TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1126
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....r the head on incentive & sales commission and neither tenable in law nor in facts. 5. For that the appellant craves leave to amend, alter, add, delete or substitute any other grounds of appeal before or at the time of hearing of the appeal." 2. Ground nos. 1 and 2 are against the action of the Ld. CIT(A) in confirming the action of the AO in reopening the assessment u/s. 147 read with section 148 of the Income-tax Act, 1961 (hereinafter referred to as the "Act"). 3. Brief facts of the case are that the assessee for the assessment year under consideration i.e. AY 2004-05 declared a total income of Rs. 6,220/-. The case was thereafter processed u/s. 143(1) of the Act. Thereafter, the case was reopened u/s. 147 of the Act based on a survey report prepared after survey u/s. 133A of the Act conducted at the business premises of the assessee on 02.03.2005. During the survey, a typed Profit & Loss Account and the Balance Sheet of the assessee as on 31.03.2004 was found which was impounded in which the turnover stated was found to be more than Rs. 3 cr. as against Rs. 2,03,34,226/- shown by the assessee in its regular books of account. Taking note of this fact, the AO recorded the ....
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.....2005 by the then AO that during the course of survey a typed profit and loss account and balance sheet of the assessee as on 31.03.2004 was found which was impounded in which the turnover declared was found at more than Rs. 3 crores as against Rs. 2,03,34,226/- shown in the regular books of accounts. Besides above, it was found that the assessee has received incentive of Rs. 31 lakhs and sales commission at Rs. 15 lakhs which were not found disclosed in the regular books of accounts. Under the above circumstances I have reason to believe that the income arisen out of the amount mentioned above, chargeable to tax has escaped assessment for the AY 2004-05 within the meaning of Section 147 of the I. T. Act, 1961 and such escapement has occurred by reason of the omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment for the AY 2004-05." 7. From a perusal of the aforesaid reasons recorded, we understand that a survey was carried out on the premises of the assessee u/s. 133A of the Act on 02.03.2005. During the survey, the survey team came across a typed P&L Account and Balance Sheet of the assessee as on 31.03.200....
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....48 of the Act on 04.11.2009 reopened the assessment. During the course of reassessment the AO noticed that despite statutory notices u/s. 143(2) and 142(1) of the Act, none appeared before him. Thereafter, the AO noticed that the assessee was dealing the business of electrical goods and distributor of various fans and electrical goods. Thereafter, the AO issued notice u/s. 133(6) of the Act to the Branch Manager, West Bengal State Cooperative Bank, who brought to the notice of AO the fact about new loans which the assessee had taken and also had filed details of valuation of closing stock as on 31.03.2004. From the Balance Sheet and P&L Account submitted by the assessee to the bank, the AO noted that the closing stock was shown as on 31.03.2004 valued at Rs. 45,01,120/- whereas as per the P&L Account and Balance Sheet filed along with the return of income was to the tune of Rs. 25,19,149/- and since there was a difference in closing stock of Rs. 19,81,971/- which could not be explained by the assessee pursuant to the show cause notice issued to it, the AO added Rs. 19,81,978/- as undisclosed stock. Thereafter, the AO noted from the typed copy of the P&L Account and Balance Sheet of....
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....nce/Discrepancy of purchase has arisen. The sources of fund has definitely come from some undisclosed sources of income of the assessee. Because of the unaccounted purchase discrepancy of the S/creditors has arisen and ultimately the difference of closing stock of Rs. 19,81,971/- is the product of the same." 10. In respect of the turnover though the assessee has shown as Rs. 2,03,34,226/- in its regular books of account, however, the survey team had come across a typed P&L Account and Balance Sheet of the assessee as on 31.03.2004 which reflected turnover as Rs. 3,00,50,000/- which means a difference of Rs. 97,15,774/- and the AO has adopted the assessee's own GP of 4.35% on Rs. 97,15,774/- and added GP of Rs. 4,22,636/- which action has been confirmed by the Ld. CIT(A) which action of Ld. CIT(A) per-se cannot be faulted. However, the AO taking note of the report of the survey team that the assessee has received incentive of Rs. 31 lacs and sales commission at Rs. 15 lacs which was not disclosed in the regular books of account have made the addition separately of Rs. 31 lacs and Rs. 15 lacs [totalling Rs. 46 lacs]. When this action of AO was challenged by the assessee, the Ld. CI....
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....based on surmises and conjectures and on an erroneous presumption that the assessee had received similar discount from the turnover of Rs. 3 cr. We note that the assessee's income termed as incentive and sales commission is only on attainment of sales target from the same line of business and, therefore, when the assessee receives incentive/discount a part of it is also passed on to the consumers to attract more consumers. Therefore, in the facts and circumstances of the case discussed above, when the books of account of the assessee has been rejected, there was no necessity for separate addition of the commission/incentive/discount which the assessee had undisputedly received in the same business and it is not the case of the revenue that the assessee was engaged in any other business from which assessee had received separate incentive/commission for doing certain other services the said income. Therefore, in the facts and circumstances of this case, we are of the opinion that once the books of account of the assessee were rejected by the AO, then he should have only estimated the profits of the assessee. For this proposition of ours, we rely on the order of the Hon'ble Andhra Pra....