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2010 (2) TMI 909 - AT - Income TaxSearch and seizure - amount of 7 lacs seized from the employee of the assesseewho was carrying the same to Mumbai - Held that:- As per the paper found during the course of search, there was much more amount available at Hyderabad office; therefore, it can be easily presumed that this amount pertains to the amount remained at Hyderabad office out of sale transactions. From the paper seized an amount of Rs. 8.96 crores was receivable on account of sales. Out of the amount of Rs. 8.96 crores a sum of Rs.8.31 crores only was remitted to Mumbai office as per the paper found. there was no need to make a separate addition of Rs. 7 lacs for AY 2004-05 as it can easily be said that this amount was out of the remaining amount available at Hyderabad office, appeals of the department are dismissed and the appeals of the assessee are allowed in part Bifurcation of transaction of jewellery and bullion - AO has not allowed any bifurcation as the total turnover estimated by him was treated as of jewellery transaction. However, the CIT(A) found that there is evidence showing sale of jewellery and bullion; therefore, he directed the AO to treat 25% of turnover of bullion transaction and 75% of turnover as jewellery transaction - reconciliation chart was prepared on the basis of loose paper found recording the transaction of sales during the course of search - reconciliation indicates 53.64% of jewellery transaction and 46.34% of bullion transactions – Held that:- Once the ascertained percentage is found in the paper seized then, there is no point not to bifurcate the transaction at the end of the AO or to bifurcate at the ratio of 25% and 75% of bullion transaction and jewellery transaction respectively at the end of the CIT(A). There was no other material before the AO or before the CIT(A) to hold that this reconciliation filed by the assessee was not correct. Accordingly AO directed to treat 54% of jewellery transaction and 46% of bullion transaction and then recalculate the profit accordingly GP profit - AO has applied 13.8% GP on the basis of GP ratio shown at Mumbai office but the CIT(A) has reduced the GP at 3% of jewellery and 0.4% of bullion on the basis of net profit rate of 3.69% shown at Mumbai office. During the search period one of the partners at the time of statement recorded has stated that there is 1% profit in jewellery transaction and 0.02% of bullion transaction. However, these contentions were not accepted by the CIT(A). The net profit shown by the assessee here at Mumbai relates to wholesale business and retail business; however, in Hyderabad, where the unrecorded sales were made relate to only wholesale transaction. It is also a fact that in wholesale transactions there is less margin of profit as compared to retail business – Held that:- If 2 % rate of profit is applied on jewellery transactions and 0.4% is applied on bullion transaction then it will meet the end of justice to both sides. AO directed to recalculate the profit for two years Addition on account of investment in sale transactions - As per paper found, there was an opening balance of 4 lacs and the ld counsel of the assessee stated that the amount of opening balance shown in the paper can be treated as unexplained investment – Held that:- AO directed to take the opening balance shown in the paper as the amount of undisclosed investment. This direction is given on the basis that in case of search, addition can only be made on the basis of material found and in the material found the opening balance is shown at Rs. 4,43,793/-. Accordingly, this amount has to be treated as investment from undisclosed sources
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