TMI Blog2019 (10) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... such addition is also covered under the definition of undisclosed income being directly relatable to seized documents from the appellant of the specified previous year . The penalty so levied on undisclosed income of ₹ 61,19,120 is hereby confirmed. Before parting, we would like to state that the decisions of Hon ble High Court relied upon by the assessee are distinguishable on facts and doesn t support the case of the assessee. - Decided against assessee. - ITA No. 111/JP/2018 - - - Dated:- 3-10-2019 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Vijay Goyal (CA) For the Revenue : Smt. Runi Pal (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-4, Jaipur dated 01.12.2017 wherein the assessee has taken the following sole ground of appeal:- On the facts and in the circumstances of the case and in law, the ld. CIT (A) erred in directing the AO to recompute the penalty imposed by ld. AO under section 271AAA of Income Tax Act, 1961 on income of ₹ 61,19, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Tribunal in the quantum proceedings. 6. The relevant findings of the ld. CIT(A) which are therefore under challenge reads as under:- For the other addition of ₹ 61,19,120/- sustained by the Hon ble ITAT Bench, Jaipur, I am of the view appellant is not covered under the section 271AAA[2] as such addition is not as a result of admissions u/s 132[4]. I may add that such addition is also covered under the definition of undisclosed income being directly relatable to seized documents from the appellant of the specified previous year. Under the stated circumstances I am of the view, appellant gets relief from penalty on a sum of ₹ 2.46 Crore, while the penalty u/s 271AAA is confirmed on the amount ₹ 61,19,120/-. The AO is directed to recompute the penalty. Appellant gets a part relief in Ground No. 1. 7. At the outset, the ld AR drawn our reference to the findings of the Co-ordinate Bench in the quantum proceedings and it was submitted that the addition of ₹ 61,19,120/- was sustained by the Tribunal on account of estimation of GP rate and the same does not represent undisclosed inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material available on record. In order to appreciate the rival contentions, we refer to the findings of the Assessing officer which are contained at page 22-23 of the assessment order which reads as under: It is amply clear from the above discussion that each of the defects found and pointed out in the show cause notice dated 03.10.2012 have been found to have been already addressed and necessary adjustment made by the special auditor. Accordingly, the net profit of the assessee company for the year under consideration as computed in the special audit report at ₹ 7,45,84,379/- on consolidated sales of ₹ 26,96,46,926/- shall be adopted for the purpose of computing the total income of the assessee. As against this, the net profit shown by the assessee in the return filed u/s 153A of the Act amounted to ₹ 2,36,16,893/- on total sales of ₹ 6,98,91,003/-. Accordingly, the sum of ₹ 5,09,67,486/- (7,45,84,379/- minus ₹ 2,36,16,893/-) being the undisclosed income/profit earned from additional sales of ₹ 19,97,55,923/- (₹ 26,96,46,926/- minus ₹ 6,98,91,003/-) is hereby added to the total income of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.R. of the assessee are added to the sample selected by special auditors, the weighted average gross profit comes to 24.08%. Considering this fact and assessed gross profit in past and next years, I estimate the gross profit rate of 24% as against 26.21% adopted by the AO and 16.95% shown by the assessee. Thus the gross profit comes to ₹ 6,24,00,000/-. The assessee has shown gross profit of ₹ 1,18,43,142/- in the return filed u/s 153A of the Act. Thus the short fall in gross profit is determined at ₹ 5,05,56,858/-. The assessee has declared ₹ 2,46,00,000/- in the return filed u/s 153A of the Act on account of undisclosed income from unaccounted sales/ purchases. In profit and loss account, the assessee disclosed this income by mentioning that income taken into account on the basis of statement recorded in search/ documents found during the search being income earned from unaccounted sales represented by undisclosed assets (PB pager 103). Further in search statement, Shri Prateek Kothari, director of assessee company admitted this as income earned from unaccounted purchases and sales in the company (PB page 34 43). Further the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 2007-08 18562148.00 2509297.00 13.52% 3 2008-09 20591252.00 3047886.00 14.80% 4 2009-10 12824830.00 3356643.00 26.17% Weighted Average GP 55509848.00 9426549 16.98% It is further noted that the ld. CIT(A) has estimated the higher gross profit @ 24% on estimated sales of ₹ 26 crores. The assessee had computed the gross turnover of ₹ 25,06,61,673/- on the basis of seized documents and books of account and has pointed out several mistakes and instances of double counting of sales computed by the Special Auditor in the estimates o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it rate of ₹ 16.98%. We therefore find that it is not a case of mere estimation of gross profit rate on declared turnover of the assessee but the fact of the matter which is clearly emerging from the orders of the authorities below as well as decision of the Coordinate Bench is that such estimation of gross profit is on reported sales/turnover as well as the undisclosed sales/turn over which has not been disclosed by the assessee in its regular books of accounts which was surrendered on the basis of search carried out at the premises of the assessee. Therefore, to the extent of profit estimated on undisclosed sales/turn over which has been found in the course of search and which has not been disclosed/recorded in the books of accounts maintained in the normal course of business, it is clearly a case of undisclosed income as defined in explanation to section 271AAA. We therefore donot see any infirmity in the findings of the ld CIT(A) where he says that such addition is also covered under the definition of undisclosed income being directly relatable to seized documents from the appellant of the specified previous year . The penalty so levied on undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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