TaxTMI 
TaxTMI 
2018 (12) TMI 634
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....2008-09, Rs. 54,10,998/- for the A. Y. 2009-10 and Rs. 42,21,367/- for the A. Y. 2010-11. 3. A survey u/s 133A was conducted in the case of Mr. Rao who is also having individual business. During the course of survey, certain incriminating material stated to have been found relating to the assessee firm, hence, the AO issued the notice u/s 148 on 28. 03. 2014 for which there was no response from the assessee. Therefore, a notice u/s 142(1) dated 07. 07. 2014 was served on the assessee and in response to the notice, the assessee filed a letter dated 17. 07. 2014 stating that the assessee had duly co-operated in the survey proceedings u/s 133A and paid the taxes due as directed by the department and as such the proceedings under the reference 2nd cited (notice u/s 148 dated 28. 03. 2014) above are not acceptable under law or fact. Subsequently, the AO issued show cause notice on 24. 12. 2014 stating that a survey u/s 133A was conducted on 17. 02. 2011 in the case of Mr Rao and Nakshatra Hotels, Guntur and during the course of survey, certain papers were found according to which there was a difference in the turnover declared by the firm in the case of Nakshatra Hotels as per the de....
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..... 1,18,82,077/-, Rs. 1,93,05,488/- and Rs. 2,24,55,442/-- respectively against which the sales shown in the ROI filed for the relevant F. Y. were its 32,64,. 226/-, Rs. 64,19,937/- and Rs. 97,89,160/- respectively which has resulted in suppression of sales to the tune of Rs. 86,17,851/-, Rs. 1,28,85,551/- and Rs. 1,26,66,282/- respectively for the above F. Ys. What is your explanation?" From the above, it is very clear that there is a much variation in the turnovers shown in the papers impounded and the returns filed, what do you say now. A. There is a managing partner Sri Sukhavasi Srinivasa Rao who is looking after the business transactions of the firm of M/s Nakshtra Hotel. In fact in order to obtain bank loan the P&L account etc have been prepared on estimated basis and particularly boosting the figures for getting higher loan from the Banks. It is a general practice in each and every business. In view of this, they cannot be relied upon, Q3. At the time of survey you have answered that "1 am not in a position to say anything. Now you are telling that those figures are estimated figures to get bank loan , You have not given this answer at the time of ....
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....he assessee also submitted before the AO that it had admitted the additional income of Rs. 11,04,500/- for the for the A. Y 2011-12 covering the deficiencies of survey discrepancies was also rejected by the AO. According to the AO, the correct method to be applied in this case is to tax the gross profit on suppressed turnovers for the A. Ys 2008-09 to 2010-11 and accordingly estimated the gross profit as income for the respective A. Ys 2008-09 to 2010-11 as under and the resultant income was brought to tax. A. Y. Turnover as per papers found (Rs. ) Turnover as admitted in the return of income (Rs. ) Difference (Rs. ) Gross Profit Rate Estimated Income (Rs. ) 2008-09 1,18,82,077 32,64,226 86,17,851 23% 19,82,362 2009-10 1,93,05,488 64,19,937 1,28,85,551 42% 54,10,998 2010-11 2,24,55,442 98,89,160 1,26,66,282 33. 32% 41,21,367 5. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld. CIT(A) confirmed the addition made by the AO holding that the assessee had no explanation to offer anything with regard to the said difference in turnover and the silence of the assessee leads ....
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....t was prepared boosting the figures for getting the higher loan and it is unjustified to estimate the gross profit as income instead of net profit. Therefore, requested for estimation of net profit as income in the place of gross profit. 7. On the other hand, the Ld. DR supported the orders of the lower authorities. 8. We have heard both the parties and perused the material placed on record. The facts of this case are peculiar and distinct from other cases of survey. Mr. Rao is one of the partners of the assessee firm and carrying on the business independently. A survey u/s 133A was conducted in the case of Mr. Rao in connection with his business on 17. 02. 2011. During the course of survey, certain incriminating material was found stated to be relating to Nakshatra Hotels. As per the material found, the turnover of the was recorded at Rs. 1,18,82,077/- for the A. Y. 2008-09 , Rs. 1,93,05,488/- for the A. Y. 2009-10 and Rs. 2,24,55,442/- for the A. Y. 2010-11. The statement was recorded from Mr. Rao on the date of survey and he stated that he was not in a position to explain the details. Subsequently, on 05. 03. 2015, one more statement was recorded and in the said statement ....
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....x the net income but not the gross income. In the instant case, the AO estimated the gross profit instead of taking the profit and loss account and to tax the net profit as per the profit and loss account found during the course of survey. However, as discussed earlier there is no information made available by either Ld. DR or the Ld. AR with regard to exact information / incriminating material found at the time of survey. As per section 292C of the Act, the presumption is available to the department to hold that the material found during the course of survey was belonged to such person against whom the survey was conducted but not in the case of third party. In this case, such person is Mr. Rao, the partner of the assessee firm who is carrying on his own independent business but not the assessee firm. Hence, there is no application of presumption in the case of the assessee. Merely because it was written on the face of it the Nakshatra Hotels it cannot be held that the turnover was pertaining to the Nakshatra Hotels unless such person confirms that the papers were related to the other person and other person also accepts the contents of the incriminating material. Otherwise it is ....