TaxTMI 
TaxTMI 
2013 (10) TMI 209
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....ame, viz., "M.R.A. Bakery". His wife Smt. Hairunnissa is the Proprietary of "M/s M.R.A. Ayurvedic Products". The Department carried out search and seizure operations in the hand of the assessee on 30-05-2007. During the course of search, a sworn statement u/s. 132(4) of the Act was recorded. In the said deposition, the assessee disclosed the details of average daily sales for M/s. M.R.A. Bakery and also for M/s M.R.A. Ayurvedic Products. He further submitted that he is having full control over his wife's concern named M/s M.R.A. Ayurvedic Products also. Consequent to the search, the assessee filed his return of income u/s. 153A of the Act disclosing additional income from his business. In the said return, the assessee also included the income of the concern belonging to his wife "M/s M.R.A. Ayurvedic Products" also, since he had stated in the sworn statement that he is having control over the said concern. During the course of deposition, the assessee also admitted that he is not maintaining proper books of accounts for all the businesses. Hence the AO rejected the book results and proceeded to estimate the income for all the years under consideration. 4. For the purposes of est....
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....,48,907/- 17.34 24,88,100 4,63,742 5,56,546@ 14,68,812 Total assessed undisclosed income 2,71,71,968 6. In the appellate proceeding before Ld CIT(A), the assessee submitted that the concern M/s M.R.A. Ayurvedic Products supplies some of its products to M/s M.R.A. Bakery. Accordingly it was submitted that the turnover of M/s M.R.A. Bakery includes turnover from the products supplied M/s M.R.A. Ayurvedic Products. Accordingly, it was contended that the AO did not consider this important point and hence has resulted in duplication of the same turnover in the hands of both M/s M.R.A. Bakery and M/s M.R.A. Ayurvedic Products. The Ld. CIT(A) accepted the said claim of the assessee and accordingly reduced the turnover in respect of M/s. M.R.A. Ayurvedic Products. However, he sustained the turnover estimated by the AO for M/s. M.R.A. Bakery. The turnover sustained by the Ld. CIT(A) for various years are tabulated below: A.Y Turnover sustained for MRA Bakery Turnover sustained for MRA Ayurvedic Products Total Turnover sustained in this appeal 2002-03 65,36,724 47,29,800 1,12,66,525 2003-04 72,63,027 52,55,100 1,25,18,127 2004-05....
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....xt aspect that requires to be decided is what should be the net profit rate. It is settled lawn that even if book results are rejected, the Assessing Officer is duty-bound to make a fair and reasonable estimate of income based on evidence and material on record. He is expected to make best judgment assessment. No doubt, the estimation of income involves certain amount of guess work but such guesswork has to be reasonable and fair and cannot be arbitrary and capricious. Reliance in this regard is placed on the judgment of Privy Council in the case of CIT vs. Laxminarain Badridas (1937) 5 ITR 170 (PC). 5.5.5 For the purpose of estimating income, the Assessing Officer can refer to the past history of the case which acts s a good guide for determination of the income. The Assessing Officer can also refer to the comparative cases to see whether the rate shown by the appellant is fair and reasonable. However, comparison with other cases must take into account the total turnover, the favourable or unfavourable condition of the assessee vis-à-vis comparable cases, etc. 5.5.6 If a reference to the past history of the appellant is made, his book results....
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.... 1,71,72,000 12,50,988@ 7.28 2007-08 Not furnished Not furnished Not Applicable 1,90,80,000 13,71,848 7.19 2008-09 Not furnished Not furnished Not Applicable 2,11,11,000 5,38,858 2.55 @Appellant admitted additional income in the revised return at rs. 5,94,900 only However, the addition of Rs. 24,888/- towards undisclosed income from UAE Shop and Rs. 6,31,200/- towards unexplained investments in UAE Shop which are not appealed are added to if find out the net profit rate. 5.5.7 The next test is a reference to the comparative cases to see whether the rate shown by the appellant is fair and reasonable. However, comparison with other cases must taken into account the total turnover, the favourable or unfavourable conditions of the assessee vis-à-vis comparable cases, etc. In this case, as already pointed out by the AR, there are two related parties carrying an identical business of running of bakery viz. Sri Abdul Gadhafi and Smt. Thasleena P.P. in whose cases my predecessor has held that net profit rate of 11% and 5% respectively, should be adopted on estimated sales turnover in I.T.A. No. C- 244....