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2020 (2) TMI 455
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.... 44 AB are inapplicable and determining income of the assessee on NP rate. In case if books have been rejected the profit should be applied on the basis of surrounding circumstances or the profit taken by other assessee. 3 That the Ld. CIT (A) erred in confirming the addition of Rs. 723724/on account of net profit rate and therefore the addition of Rs. 723724/- should be deleted. 4. That the learned CIT(A) has erred in confirming the addition of Rs. 723724/- for the A.Y. 2008-09 and Rs. 1413086/- for AY 2009-10 which was surrendered in course of survey operation conducted at premises of assessee under stress where circumstances and evidences doesn't permit the same. That the learned CIT(A) ought to have appreciate that there was no substantive evidence on record in support of above addition. 5. Without prejudiced to the above, the learned CIT(A) ought to have appreciated that even assuming there was evidence supporting the investment the same is not includible in total income because the assessee was having sufficient fund and the same should be allowed as deduction under the principle of telescoping. 6 That the appellant craves to add, alter....
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....ucted on the business premises of the assessee on 5.9.2008 and the statements u/s 133A & 131A was recorded. The assessee has filed its income tax return for the Assessment Years 2008-09 and 2009-10 at Rs. 14,27,960/- and Rs. 4,43,860/- showed net profit rate of 5.24% and 2.34% respectively. The Ld. A.O completed assessment u/s 143(3) of the Act by applying the net profit rate of 8% on the gross receipts. Ld. A.O has also made addition of Rs. 2,00,000/- for undisclosed income for the Assessment Year 2009-10. Aggrieved assessee preferred appeal before Ld. CIT(A) but could not succeed. 5. Now the assessee is in appeal before the Tribunal. 6. Ld. Counsel for the assessee submitted that for the Assessment Years 2006-07 & 2007-08 Ld. A.O has accepted the Net Profit rate of 5% shown by the assessee in the assessment completed u/s 143(3) of the Act. He further argued referring to following written submissions for both the appeal:- a. If books of account were rejected, profit has to be taken from surrounding, circumstances or past record (Ground no. 1,2 and 3) 4.1 The appellant has produced audited books of account along with audit report which was not accepted by....
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....ied by AO copy of order enclosed under 143(3) 2007-08 15869048 4.88% 774950 4139428 974950 5% 5% percent applied copy of order enclosed under 143(3) 2008-09 27227334 5.24% 1427960 27227334 2178187 8% Applied 8% against NP declared @5.34% 2009-10 21468304 2.34% 504379 21468304 1717464 8% Applied 8% against NP declared @ 2.34% 4.6 Hence the Ld AO as well as CIT (A) both of the erred in law applying net profit @ 8%. In absence of any corroborative evidence even no comparable case to the case of assesse has been cited. Reference may be made from following decisions that where books of accounts are rejected and profit is to be estimated it is past history, which is the most relevant criteria. (a) Asstt.CIT vs OM Brothers (2010)44 DTR 13 (ALL) (APB-S7-62) (b) CIT vs Targeted Construction Co. Ltd (2015) 55taxmann.oom 294 (All) (APB -63- 65 (c) Pragati Engineering Corporation Co.Vs ITO (order dt 5th April 2013 passed by Hon'ble Allahabd High Court in ITA No 11 of 2012)(APB 66-70) (d) ACIT Vis kanhalyala, Choudhary 29 CCH 0766 It Was held that where books of accounts....
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....ed to declared held that it was included in estimated profit of 8 lack. The difference of Rs. 2 lack over and above net profit was added by him as undisclosed source. The LD CIT (A) at Pq No 12 Para no 4.2of her order mentioned that during the course of survey operation carried on 05-09-2008 appellant statement was recorded wherein he admitted the fact of non maintenance of books of account. There has been no discloser/surrender made on that day it is only when the appellant has attendant the post Survey proceedings u/s 131 on 09-09-2008 than he chosen to declare his un disclose Income. She also mentioned that disclosure has been made voluntarily during post survey investigation thus action of AO making addition of 200000.00 over and above is found justifiable. 6 Submission The assessee is engaged in purchase and sales of bitumen and at the time of survey he offered Rs. 1000000.00 as his business income. The margin of product in Bitumen product is 2 of total turnover. Looking at things from macro overall point of view the amount of Rs. 200000.00 would be very well covered in total business income It is evident that the statement recorded u/s 131 ....
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....on for same. 6.1 That the statement of assessee under section 133 (A) was recorded on 05/09/2008 in that statement no declaration was made by assessee but the learned AO issue the summon u/s 131 to the assessee and recorded the statement mentioning that no book of accounts was maintained against which summon was issue to you to calculate the undisclosed income. The copy of the relevant para is reproduce is under. 6.2 Section 133A lays down that power of section 131 can be exercised where a person refuses, refrain to do so at the time -of survey. Summons under 131(1) can be served only in case of obstruction by person or some sort of hindrance is put by him on the contrary, the appellant has cooperated at the time of survey under section 133A on perusal of the statement recorded under 131 immediately after completion of survey it reveals that it calls the assessee to declare the profit. It is clearly established that assessee has cooperated during the survey and he did not make any default as stipulated under 133A(6). It is also apparent that survey was already completed on 5-9-2008 and papers and other record was also impounded no proceeding was pending, ....
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....t maintained complete and regular books of accounts pertaining to his business activities. Returns have been filed on the basis or bank account statements and net profit been taken at 5% by the appellant. As per appellant's own submissions, gross profit margin is not more than 2% in his, line of business. Thus, no basis or justification has been given for estimating his net profits @5% by the appellant himself. There is always an element of subjectivity involved in estimation. Unless it can be shown that the estimate arrived at by the A.O. is highly ambiguous or totally lacking the bonafides, no interference is called for. After perusal of entire material on record, A.O. is found fully justified in estimating appellant's net profits @8% on declared business receipts. Accordingly addition of Rs. 4,71,092/- and Rs. 12,13,086/- made for A.Y. 2008-09 and 2009-10 respectively is, hereby, confirmed." 10. Before us Ld. Counsel for the assessee strongly relied on the fact that for Assessment Years 2006-07 and 2007-08 where the Net Profit of 5.90% and 4.88% was shown by the assessee, Ld. A.O completed the assessment u/s 143(3) of the Act by applying 5% ....
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....ee declared undisclosed income of Rs. 10,00,000/- which included estimated profit of Rs. 8,00,000/-. The difference of Rs. 2,00,000/- which was declared over and above net profit was added as undisclosed income by Ld. A.O. It is not in dispute that the total gross receipts of the assessee during the year have already been subject to tax and in the preceding para we have held that the net profit @5.24% be applied on the gross receipts shown by the assessee. The addition of Rs. 2,00,000/- made by the Ld. A.O is not on the basis of any incriminating material and is merely based on the statement recorded during survey proceedings. 15. It is judicially well settled that the statements given during the course of survey u/s 133A of the Act has no evidentiary value and any admission made in the statements cannot by itself be taken as a conclusive piece of evidence to make addition in the hands of the assessee. This ratio was confirmed by Hon'ble Apex Court in the case of CIT V/s Kader Khan 352 ITR 480 (SC). Further the Coordinate Bench in the case of Khoobchand Pagarani V/s ITO 15 ITJ 738 held that if the Ld. A.O has already made addition for profit rate holding that books are not relia....