RAVI KUMAR POLIMETLA,KHAMMAM vs. INCOME TAX OFFICER, WARD-1, KHAMMAM

5. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Learned Authorised Representative (“Ld. AR”) submitted that, the assessee had filed ROI by showing a net profit of Rs.10,51,808/- on business turn over of Rs.1,48,53,281/-. However, the Ld. AO calculated the net profit @ 8% on a turn over of Rs.23,64,05,099/- i.e. amount of total credit in the bank account excluding amount of cash deposit. The Ld. AR invited our attention to reconciliation statement placed at page no.1 of paper book no. 3 and submitted that, the assessee had filed a reconciliation statement before the Ld. AO explaining the total credit of Rs.27,87,56,395/- in the bank account. The main components of bank credits, as explained in the said reconciliation statement was that, the credits were found in the bank statement due to internal transfer from one bank to other bank of the assessee. However, without considering the reason stated in the said reconciliation statement, the Ld. AO treated all the credits in the bank account excluding the cash deposit, as turn over of the assessee and calculated the net profit @ 8% on the said turn over. Further, the Ld. AO added the total cash deposit as income u/s.69A of the Act without considering the reconciliation statement, where the cash deposit has been reconciled. The Ld. AO, without providing any opportunity to the assessee, has made the said addition. The Ld. CIT(A) also did not provide adequate opportunity before dismissing the appeal of the assessee. The Ld. AR also invited our attention to bank statements, placed at page nos. 5,6, 21 and 25 of paper book no. 2, as sample to demonstrate that the amount had been transferred from one bank to another bank of the assessee. Finally, the Ld. AR submitted that, the order has been passed by the Ld. AO without properly verifying their submission and without providing any opportunity. Hence, by consolidating all their grounds, the Ld. AR requested before the bench to provide one more opportunity to the assessee to prosecute their case on merits before the Ld. AO.

6. Per contra, the Ld. DR objected for providing any further opportunity to the assessee and she submitted that, adequate opportunity has already been provided by the revenue authorities. Further, the Ld. DR invited our attention to Form No.26AS, placed at page no.4 of paper book no. 2 and submitted that the assessee has received Rs.1,60,000/- from Bisco Bioscience Private Limited on 04.04.2012, which has not been considered by the assessee in their turn over disclosed in the ROI. Finally, the Ld. DR submitted that, the assessee has not disclosed their true turnover in their ROI and prayed to uphold the order of revenue authorities.

7.1 On perusal of above, we found that, the assessee has stated that amount of Rs.22,25,87,167/- are deposited in bank on account of transfer of funds from companies and internal transfer from one bank account to other bank account of the assessee. The assessee has also explained the details of other credits also. However, we found from the order of Ld. AO that, the Ld. AO neither considered the reconciliation statement nor called any explanation from the assessee and treated the total credit in the bank account (reducing cash deposit) as turnover of the assessee and calculated the income of the assessee @ 8% on the said turnover. Further, the nature of transaction from the companies has also not been examined by the Ld. AO. We have also gone through the bank statements placed at page nos.21 & 5 of paper book no. 2 and found that two deposits of Rs.50 lakhs each in Axis Bank A/c. No.910030045671444 was transferred from another bank account of the assessee with Axis Bank bearing A/c. No.910010032731027 on 16.04.2012. We have also gone through the bank statements placed at page nos.6 & 25 of the paper book no. 2 and found that another two deposits of Rs.50 lakhs each in Axis Bank A/c. No.910030045671444 was transferred from another bank account of the assessee with Axis Bank bearing A/c. No.910010032731027 on 23.04.2012 and 25.04.2012 respectively. Hence, it cannot be denied that there are internal bank transfer from one bank account to another bank account of the assessee, however the source of deposit or credit in the other bank account is required to be verified. The AO failed to verify this information during the assessment process. Further, as submitted by the Ld. DR that, an amount of Rs.1,50,000/- received by the assessee from Bisco Bioscience Private Limited on 04.04.2012 has not been considered by the assessee in his disclosed turnover in ROI, the same is also required to be verified at the end of the Ld. AO. Therefore, considering the facts of the case and the principle of natural justice, we are of the opinion that a fresh adjudication is required in the case of the assessee. Therefore, we set aside the issue to the file of Ld. AO with a direction to adjudicate afresh as per law after providing an opportunity of being heard to the assessee. The assessee is also directed to co-operate with the Ld. AO by filing all the necessary evidences called by the Ld. AO without seeking any adjournment. Accordingly, the grounds of the assessee are answered.