TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1642
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.... concern styled as "M/s Power Electronics'. The return of income for the Asst Year 2010-11 was filed by the assessee declaring total income of Rs. 34,63,940/-. A survey action u/s 133A of the Act was carried out in the business premises of the proprietorship concern on 30.3.2010. The survey proceedings were started at 2.00 P.M. and the same was concluded on 31.3.2010 at 1.30 A.M. The books and accounts maintained by M/s Power Electronics include cash book, bank book, ledger, sales and purchase register etc. All the books were maintained in computer in the office at 11, Pollock Street, Kolkata- 700001. In the statement recorded on oath, it was confirmed by the assessee that 'books of accounts are entered up till today, however some of the purchase bills which are yet to be received and some sales bills which is yet to be raised are yet to be entered in the books of accounts. Besides, some day to day expenses such as petty expenses and salary for March is yet to be taken into account. The net profit of the firm for the period 1.4.2009 to 31.3.2010 was extracted by the survey team from the computerized books of accounts of the firm. The profit for the period 1.4.2009 to 31.3.2010 was ....
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....alers and / or retailers. He stated that the entire basis for rejection of books of accounts is the computer extracts drawn from the computer which showed profit of Rs. 2,18,47,252/- on the date of survey. The assessee referred to the relevant extracts of the statement recorded from him on oath on the date of survey and explained his contentions as under:- I had stated in reply to question No.4 that "since there are numerous items of goods we do not maintain stock register. At the end of the year, stocks is physically inventorized and valued for the purpose of finalization of accounts at the time of audit". Further, I had stated "I would like to state that the value of stock as on date is not correct since the data entered in software package is corrupt and improper". Further in reply to question No.6 I had stated that "as stated earlier the closing stock as on so: March,2010 shown in the extracts of "P/L a/c taken from the computer is wrong and not correct due to corrupt date of value of stock entered in the computer. The matter did not stop here. Even in reply to question No. 8 I stated that as stated earlier the value of closing stock shown in the P/L A/c is completely erroneo....
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....ion therein according to which the income came to Rs. 35Lac approximately. I had paid the advance tax on the basis-of the same. Even the Audited Ales shows the profit at Rs. 34,84,074/-. . I append below herewith a comparative chart in respect of my turnover for last three Years (inclusive that of the current years) which would show that all along my GP till the AY 2009-10 had been hovering around 6.7 to 7% and the net profit had all along been roughly 1 % which during the year is 4.22% and i. e. because of the reason that during the year the commission payment had been only Rs. 1, 73,123/- as against last year's Rs. 25,56, 739/- resulting in a spurt in the profits declared. AY Turnover G.P. % N.P. 2008-09 112148546.40 7556314.62 6.74 997/30.92 0.89 2009-10 120514165.84 8405933.85 6.98 1124531.04 0.93 2010-11 82554207.66 8547648.79 10.35 3484074.28 4.22 Though the records are there with you still 1 would like to state that in the past Three/four years all my assessments were completed under scrutiny by issue of notices s 143(2) and 142(1) of the IT. Act and the gross profit as well as the net profits were never disturbed exc....
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....see's gross profit margin in any case is not more than 6.42% on these sales against which the declared rate of gross profit during the year is 10.35% on the entire turnover . assessee's tradings/supplies are in wholesale and all duly verifiable." 4.2. The ld AO observed the following in his order with regard to the aforesaid explanations of the assessee as under:- "4.4 The arguments of the assessee have been considered but are not acceptable. The assessee has argued that in the statement under oath he admitted that the data in the computer was corrupt. However, there are certain facts which need to be looked into:- Head of account Amount in books as on date of survey Amount as per books in support of return Difference Difference Amount not entered in books on the date of survey Purchase Rs.72430057/- Rs.75955536/- Rs.3 525479/- Rs. 1733582/- Sales Rs. 81389785/- Rs. 82554207/- Rs.1 164422/- 8449/- Closing stock Rs. 15297868/- Rs. 5426130/- (Rs.9871738) NIL A look on the above data indicate that there is not much difference in values in the figure of purchase and sale in books as on date of survey and books in support of return. Hence, t....
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....erence in net profit as per return of income and as estimated by the AO. The fact of the case is that in this case a survey action u/s 133A(1) was carried out and during the course of survey action net profit of the firm for the period 01.04.2009 to 30.03.2010 was extracted from the computerised books of account of the firm. It was claimed that certain purchases and expenses were yet to be entered in the computerized books . During the course of survey action inventory of stock was taken and after taking into account the expenses and opening stock etc, the net profit was arrived at Rs. 35,00,000/- which was offered for taxation by the appellant. The AO mentioned in the assessment order that as per computerised books till the date of survey, net profit should be at Rs.l,53,26,690/-. She found that huge expenses were claimed under variousheads after the date of survey. There was huge difference between net profit shown in the computerised books on the date of survey as against declared in the return of income, thereby, she concluded that the books of account were not upto the satisfaction as regard their correctness and completeness. After considering the submission filed by the appe....
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....rrect. However, the figure discussed by the AO in her order on para 4.4 with regard to purchase and sale entered during post survey period which show that the closing stock should have been at Rs. 58,32,590/- as against value shown by the appellant in the books of account based on return of income at Rs. 54,26,130/-. Hence, there was a difference of Rs. 4,06,460/- in the figure of closing stock. After analysing the facts/figures in this regard, I find that AO was correct as she had taken into account all the figures of purchases/sales upto the date of survey/post survey period for arriving at the correct figure of closing stock. From the above discussion, it is concluded that addition of Rs. 4,06,460/- is sustained but the balance-addition is directed to be deleted." 6. Aggrieved, the revenue is in appeal before us on the following grounds:- "1. On the facts & circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition to Rs. 4,06,466/- as against addition of Rs. 1,01,17,483/- made by the A.O. on account of difference in the net profit as per return of income and as estimated by the A.O. 2. On the facts & circumstances of the case and in law, the....