2013 (2) TMI 863

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....d.DR submitted that the taxpayer engaged itself in sale of IMFL liquor. There was a survey in the premises of the taxpayer u/s 133A of the Act and it was found that the taxpayer was suppressing the turnover. The taxpayer was accounting sales at 14% of the cost price of the liquor whereas the sale took place at much higher percentage. The assessing officer estimated the sales suppression at Rs. 65,10,390 for the assessment year 2006-07 and Rs. 73,37,949 for the assessment year 2007-08. According to the ld.departmental representative, the revenue authorities found the actual sales for the assessment year 2006-07 at Rs. 2,38,80,383 as against Rs. 1,94,47,035. Accordingly the assessments were reopened u/s 147 of the Act. 3. The ld.DR further....

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....ld.senior counsel, the entire suppressed turnover cannot be taken as profit. What is to be assessed under the Income-tax Act is the profit element embedded in the surplus turnover. Therefore, the CIT(A) after placing reliance on the judgment of the Gujarat High Court in CIT vs President Industries 258 ITR 654 (Guj) and CIT vs Abhishek Corporation 158 CTR (Guj) 374 found that the assessing officer estimated the profit excessively. According to the ld.senior counsel, the taxpayer has incurred several expenditure in connection with the business of IMFL, therefore, what is to be taxed is only gross profit. 5. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the revenue aut....

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....High Court has observed as follows at page 655: "....... The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way of incurring the cost in acquiring the goods which have been sold has been made by the assessee and that has also not been disclosed. In the absence of such finding of fact the question whether the entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in the negative. The record goe....