IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकरअपीलस.ं/ITA No.127/RJT/2022 Assessment Year: (2017-18)

(HybridHearing)

PareshkumarNarsibhaiSiroy. Vs. PCIT, Rajkot-1 Prop. Aadesh Enterprise, Jetpur Road, Dhoraji, Rajkot -360410-

Gujarat Öथायीलेखासं./जीआइआरसं./PAN/GIR No.: BEJPS7256E (Appellant) (Respondent)

Appellant by : Shri Samir Bhuptani, Ld. A.R.

Respondent by : Shri Shramdeep Sinha, Ld. CIT. DR Date of Hearing : 24/12/2024 Date of Pronouncement : 17/03/2025 ORDER Per, Dr. A. L. Saini-AM By way of this appeal, the assessee has challenged the correctness of the order dated 02.03.2022 passed by the Learned Principal Commissioner of Income-tax (in short “Ld PCIT”) under section 263 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), for the assessment year 2017-18.Grievances raised by the assessee, which, being interconnected, will be taken up together, are as follows:

1.Ld. Pr. CIT erred in law as well as on facts in initiating proceedings u/s, 263 of the income-

tax Act, 1961, which is bad in law and without appropriate jurisdiction.

2. Ld. Pr. CIT erred in law as well as on facts in contending that the assessment order passed u/s. 143(3) of the Act was (i) the order of the Assessing Officer sought to be revised is erroneous and (ii) it is prejudicial, to the interests of the revenue.

3. Ld Pr. CIT erred in law as well as on facts in contending that Id. assessing officer did not conduct any inquiry, which is factually incorrect.

4. Ld. Pr. CIT erred in law as well as on facts in contending that Id. assessing officer computed total income u/s. 44AD of the Act.

5. Ld. Pr. CIT erred in law as well as on facts in contending that assessing officer ought to have applied provision of section 68 of the Act.

6. Ld. Pr. CIT erred in law, as well as, on facts in contending that gross deposit in bank account and not income element embedded therein has to be taxed.

7. Ld. Pr. CIT erred in law as well as on facts in not considering the fact that Id. assessing officer estimated profit on the gross deposits made in the bank account, which is in accordance with the ratio laid down by jurisdictional high court.

8. Ld. Pr. CIT erred in law as well as on facts in not appreciating the facts that Id. assessing officer did conduct inquiry of the transactions and came to a plausible view, which is supported by the decision of jurisdictional, high court and hence rightly applied his discretion to not to invoke any deeming provision.

2.The relevant material facts, as culled out from the material on record, are as follows.The assessee filed return of income on 30/07/2017, declaring total income of Rs. 3,38,450/-. The assessment was completed u/s 143(3) of the Income-tax Act, on 19/12/2019, determining total income of Rs. 28,50,850/-. While finalizing the assessment an addition of Rs. 25,12,400/- was made to the total income of the assessee.

3. Later on,Learned Principal Commissioner of Income-tax (in short “Ld PCIT”), exercise his jurisdiction under section 263 of the Income-tax Act, 1961.On verification of the details on records it was noticed by the ld. PCIT that the assessee has deposited cash and cheque in his bank account to the tune of Rs. 38,01,13,684/-. During the course of assessment proceedings, the assessee was asked to explain high cash deposit transactions. In response the assessee submitted that the said amount belonged to his customers but did not give the details of such customers. Accordingly, the assessing officer calculated the total Income @ 0.75% of total deposit of Rs. 38,01,13,684/-. The ld. PCIT noticed that the action of the assessing officer in computing the total income u/s 44AD of the Act, was not proper, as these provisions do not applicable in view of the huge turnover of the cash / credits deposits in the bank account. Therefore, the assessee was not eligible for the benefit of the section 44AD of the I.T. Act. Sin