TaxTMI 
TaxTMI 
2019 (7) TMI 1042
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....Year 2014-15. 2. The Revenue has proposed the following question as the substantial question of law in its memorandum of the Tax Appeal : "Whether on the facts and circumstances of the case and in law, Hon'ble ITAT has erred in deleting the addition of Rs. 2,57,41,751/- in respect of unexplained receipts?" 3. The findings recorded by the Tribunal as regards the proposed question are as under : "7. A bare reading of Section 145 would reveal that it provide the mechanism how to compute the income of the Assessee. According to sub-section 1, the income chargeable under the head profit and gains of business or profession or income from other source shall be computed in accordance with the method of accountancy employed b....
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.... It means books of accounts maintained by the assessee were not depicting true picture. The income of the assessee on the basis of these books could not be determined. Book results deserve to be rejected. Books have been rejected and no one has challenged rejection of that books before the Tribunal. This finding has been accepted by the assessee as well as by the Revenue. Short question is that, after rejection of the books, whether gross receipt are to be treated as income of the assessee or only profit embedded in those receipts? Once the ld.AO has worked out unaccounted receipts for the whole year on the basis of evidence found for the period of six months, then such working is based on an estimate and assumption, and in the same manner ....
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.... of account for A.Y. 2014-15 is Rs. 38,84,048/-. The other receipts of the nature corresponding to fee income register Rs. 40,40,998/-. Out of these, payments received from Jeevanshaili in form of test fees, Rs. 21,79,420/- (Ledger polio 158) and in form of consultancy fee, Rs. 60,000/- (LF 157); consultancy fees received from Doctors Clinical Lab (LF 154) Rs. 5,76,750/- and testing fees received from Miraj Health Care (LF 163) Rs. 4,17,000/- do not form part of the Kachha Register of receipts in cash seized during the search. Therefore, out of Rs. 79,25,046/- (Rs. 38,84,048/- plus Rs. 40,40,998/-) only Rs. 46,91,876/- (Rs. 79,25,046/- minus Rs. 21,79,420/- minus 60,000/- minus Rs. 576750/- minus 4,17,000/-) could be set off against the rec....
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....be worked out on the basis of actual and suppressed receipts of the appellant's profession. d) The courts have time and again held that what is to be added is the profit embedded in the suppressed receipts, by way of the suppression and not the entire receipts. I agree with the appellant on this count. The following decisions of superior Courts are relied upon and taken guidance from : 1) Commissioner of Income Tax Vs. President Industries (2002) 124 Taxman 654 (Gujarat High Court) 2) Commissioner of Income Tax Vs. Samir Synthetics Mills (2001) 326ITR 410 (Gujarat High Court) 3) Commissioner of Income Tax Vs. Gurubachhan Singh (2008) 171 Taxman 406 (Gujarat High Court) 4) Commissioner of Income T....
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.... Net Profit as per books of account 11.42 10.26 12.32 14.94 16.52 Net Profit ratio after removing fixed expenses 14.49 13.83 16.18 19.42 21.69 The average net profit excluding the fixed expenses works out at 17.12% and maximum net profit was 21.69% 5 years back and has shown a decreasing trend. The appellant has disclosed additional 50 ac rupees in its return filed. The net profit of 50 lac on unrecorded-receipts for the year worked out at Rs. 2,12,91,706/-; gives a net profit rate of 23.48%. Therefore, the profits declared are held reasonable looking to the profit in the business even after reducing the fixed expense. Without prejudice to the above, even otherwise, if unrecorded r....