The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the standard operating procedure ( SOP ) issued by the Central Board of Direct Tax ( CBDT ) should be followed while making additions in respect of cash deposits found during the demonetization period.
The assessee, Chandrakant Tatoba Patil, during the period from 09-11-2016 to 31-12-2016, had deposited cash which was inclusive of an amount from Manisha Patil. There was no evidence in support of these cash deposits which were made during the demonetization period.
According to the Principal Commissioner of Income Tax (PCIT), the CBDT had issued instructions and an SOP for completing the assessments involving issue of huge cash deposits by the assessee during the demonetization period and there was no verification by the AO in terms of the said SOP issued by the CBDT.
The PCIT on an examination of the assessment record found that no enquiry was conducted in terms of instructions issued by the CBDT. The assessee filed an appeal as to whether the PCIT was justified in invoking the jurisdiction under Section 263 of the Income Tax Act 1961.
Keyur Patel on behalf of the revenue submitted that the AO had failed to conduct the proceedings in terms of instructions issued by the CBDT, particularly cases relating to cash deposits during the demonetization period. The CBDT had also clearly instructed all the Assessing Officers to conduct assessment in terms of the said SOP.
The Pune Bench of Inturi Rama Rao, (Accountant Member) and S.S. Viswanethra Ravi (Judicial Member) dismissed the appeal by the assessee and observed that there was no reference or whatsoever in respect of cash deposits and the CBDT instructions and no verification by AO.
“We note that the PCIT only remanded the matter to the file of AO for proper examination on facts and applicability of provisions of law along with SOP issued by the CBDT and no prejudice would cause to the assessee in representing his case before the AO with evidence if any rebutting the finding of PCIT in respect of huge cash deposits during demonetization period.” The Bench observed.
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