TaxTMI 
TaxTMI 
2022 (6) TMI 1550
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....ered in the search operations on 30/08/2016. Notice was issued U/s. 153A on 20/03/2017 served on the assessee on 27/03/2017. In response, the assessee filed return of income on 11/4/2017 admitting a total income of Rs. 2,06,110/- as admitted in the original return of income U/s. 139(1) of the Act. Notices U/s. 143(2) and 142(1) were issued and served on the assessee. In response, the assessee's AR filed information and explanations called for by the AO. The Ld. AO considered the seized material during the search operation and also the deposition of the assessee U/s. 131(1A) wherein the assessee has admitted unaccounted sales of Rs. 31,64,40,122/- as per the details given below: FY Turnover as per Annexures (in Rs.) 2009-10 23,19,720 2010-11 1,56,60,108 2011-12 7,90,99,283 2012-13 5,44,88,174 2013-14 5,89,65,250 2014-15 6,15,67,135 2015-16 3,86,89,352 2016-17 56,51,100 Total 31,64,40,122 3. The assessee in the earlier prior to search, has filed his Return of Income (ROI) admitting an average net profit at 8%. Further, the assessee, in response to question No.10 of the deposition, has also admitted net profit at 8% on....
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....tional expenditure would have been incurred by the assessee for effecting this unaccounted sales turnover and hence he pleaded that the order of the AO be upheld. 6. We have heard both the sides and perused the material available on record and the orders of the Authorities below. We find from the submissions made by the Ld. AR with respect to the ROI filed by the assessee for the AY 2011-12 to 2015-16, the assessee has consistently disclosed the net profit at the rate of 8% on the turnover by the assessee. The contention of the Ld. AR that adopting the gross margin without considering the expenditure in effecting the unaccounted turnover deserves consideration. We also note from the depositions made by the assessee during the search and seizure operations, the assessee has admitted that he derives 8% net profit on the turnover admitted and accordingly the same 8% net profit shall be adopted for the unaccounted turnover also. The deposition by the assessee during the time of search operation on the Question No. 10 is reproduced below: "Q. No. 10: On verification of your return of income for the AY 2015-16, you have admitted net profit @ 8% on your turnover. Similarly, pl....
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....rities below. We find from the orders of the Ld. AO that the AO has assessed the unaccounted turnover at an average rate of 15% through the gross margin made by the assessee in the respective AYs. The Ld. AO has not considered the net profit declared by the assessee in the earlier AYs @ 8%. The Ld. AO has once again inconsistently for the purpose of telescoping has assessed the income @ 2.5% of the turnover. We find that the Ld. AO in his order at para 3.3 has clearly stated that the assessee is qualifying for telescoping benefit. However, the Ld. AO erred in adopting differential rates for the assessment of income, one for the purposes of taxing the income and another for the telescoping benefit. There is no dispute on the conclusion of the fact by AO that the assessee is entitled for telescoping benefit, but the AO erred in adopting differential rates while allowing telescoping benefit to the assessee. We therefore direct the AO to adopt a consistent rate of 8% (net profit) on the unaccounted turnover and consequently the same should be considered for the telescoping benefit to the assessee. ITA No. 245/Viz/2021 (AY: 2016-17) 10. The Ld. AR argued that once again the Ld. AO....
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....he net profit ratio, we direct the AO to adopt the rate of 8% on the total turnover and accordingly income may be assessed as such. 14. With respect to the additions made on account of cash deposits made during the demonetization period, the Ld. AR in his written submissions submitted that these cash deposits are made out of the cash sales. The Ld. AR also pleaded that the cash deposits are not on account of unexplained money and therefore section 69A of the cannot be invoked. The Ld. AR also submitted that these cash sales are already accounted in the books of accounts and the audited financial statements were filed while filing the return of income. The Ld. AR in his written submissions demonstrated that the cash deposits made during the current year and also during the previous year into the bank. The relevant table is extracted below: Cash deposits in the Axis Bank A/c No. 332010200000383 FY 2016-17 Amount deposited FY 2015-16 Amount deposited April -16 37,65,000 April -15 32,90,000 May-16 33,80,000 May-15 23,70,000 June-16 46,90,000 June-15 29,35,000 July-16 36,31,400 July-15 27,90,000 August-16 38,40,000 ....