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2014 (10) TMI 572 - HC - Income TaxEstimation of GP @ 2% of average of subsequent three years - Whether the Tribunal was correct in holding that the net profit should be estimated at 2% of the turnover, as against computation of undisclosed income by the AO based on the deposits discovered in search in undisclosed bank accounts in respect of suppressed sales – Held that:- The Tribunal was rightly of the view that when the FAA is relying on comparable cases, first there should be factual foundation showing the total turnover of that business and then the profit margin - there is no material to show as to what is the total turnover of M/s. SRV and Sons and therefore, the Tribunal was not prepared to accept the basis - it took note of the orders passed in the case of the assessee for the AY 2003-04, 2004-05 and 2005-06 u/s 143(3) of the Income Tax Act, 1961 - when the total turnover was much more than the turnover for the AY 1996-97, 1997-98 and 1998-99, 2% was held to be the gross profit - 2% gross profit has to be taken for the relevant AYs during the block period - Even though the higher margin of turnover is shown for the subsequent years and the very same AO has recorded the finding of 2% profit margin for the period earlier to that where the total turnover is less, the Tribunal was justified in taking the gross profit at 2% - the order of the Tribunal is upheld – Decided against revenue.
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