MANORANJAN LENKA,BALANGA vs. PCIT-1, BHUBANEWSAR

The appeal of the assessee is barred by 27 days. In this regard, the assessee has filed an application for condonation of delay along with affidavit stating sufficient reasons for delay therein. Ld. CIT-DR did not object to condone the delay. In view of the above and considering the facts and circumstances of the case, the delay of 27 days in filing the present appeal is condoned and the appeal is heard finally.

It was the submission by the ld. AR that the original assessment came to be completed u/s.143(3) of the Act on 13.08.2019 and it was a case of limited scrutiny in respect of large cash deposits in the bank account during the year. It was the submission that the AO had after examining the issues treated the differential bank deposit as suppressed sales turnover of the assessee and had estimated the income at 8% thereof. It was the submission that the ld. Pr.CIT has invoked his powers u/s.263 of the Act to hold that the estimation of the income at 8% was wrong by the AO and that the entire cash deposit in the bank account was liable to be brought to tax. It was the submission that as this was a case of limited scrutiny in view of the decision of the coordinate bench of the Tribunal in the case of M/s Shark Mines and Minerals Pvt. Ltd., passed in order dated 18.08.2022, which has been upheld by the Hon’ble Jurisdictional High Court vide order dated 02.03.2023, passed in ITA No.1 of 2023, the ld. Pr.CIT could consider only such issues which were raised in the limited scrutiny. It was the submission that as the ld. Pr.CIT has gone beyond the issues on which the limited scrutiny was done, the order passed u/s.263 of the Act is liable to be cancelled.

In reply, ld. CIT-DR submitted that the issue in the limited scrutiny was in respect of examination of large cash deposit in the bank account. It was the submission that the ld. Pr.CIT has looked into only that issue of the limited scrutiny being deposit of large cash in the bank account. It was the submission that the view taken by the AO that the excess cash deposit in the bank account compared to the gross sales was in excess of Rs.32,10,196/-, he ought to have added the entire amount as undisclosed income of the assessee, against which the AO has only adopted 8% by holding the said excess as undisclosed turnover of the assessee. It was the submission that it is this view of the ld. AO which was found to be erroneous. It was the submission that the decision of the Hon’ble Jurisdictional High Court in the case of M/s Shark Mines and Minerals Pvt. Ltd. does not apply. It was the submission that the order of the ld. Pr.CIT is liable to be upheld.

We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the issue revolves around the excess of bank deposit of Rs.32,10,196/-. In the scrutiny assessment also, the AO has determined the excess of the bank deposit at Rs.32,10,196/-. How the amount of Rs.32,10,196/- is to be treated is the dispute which has been racked up by the ld. Pr.CIT in his revisionary proceedings u/s.263 of the Act. Thus, clearly the issue on which the ld. Pr.CIT has invoked his powers u/s.263 of the Act, is in respect of the issue of the limited scrutiny. Consequently, the decision in the case of M/s Shark Mines and Minerals Pvt. Ltd. (supra) would not come to the rescue of the assessee.

However, a perusal of the assessment order as also the order of the ld. Pr.CIT shows that the AO has taken a view that Rs.32,10,196/- is to be treated as the suppressed turnover of the assessee. The AO has estimated the income on the said turnover at 8%. This is a view which has been taken by the AO when he has done the assessment u/s.143(3) of the Act. This is very much a permissible view. The view adopted by the ld. Pr.CIT that the entire suppressed turnover is to be treated as income of the assessee is also another plausible view. When the AO has taken one