Electronic assessment proceedings, though laudable, “can lead to erroneous assessment” if officers are not able to understand the transactions and statement of accounts of an assessee without a personal hearing : Madras HC

Madras HC allows assessee’s (chit fund co.) writ, sets aside assessment order for AY 2017-18 making addition u/s.69A on account of unexplained cash deposits of Rs.67.37 lakhs collected during the demonetisation period and bringing to tax the said amount at  maximum marginal rate u/s. 115BBE, remits the case back for fresh order;  Notes that the amounts collected, deposited and closing balances are not at variance with the amounts for corresponding months in the year 2015, and opines that “the petitioner has prima facie demonstrated  that the assessment proceeding has resulted in distorted conclusion on facts that amount collected by the petitioner during the period was huge and remained unexplained by the petitioner and therefore same was liable to be treated as unaccounted money in the hands of the petitioner under Section 69A”;  States that electronic assessment proceedings, though laudable, “can lead to erroneous assessment if officers are not able to understand the transactions and statement of accounts of an assessee without a personal hearing”;  Opines that since the assessment proceedings no longer involve human interaction and are based on records alone, the assessment proceeding should have commenced much earlier to enable the AO to come to a definite conclusion on facts after fully understanding the nature of business of the assessee; Remarks that “….assessment proceeding under the changed scenario would require proper determination of facts by proper exchange and flow of correspondence between the petitioner and the respondent Assessing Officer”:HC

Electronic assessment proceedings
The ruling was delivered by Justice C.Saravanan.

Mr. G.Baskar appeared for assessee while Revenue was represented by Mr. A.P.Srinivas.