TaxTMI 
TaxTMI 
2015 (9) TMI 72
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....the revenue for A.Y. 2002-2003 to 2007-2008 and has partly allowed the appeal preferred by the revenue for the A.Y. 2001-2002 and allowing the Cross Objections filed by the assessee for the A.Y. 2001-2002 to 2003-2004, the revenue has preferred present Tax Appeals. 3.00. For the sake of convenience, facts for A.Y. 2001- 2002 are narrated and considered :- 3.01. In Tax Appeal No.235 of 2015, which is arising out of the judgement and order passed by the learned tribunal in IT(SS) No.594/Ahd/2010 for A.Y. 2001-2002, the revenue has proposed the following substantial questions of law :- "(A) Whether the Appellate Tribunal has substantially erred in applying net profit ratio of 5.2% for A.Y. 2001-2002, 2002-2003 & 2003-2004 since no estimation of profit is required when the profit can be worked out from the figures of unrecorded sales and unrecorded purchases of seized Note Books marked as Annexure-A/2, A/3, A/5, & A/8.? (B) Whether the Appellate Tribunal has substantially erred in holding that the provisions of section 40(A)(3) of the Act are not applicable on the unaccounted purchased / expenses incurred by the assessee for A.Y. 2001-2002 to 2007-2008 which were recorded in seized....
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....appeal the learned CIT(A), who was deciding appeals of all the years prepared consolidated chart of the profit ratio as calculated by the A.O. vis-a-vis 5% profit shown by the assessee, was compared in the following manner:- A.Ys. Income offered by assessee i.e. @ 5% of the total of receipt in seized diaries (Rs.) Income determined by A.O. as per seized records diaries (Rs.) Profit rate as per A.O.'s calculation 2001-02 14,85,000 16,15,803 5.44% 2002-03 17,86,000 -10,25,449 -2.87% 2003-04 14,58,000 21,67,076 7.43% 2004-05 16,63,554 26,54,974 10.51% 2005-06 16,63,554 5,19.318 7.90% 2006-07 15,53,775 25,01,070 10.25% 2007-08 Nil -21,12,276 -2.41% 96,09,883 63,20,466 Average Profit Ratio 5.17% 4.06. That in addition of the above chart, the learned CIT(A) also compared income disclosed by the assessee with the income declared as per the original return which reads as under :- A.Ys. Original Returned Income 5% Income on credit entries in seized records declared by appellant Profit rate as per A.O.'s calculation Income Returned u/s 153A 2001-02 2,97,090 14,85,000 1,00,000 18,82,090 2002-03 2,83,264 17,86,000 1,25,0....
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....3,554 2005-06 Rs.05,19,318 Rs.16,63,553 2006-07 Rs.25,01,070 Rs.15,53,775 2007-08 Rs.(-)21,12,276 Rs.00,36,083 4.10. In respect of the A.Y. 2007-2008, the learned CIT(A) deleted additions made by the A.O. by observing that quantity of 1425 MT was not found and in fact as on 4/8/2006, 632 MT goods was found. 4.11. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) in modifying the additions made by the A.O. in the respective years as above, the revenue preferred appeals before the learned tribunal, being IT(SS) No.594 to 599 of 2010 as well as 2312 of 2010 for A.Y. 2001- 2002 TO 2007-2008 and also preferred Cross Objections Nos.245 to 248 of 2010 for A.Y. 2001-2002 to 2002003-2004 and also A.Y. 200702008, in so far as confirming the estimated total unaccounted estimated income. 4.12. That the learned tribunal by the impugned common judgement and order has dismissed the appeals preferred by the revenue for the A.Y. 2002-2003 to 2007-2008 and has allowed the appeal for A.Y.2002-2002 and has partly allowed the Cross Objections of the assessee for A.Y. 2001-02 to 2003-2004 & 2007-2008. 4.13. That feeling aggrieved by and dissatisfied with the imp....
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....age of commission on sales. 5. The Appellant is neither required to make collection from the parties to whom coal are sold on behalf of other parties nor is required to make payment to the said other parties, transactions are directly settled in between both the parties. The Appellant only receives commission on such sales. Your Honours would appreciate that during the course of search carried out the authorized persons have not found any creditors or debtors for the said transaction in kachcha books of the Appellant, which is also evident that the Appellant is only concerned with its commission on sales and not with collection and payment of such transactions. The only purpose of maintaining such kachcha books was to ensure that the Appellant claims its commission on all such kind of sales of coal which were effected through the Appellant. The noting in Kachcha books does not give any profit or loss, purchase or sell data in particular. Details provided in particular format during the search operation was only on the request of the authorized persons. The ld. Assessing Officer had never issued a show cause notice seeking any clarification regarding disallowances being made u/s 40....
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....ts of this case have revealed that even after the search was carried out there were no evidence of expenditure and the AO was not able to lay hands on unaccounted purchases. Because the evidence of total expenditure or purchases was not available to the Revenue Department, therefore, the assessee as well as the AO, both have decided to determine the income by applying a reasonable estimate of profit. That estimation was very close to the income offered by the assessee. Resultantly, the grounds raised for all the years by the Revenue are hereby dismissed." 5.04. We are in complete agreement with the view taken by the learned tribunal as well as learned CIT(A). When the evidences of total expenditure or purchase were not available with the revenue and consequently the assessee as well as A.O. both decided to determine the income by applying a reasonable estimate of profit and that estimation was found very near to the income offered by the assessee, the learned tribunal has rightly dismissed the appeals preferred by the revenue. 5.05. With respect to A.Y. 2007-2008, which was against the order passed by the learned CIT(A) deleting the amount of Rs. 20,02,612/- being the value of un....
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....ales were recorded. Such stated goods were computed by the AO to be of the value of Rs. 20.02 lacs and treated as unaccounted closing stock. In terms of prevailing price, the quantum of such goods would be approx. 793 MT (i.e. @ 2554/-per MT). At the time of search 04/08/2006, the stock of goods (coal) was found to be 625 MT approx. which was reconciled by the appellant as opening stock of 440 MT on 04/08/2006 and inwards of 207 MT from 01/08/2006 to 04/08/2006 less outward of 14.9 MT i.e. stock of 632 MT as on 04/08/2006. If the assumption of the AO was valid in respect of A.Y. 2007-08, the stock available with the appellant should have been another 793 MT. However, such a quantity (632 MT + 793 MT) of stock was not found. Hence, the addition for unaccounted stock, was based on a conjecture and can not be sustained. It is therefore deleted and the related ground of appeal is allowed." 16. Having heard the submissions of both the sides. We are of the view that learned CIT(A) has correctly appreciated the facts of the case and held that in the absence of any stock found at the time of search there was no justification to tax unaccounted stock in the hands of the assessee. We have a....