ANAND KUMAR,KUBERPURI vs. PR.CIT-1, BHUBANESWAR

It was submitted by the ld. AR that the assessee is an individual engaged in the wholesale and retail trade of potato, onion and other agricultural products. It was the submission that the return of the assessee came to be processed and the assessment came to be framed u/s.143(3) of the Act on 17.12.2020, wherein the return submitted by the assessee was accepted. It was the submission that the assessment in the case of the assessee was on limited scrutiny assessment and the same was also been recognized by the ld. Pr.CIT in his order passed u/s.263 of Act. The reason for the limited scrutiny was on the large cash deposit in the bank account. The AO had examined the deposit in the bank account and had accepted the transaction of the assessee. It was the submission that the ld. Pr.CIT had issued a show cause notice u/s.263 of the Act on 25.11.2022, wherein he has raised the following issues in para 3, 3.1, 3.2 & 4 of his order :- 3. On verification of assessment record revealed from the notice u/s.142(1) that Rs.8,42,23,350/- was deposited in six bank accounts and assessee was asked to furnish source of cash deposit with documentary evidence. But no compliance was furnished in this regard. In spite of no compliance, scrutiny assessment was completed by accepting the returned income. 3.1. Further verification of assessment record, it is revealed from the computation of income and tax that gross business receipt shown by the assessee is Rs.44,75,747/- and it has computed income from the said business receipt u/s. 44AD of the I T Act @ 12% which comes to Rs. 5,41,059/-. 3.2. When assessee has not offered any explanation in respect of huge cash deposit of Rs. 8,42,23,350/-, the said cash deposit was required to be treated as business receipt of the assessee for the P.Y. 2017-18 relevant to A.Y. 2018-19.

Going through the Profit & Loss account for the year ending 31st March, 2018 submitted by the assessee, it is seen that assessee has shown Net Profit of Rs.17;27,424/- but had filed return of income showing total income at Rs. 6,99,690/-. During assessment proceedings u/s.143(3) of the Act, AO had accepted the returned income and completed the assessment as the assessee had not submitted the reply of notice u/s.142(1) of the Act. Hence Rs.10,27,734/-(Rs.17,27,424 - Rs.6,99,690/- should have been added to the total income of the assessee.

It was the submission that after considering the reply filed by the assessee, ld. Pr.CIT had in para 6.1.3.5 had accepted the contention of the assessee in regard to the cash deposit in the bank account of the assessee.