The Income Tax Appellate Tribunal (ITAT), Chandigarh bench, while upholding the revision order passed under section 263 of the Income Tax Act, 1961, held that the Assessing Officer failed to conduct inquiries with respect to abnormal cash deposits during the demonetization period.
Assessee Ravi Sher Singh Toor is engaged in operating a Petrol Filling Station under the name and style of M/s Toor HP Centre and has filed his return of income, declaring a total income of Rs. 10,90,270.
The case of the assessee was selected for scrutiny through CASS, and notices u/s 143(2) and 142(1) were issued, and assessment was completed u/s 143(3) of the Income Tax Act. Subsequently, the assessment records were called for and examined by the Pr. CIT, who observed that without making necessary inquiries in respect of abnormal cash deposits during the demonetization period, the AO passed the assessment order.
Therefore, the Pr.CIT held that the assessment order is prejudicial to the interest of revenue and passed a revision order.
Aggrieved by the revision order, the assessee filed an appeal before the tribunal. During the proceedings, Nikhil Goyal, assessee representative, argued that all the requisite documentation shall be filed before the AO to verify abnormal increase in cash deposits during the demonetization period as compared to the pre-demonetization period.
Further, he stated that where an enquiry has been made by the AO and which has been considered inadequate by the Commissioner, the same cannot lead to the order passed by the AO as erroneous and prejudicial to the interests of the Revenue.
Sarabjeet Singh, Counsel for Revenue, argued that the AO had omitted to conduct basic inquiries with regard to abnormal cash deposits during the demonetization period as compared to the pre-demonetization period, as well as the various claims made by the assessee. Hence, the AO was under an obligation to verify the complete facts of the case holistically, and the scope of assessment was not limited to the examination of cash deposits during the demonetization period.
It was observed by the tribunal that the bank statement furnished by the assessee is incomplete, and the AO has failed to make any further inquiries or investigations about the ownership of the said account and about the transactions therein.
Therefore, the assessee’s return of income and accompanying financial statements, other documents/submissions filed during the course of assessment proceedings, as well as certain specific documents available on record at the time of his examination of the assessment records, led to the conclusion that the assessment order so passed by the Assessing Officer is erroneous insofar as prejudicial to the interest of the Revenue.
After reviewing the facts and records, the two-member bench of Vikram Singh Yadav (Accountant member) and A.D. Jain (Vice President) upheld the revision order and held that the Assessing Officer failed to conduct inquiries with respect to abnormal cash deposits during the demonetization period.
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