TaxTMI 
TaxTMI 
2016 (7) TMI 614
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....ring total income of Rs. 2,77,976/-. The return of income was processed u/s.143(1) of the Act on 31.03.2010. 3. There was a survey conducted by the revenue u/s.133A of the Income Tax Act, 1961 (Act) in the business premises of the Assessee on 25.1.2008. In the course of survey the material found by the Revenue was that the Assessee recorded sales of Rs. 2,46,23,315/-. But in the P/L account it was shown only at Rs. 2,07,65,620/- and the sale transactions not recorded in the regular books of accounts were to the extent of Rs. 38,57,695/-. In the course of assessment proceedings, the AO examined the Assessee and confronted the Assessee with the material found in the course of survey which showed that transactions of sale were not recorded in....
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....ales of Rs. 6,55,808/- and made an addition to the total income of the Assessee. The AO passed the order u/s.143(3) of the Act on 22-12-2010. 6. The CIT in exercise of his powers u/s.263 of the Act, was of the view that the aforesaid order of the AO was erroneous and prejudicial to the interest of the revenue. The main point of dispute which is subject matter in this appeal as raised by the CIT in the proceedings u/s.263 of the Act was as that the AO should not have stopped by just adding Gross Profit on unrecorded sales. According to CIT the entire sale should have been added as income of the Assessee. Alternatively, the purchases or peak purchase, related to the unrecorded sales, ought to have also been added as income of the Assessee. ....
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....orded purchases should be made. The Assessee placed reliance on the decision of the Hon'ble Gujarat High Court in the case of President Industries Ltd. 258 ITR 654 (Guj.) and the ITAT Delhi in the case of India Seed House Vs. ACIT (2001) 69 TTJ (Delhi) 241 for the proposition that only gross profit on unrecorded sales have to be treated as income and not the entire undisclosed sale. 8. The CIT however did not deal with any of the aforesaid submissions but nevertheless concluded that the Gross Profit adopted by the AO for making addition on account of income from unrecorded sales was proper. He went on further to add that the element of unaccounted purchase ought to have been added by the AO and the order of the AO without going into this a....
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....ring it was brought to our notice that in respect of similar addition made in AY 2007-08 on the basis of material found at the time of survey, an assessment was made by the AO by order dated 21.12.2009 adding Gross Profit on unrecorded sales. That order was revised by the CIT in exercise of his powers u/s.263 of the Act by an order dated 23.3.2012. In the said order the CIT gave similar directions as was done in AY 2006- 07. The said order was challenged by the Assessee before the ITAT in ITA No. 1245/Kol/12 and this Tribunal by its order dated 16.5.2013 was please to quash the order of the CIT u/s.263 of the Act. The said order of the Tribunal has however been reversed by the Hon'ble Calcutta High Court in G.A.No.3284 of 2013 dated 4.4.201....
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....e is added back to the total income of the assessee. No further expenses are allowed as assessee has already debited huge expenses (Addition Rs. 38,470/-)" 14. It is clear from the above observations of the AO and the observations in para-3 of the order of assessment that he had taken due cognizance of all debit items in the profit and loss account, the tax audit report, the impounded documents, statement recorded during Survey and during assessment proceedings, books and accounts and other documents, bills, vouchers etc. 15. The CIT has exercised jurisdiction u/s.263 of the Act on the ground that the AO failed to make proper enquiry which he ought to have made before completing the assessment. There is a distinction between "lack of en....