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TMI Blog2023 (4) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... essing such cases. Assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. Burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to the assessee. The assessee may be granted physical hearing in order to justify its claim. We direct the Ld.AO to verify the cash deposited in the light of the above circular by granting proper opportunity of being heard to the assessee. Applicability of provisions of section 2(22)(e) - Queries raised by the Ld.AO do not indicate that there is an application of mind in respect of the money paid by assessee to M/s. Valmark Realty Holding and the money deposited by M/s. Avant Garde Fashion wear Pvt. Ltd. with assessee. The share holding of assessee in M/s. Avant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U/s. 263 of I.T. Act, 1961 and therefore also the impugned order deserves to be quashed. 6. The conclusion of the Principal Commissioner of Income tax that no inquiries were made by the Assessing Officer while passing the original order is also against the facts of the case and evidence available. Therefore also the impugned order is liable to be quashed. 7. The very fact that the Principal Commissioner of Income tax has set aside the assessment order with a direction to redo the assessment afresh, without giving any conclusive finding on the error if any shows that there was no case for passing an order U/s. 263 of I.T. Act, 1961 and therefore also the impugned assessment order is liable to be quashed. 8. In any case the appellant was Non-Banking Financial Company during that period and in normal course of business had taken advance from Avant Grade Fashion Wear P ltd for making the tax payment. The advance taken is clearly shown in the balance sheet of the company. The amount taken is used for making payment of Income Tax which is also clearly shown in the balance sheet of the company. The provision of section 2(22)(e) are not at all applicable to the this trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name M/s. Valmark Realty Holding on 03.09.2016 that was not reflecting in the balance sheet or P L account of the assessee. Also that assessee had received a sum of Rs.18,10,000/- from M/s. Avant Garde Fashion wear Pvt. Ltd. on 01.09.2016 as loans and advances out of which the amount of Rs.18,06,650/- was transferred to M/s. Valmark Realty Holding. It was also observed by the Ld.PCIT that assessee holds 62,240 shares of M/s. Avant Garde Fashion wear Pvt. Ltd. being 32.02% of share holdings. The Ld.PCIT was of the view that applicability of provisions of section 2(22e) has not been verified by the Ld.AO in respect of the above transaction. 2) The next issue is in respect of the cash deposits made by assessee during the demonetisation period which has not been verified by the Ld.AO. 4.4 The Ld.PCIT called for evidences in support of the above issues. After verifying the submissions of the assessee, the Ld.PCIT was of the view that the assessment order dated 20.11.2019 was erroneous in so far as prejudicial to the interest of revenue in terms of section 263 and therefore after considering various decisions observed and held as under: 14. In view of the above discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has been raised by the Ld.AO on the two issues that are subject matter of 263 proceedings. We also note that in respect of the cash deposits during the demonetisation period, the Ld.AO has not followed the circulars issued by the CBDT to carry out necessary verifications in respect of the genuineness of cash deposited by the assessee during the relevant time. 7.1 Admittedly, the assessee accepted the SBNs which were no longer a legal tender and were to be explained in accordance with the relevant circular mentioned hereinabove. These instructions gives a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases. 7.2 Instructions dated 09/08/2019 speaks about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not where substantial evidences of vide variation be found between these statistical analyses. Therefore, it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Garde Fashion wear Pvt. Ltd. with assessee. The share holding of assessee in M/s. Avant Garde Fashion wear Pvt. Ltd. is also not been a subject matter of verification by the Ld.AO. The Ld.AR submitted that assessee is a NBFC and therefore advancing of loans is a regular activity on day-to-day basis. It was thus submitted that provisions of section 2(22e) will not attract to a NBFC company. Very pertinently the Ld.AO has also not looked into whether assessee is a NBFC or not. 7.7 We direct the Ld.AO to verify the documents relating to assessee being a NBFC and to consider the issue in respect of applicability of provisions of section 2(22e) in accordance with law. 7.8 In our considered opinion, we therefore do not find any infirmity in the 263 proceedings initiated in the present facts of the case. With these above modified directions, we uphold the order passed by the Ld.PCIT u/s. 263 of the act. 8. On enquiry being raised by the bench in respect of status of the assessment pursuant to 263 order, the Ld.AR submitted that the assessment is presently going on. We therefore do not find reason to interfere with the proceedings. However direct the Ld.AO to carry out the v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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