SANJAY KUMARAGARAWALA,MAYURBHANJ vs. PR.CIT, CUTTACK

It was submitted by the ld.AR that the assessee is a trader of consumer goods and turnover of the assessee was Rs.36,88,200/-. It was submitted by the ld.AR that the assessee has filed his return of income u/s.44AD of the Act and had offered 8% income. It was the submission that the assessment was completed u/s.144 of the Act, wherein the AO had examined the bank account of the assessee and had arrived at total 2 deposit of Rs.49,71,700/-. Consequently, the AO had treated the said amount of Rs.49,71,700/- as turnover of the assessee and has estimated the income of the assessee at 8%. The difference between the turnover as disclosed by the assessee and as taken by the AO was an amount of Rs.12,85,500/-. It was the submission that a show cause notice u/s.263 of the Act was issued by the ld. Pr.CIT, Cuttack wherein he proposed to bring to tax the entire amount of Rs.12,85,500/- as income of the assessee as against the 8% income estimated by the AO. It was the submission that before the ld. Pr.CIT it was explained that the amount of Rs.12,85,500/- was erroneous and the actual deposit of the bank account was Rs.43,15,000/-, insofar as the amount of Rs.6,56,200/- was an RTGS entry which was reversed. It was the submission that the balance of Rs.6,28,800/-, which was deposited in the bank account was the past savings of the assessee and his family members which had been used for the purpose of business of the assessee. It was the submission that the ld. Pr.CIT did not accept the claim of the assessee in regard to the past savings and directed the AO to add the amount of Rs.6,28,800/- in place of the addition representing 8% of Rs.12,85,500/-. It was the submission by the ld. AR that when the AO having already taken a view and having formed an opinion, the direction given by the ld. Pr.CIT was only on a change of opinion and the same is not permissible under the provisions of Section 263 of the Act.

In reply, ld. CIT-DR submitted that the assessment is an ex-parte assessment. No enquiry has been done by the AO. It was the submission 3 that the fact that the AO had not considered the RTGS reversal of Rs.6,56,200/- clearly shows the non-application of mind by the AO. It was the submission that two views are not possible and the correct view should be taken to make addition of Rs.6,28,800/- as directed by the ld. Pr.CIT. It was the submission that the addition representing 8% on the amount of Rs.12,85,500/- being the difference between the turnover as disclosed by the assessee and deposit as made in the bank account bearing No.40720200000087 maintained with Bank of Baroda, Karanjia Branch was erroneous and prejudicial to the interest of revenue. It was the submission that the order of the Pr.CIT passed u/s.263 of the Act deserves to be upheld.