Cash deposit during demonetisation-AO to complete assessment by 30th June 2019

Substantial cash deposits during demonetisation, AO to complete best judgment assessment by 30th June 2019 where notices u/s 142(1) not responded

CBDT vide letter dated 15.11.17 had issued a SOP for issue of notice u/s 142(1) of Income-tax Act, 1961 for filing of returns of income pertaining to assessment year 2017-18 in cases related to substantial cash deposit during the demonetisation period.

CBDT has stated that subsequently, notice u/s 142(1) was issued in around 3 lakh cases. However in around 87,000 cases out of these cases, assessees concerned have not filed their return of income in response to the said notice.

Accordingly, as stated in its latest instruction, the Board has decided that cases in which said notices under section 142(1) have remained non-complied with, would be handled in the following manner :

1. An updated information regarding address, bank-account, transaction detail, etc. in the identified cases would be provided to the jurisdictional Assessing Officer (AO) by the Pr. DGIT (Systems). Further, an internal Guidance Note for assistance of AOs for verification of cash deposits and framing of assessments in demonetisation related cases shall also be issued subsequently by the Pr. DGIT (Systems).

2. In these cases, AO would proceed with completion of the ‘best judgement assessment’ under section 144 of the Act . The summarised form of relevant provision i.e. section 144(1)(b) of the Act is:

“If any person fails to comply with all the terms of a notice issued under section 142(1), the AO after taking into account all relevant material which the AO has gathered shall after giving the assessee an opportunity of being hear make the assessment of total income or loss to the best  of his judgement..

3. In ‘best judgement assessment’ order being framed under this SOP, the Range Head shall mandatorily issue directions from time to time under section 144A of the Further, Range Head abcaus.in would also monitor framing of the final assessment order.

4. The AOs should, through local enquiries, endeavour to identify possible addresses of the assessee as per the modes prescribed in the second proviso to Rule 127 of the Income tax Rules, The results of these enquiries are to be captured on ITBA in accordance with modalities to be provided by the Pr. DGIT (Systems).

5. While gathering material, section 133(6) of the Act should be suitably invoked by the AO so as to gather additional information about persons, transactions and fund flow from the banks where the suspected transactions took place. Such notices would be issued by the concerned AO after a careful appraisal of information at his disposal so that maximum possible additional information can be culled out. Further, a detailed analysis of past income tax returns, if available, should also be made to form an opinion regarding nature of transactions related to demonetisation.

6. On the basis of all material and evidence gathered by the AO, during the course of assessment proceedings, assessee would be duly provided with an opportunity to explain his/her case.

7. In cases where ultimate beneficiary of a transaction has been established, the concerned AO shall forward the material available at his/her disposal to the AO having jurisdiction over the ultimate beneficiary so that appropriate action can be initiated in that case as per relevant provisions of the Further, information regarding the entry operators in a particular chain should also be forwarded to the concerned jurisdictional AO for taxing the unaccounted commission receipts.

8. Wherever possible, the assessments in cases covered in this SOP may be completed by 31st March, 2019 and in any case by the first quarter of the next financial year i.e. by 30th June, 2019. 

Download the Instruction Click Here >> 

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