VARSHITA JAIN,HYDERABAD vs. DCIT., CIRCLE-5(1), HYDERABAD

Facts

The assessee's case was selected for limited scrutiny to verify cash deposits made during the demonetization period. The Assessing Officer completed an ex-parte assessment, adding Rs. 14,72,548/- as unexplained cash deposits under Section 69A, due to the assessee's non-compliance with notices. The assessee appealed, claiming she could not respond to notices due to marriage and relocation to the USA, and that the deposits were sourced from past savings, marriage gifts, and matured fixed deposits. The CIT(A) upheld the AO's order.

Held

The tribunal found substance in the assessee's reason for non-participation and set aside the orders of the CIT(A) and AO. The matter has been restored to the AO for fresh adjudication, directing the AO to provide the assessee a reasonable opportunity to submit evidence and substantiate her claims regarding the source of the cash deposits.

Key Issues

Whether the ex-parte assessment under Section 144 was justified given the assessee's inability to participate, and the proper verification of the source of cash deposits made during demonetization.