NIKHILESH MALLICK ,BANKURA vs. PRINCIPAL CIT, DURGAPUR

For that the Ld. Principal Commissioner of Income Tax, Durgapur in consideration of the facts and circumstances of the matter, erred is concluding the order passed u/s. 143(3) by the ld. AO as erroneous is so far as it is prejudicial to the interest of the revenue.

For that the ld. Pr. CIT, Durgapur, in consideration of the facts and circumstances of the matter is not justified in considering the submission of the appellant with non-speaking order by simply stating that the “submission were without conclusive supporting evidence”.

For that the appellant reserves his right to add, to, to alter and/or to amend the ground/s taken and to adduce paper/s and document/s at the time of hearing.

Brief facts qua the issue are that the assessee filed return of income for the AY 2014-15 on 27.10.2014 declaring total income of Rs.3,20,830/-. Scrutiny assessment was completed in this case on 22.12.2016 on an assessed income of Rs.8,03,620/-. Later on, the assessment record for AY 2014-15 and the assessment order dated 22/12/2016, passed u/s 143(3) has been examined by ld. PCIT and he noticed that the following error has been committed by the AO in the assessment order in determining the assessed income.

The assessee is engaged in trading business with a turnover of Rs.3,54,67,840/- as per the return of income of the assessee. The books of the assessee is audited considering the turnover of Rs. 3,54,67,840/-. It is found that the deposit of the assessee in the banks were as under: - Sl Name of the bank Branch A/c No Amount No. Deposited 1 State Bank of India Kotulpur 11052939049 1,36,07,836.00

State Bank of India Kotulpur 31904604166 93,08,378.00

BDCC Kotulpur 606105033258 0

United Commercial Bank Kotulpur 23430210000045 1,94,87,290.00 5 State Bank of India Kotulpur 334222221596 1,43,44,400.00 Total deposit in the bank accounts 5,67,47,904.00

Hence there is discrepancy of Rs. 2,12,80,064/-(Rs.5,67,47,904/- minus Rs. 3,46,78,400/-) between the disclosed turnover and deposit in bank accounts. This part of receipt of the assessee has not been reported as turnover in the audit report. The AO merely estimated income @ 1.94% on the undisclosed receipt without proper verification and/or enquiry of the undisclosed credit, with respect to scope of the taxation. The AO during the course of assessment proceedings did not make any enquiry in this regard which renders the assessment prejudicial to the interest of revenue. Therefore, the case of the assessee satisfies Explanation 2(a) of section 263 of the IT Act, 1961 which is as under: - Explanation 2 - For the purpose of this section" it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue" if, in the opinion of the Principal Commissioner or Commissioner" - (a) The order is passed without making enquiries or verification which should have been made"

Notice for proceedings u/s 263 of the IT Act, 1961 was issued by the ld PCIT to the assessee on 29.11.2017. In response, the assessee submitted written submissions before the ld PCIT. The Assessee`s written submissions were considered by the ld. PCIT and it was noticed by the ld. PCIT that assessee`s submissions were without any conclusive supporting evidences, therefore, ld. PCIT held that order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue.

Aggrieved by the impugned order of ld. PCIT, the assessee is in appeal before us.

The ld. Counsel for the assessee begins by pointing out that the assessee had submitted every kind of evidences and documents, as required by AO, during the assessment stage u/s 143(3) of the Act. The AO examined each and every details of sales/purchases and then reached on a definite conclusion. The Ld. Counsel for the assessee submitted that it is a case of change of opinion therefore the order passed by the AO is neither erroneous nor it is prejudicial to the interest of the revenue, hence the order of ld PCIT should be quashed.

The ld. Departmental Representative relied on the impugned order of the ld. PCIT and stated before the Bench that the order passed by the AO is erroneous.

We have heard both the parties and perused the material available on record. We note that during the assessment proceedings the AO examined the bank accounts, turnover and other documents of the assessee. Relevant part of the assessment order, (which is relevant for our discussion) is reproduced below: -

3 From the Profit & Loss Account it is observed that total turnover of the assessee during the relevant period was amounting to Rs.3,54,67,840/-. Thus, total deposits in bank accounts during the relevant period exceeded total turnover of the assessee by an amount of Rs.2,12,80,064/-.

4 During the course of assessment proceedings, the assessee was asked to explain why his total deposits in bank accounts should not be considered as his total turnover during the relevant period. The A/R of the assessee furnished his reply which is as under: 2.5 That from total deposit in Bank account ascertained discrepancy of Rs.2,12,08,064.00 (Rs5,67,47,904 - 3,54,67,840.00). Actually all deposits are not related to turnover. At times, the assessee used to make deposit after withdrawal. Still for the sake of settlement of dispute I accept your findings. Suppression in purchase entails suppression in sale too. What escaped for taxation is the gross profit element.”

We note that the ld. CIT has not pointed out any specific mistake in the assessment order passed by the assessing officer under section 143(3) of the Act. The assessing officer has examined all five bank accounts and the turnover of the assessee. The AO noticed that total deposits in said five bank accounts were to the tune of Rs.5,67,47,904/-, whereas total turnover of the assessee was to the tune of Rs.3,54,67,840/- thus he worked out the difference at Rs. 2,12,80,064/- ( Rs.5,67,47,904- Rs.3,54,67,840). The AO considered Rs. 2,12,80,064/- as suppressed income of the assessee and made addition @ 1.94% ( being rate of gross profit). We note that ld PCIT has exercised his juri iction under section 263 of the Act on the same issue which had been examined by assessing officer properly during assessment satge, hence we note that ld PCIT has failed to point out any specific error in the assessment order, therefore order passed by AO is neither erroneous nor prejudicial to 5 Nikhilesh Mallick l

We note that assessee submitted bank statements of all five bank accounts and also submitted the turnover details. The AO has computed the disallowance and made addition after going through the explanation and materials submitted by the assessee, pursuant to the statutory notices issued by AO. So, the AO has discharged the role of investigator by seeking details and queries in respect to the issues raised by the Id. PCIT

In the result, the appeal of the assessee is allowed.

"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, कोलकाता / DR, ITAT, Kolkata 5. गाड" फाईल / Guard file. 6. //// By Order