TMI Blog2014 (11) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax – in Commissioner of Income Tax v. President Industries [1999 (4) TMI 8 - GUJARAT High Court] the same was decided by court - the entire sales could not have been added as income of the assessee, but only to the extent the estimated profits embedded in the sales for which the net profit rate was adopted entailing addition of income on the suppressed amount of sales - unless there is a finding to the effect that investment by way of incurring the cost in acquiring the goods which have been sold has been made by the assessee and that has also not been disclosed, such addition could not be sustained - even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax is the profit embedded in such receipts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of ₹ 3.5 lakhs by a partner of the assessee firm Shri K. R. Sardara. This disclosure was confirmed by the other partner of the firm Shri Janakbhai P. Balar in his statement on 5.7.1997. In response to notice issued by the Department, the assessee filed return declaring undisclosed income of ₹ 26 lakhs. During the search of the residential premises of Shri Balar, a loose paper No.31 was found and seized. The paper pertained to details of sale of two of the flats. The statement of Shri Balar under section 132(4) of the Income Tax Act, 1961 was recorded on 4.7.1996. On the basis of the contents of the loose paper and the statement of the partner, the Assessing Officer came to the conclusion that the assessee partnership firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in reversing the order of the Assessing Officer. He submitted that the on money collection by the respondent assessee firm was established. The Tribunal having confirmed such findings, ought not to have rescinded the directions for collection of tax, interest etc. 6. On the other hand, learned senior counsel Shri S. N. Soparkar appearing for the respondent assessee opposed the appeal contending that no question of law arises. He drew out attention to section 260-A of the Income Tax Act to contend that even after admission of the appeal, it would be open for the assessee to contend that no question of law arises. 7. He submitted that even if the on money collection of ₹ 62 lakhs is believed, what could be taxed in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer made addition of the entire sum of the said undisclosed sales as income of the assessee for the assessment year 1994-95. Such addition was confirmed by the Commissioner (Appeals). The Tribunal, however, held that the entire sales could not have been added as income of the assessee, but only to the extent the estimated profits embedded in the sales for which the net profit rate was adopted entailing addition of income on the suppressed amount of sales. Such decision was carried in appeal by the revenue before the High Court. The High Court rejected the appeal, observing that unless there is a finding to the effect that investment by way of incurring the cost in acquiring the goods which have been sold has been made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal that only the gross profit on the said amount can be brought to tax does not call for any interference. 12. Counsel also relied on the decision in the case of Commissioner of Income Tax v. Samir Synthetics Mill, reported in (2010) 326 ITR 410, wherein the High Court confirmed the view of the Tribunal accepting only the profit of unaccounted sale for the purpose of collecting tax. 13. Our attention was also drawn to the decision of the M. P. High Court in the case of Man Mohan Sadani v. Commissioner of Income Tax, reported in (2008) 304 ITR 52, wherein referring to and relying upon the decision of this Court in the case of Commissioner of Income Tax v. President Industries (supra) and other decisions of other High Courts, the M. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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