ITAT Remands Demonetisation Cash Deposit Addition to AO for Fresh Verification:

The assessee's case was selected for scrutiny on account of cash deposits made during the demonetisation period in his bank account maintained with State Bank of India, Kalyanpur Branch, Lucknow. Although the assessee had filed his return of income, he did not comply with the notice issued under Section 142(1) of the Income Tax Act dated 13 February 2018. Consequently, the AO proceeded to complete the assessment under Section 144 of the Act on the basis of the material available on record and treated the cash deposits of Rs. 98,59,900 as unexplained income. The CIT(A) upheld the addition. 

The Tribunal noted that there had been no effective representation on behalf of the assessee before the lower authorities and that the AO had treated the entire cash deposits as unexplained income without properly examining the explanation furnished by the assessee. On examining the material available on record, the Tribunal took note of the assessee's claim that the total sales during the relevant period amounted to Rs. 1.45 crore. The Tribunal observed that these figures and the nature of the transactions required verification at the level of the AO before drawing any conclusion regarding the taxability of the deposits.

Accordingly, the Tribunal set aside the orders and restored the assessment to the file of the AO for fresh assessment after providing adequate opportunity of being heard to the assessee.