TMI Blog2014 (11) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... for extra expenditure was found to be incorrect – Held that:- In Commissioner of Income Tax vs. Gurubachhan Singh J. Juneja [2008 (2) TMI 177 - GUJARAT HIGH COURT] it has been held that in absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the undisclosed sales. Following the decision in DY. CIT (ASSTT) Versus PANNA CORPORATION [2014 (11) TMI 797 - GUJARAT HIGH COURT] - The Tribunal rightly 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 - unless there is a find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, the ITAT having held that assessee has received unaccounted receipts was justified in law in holding that the assessing officer has to discharge onus in respect of on-money by showing that assessee has invested ₹ 1,58,59,400 out of such receipts whereas claim of assessee for extra expenditure was found to be incorrect. 2. The assessee had filed appeal against the order of DCIT(Asstt.) Spl., Surat Under section 143(3) of the Act for the assessment years 1987-88 to 1997-98. The only effective ground taken by the assessee was regarding the assessment of undisclosed income of ₹ 1,88,59,400/- as On Money / Premium charged by the assessee as against the undisclosed income of ₹ 30 lakhs disclosed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that has also not been disclosed, such addition could not be sustained. 4.1 Mr. Soparkar has also relied upon decision of this Court in the case of Commissioner of Income Tax vs. Gurubachhan Singh J. Juneja reported in [2008] 302 ITR 63 (Guj) wherein this Court has observed that in absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged undisclosed sales, the finding of the Tribunal that only the gross profit on the said amount can be brought to tax does not call for any interference. He also relied on the decision in the case of Commissioner of Income Tax vs. Samir Synthetics Mill reported in [2010] 326 ITR 410, wherein the High Court confirmed the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent, this Court in the case of Commissioner of Income Tax v. President Industries, reported in (2002) 258 ITR 654 had taken a similar view. In the said case, during the course of survey conducted on the premises of the assessee, from the excise records found, an inference was drawn by the Assessing Officer that sales accounting to ₹ 29 lakhs and odd had not been disclosed in the books of account. The 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 esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and reduced the income on the basis of gross profit rate. The Tribunal confirmed the order of the Commissioner (Appeals). On further appeal before the High Court by the revenue, the High Court refused to refer any question holding that in absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged undisclosed sales, the finding of the Tribunal 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 Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in considering that the respondent assessee ought to have spent reasonable amount for the purpose of receiving such gross receipt. 15. It can, thus, be seen that consistently, this Court and some other Courts have been following the principle that even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax is the profit embedded in such receipts and not the entire receipts themselves. If that be the legal position, what should be estimated as a reasonable profit out of such receipts, must bear an element of estimation. 16. In view of the legal position that not the entire receipts, but the profit element embedded in such receipts can be brought to tax, in our view, no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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