in the legal judgment by the ITAT Bangalore.