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2013 (6) TMI 666 - AT - Income TaxDetermination of income - addition towards estimated G.P. on unaccounted sale of Gutkha and Pan Masala - Held that:- AO has supported its finding by the statement of the Assessee recorded on 02.04.2009 post survey carried on 05.02.2009. As find from the record that the AO supplied the copy of the said statement to the Assessee but did not supply the other documents/record requisitioned from the Sales Tax Department based on which the unaccounted sale was worked out by AO. Assessee vide its letter demanded the alleged record though AO has referred the notice u/s 142(1) to show that the copies of the documents were shown to Assessee for examination. It is pertinent to note that no documents can be used against the Assessee without giving him proper opportunity to rebute the same or to produce counter evidence. The assess denied that the alleged record belongs to the Assessee and demanded the cross-examination of the panchnama on this point. The whole case of the department is based on the presumption that the Assessee is C & F Agent of Godhwat Industries for sale of Gutkha and Pan Masala. AO made the estimated GP addition by working out the unaccounted sale whereas in case of C & F Agent the income is only the commission as agreed between the parties and not any profit margin from purchase and sale because the purchase is made by the traders and dealers and the sale is made by the manufacturer. There cannot be any purchase and sale by the C & F Agent but it facilitates the purchase and sale between the Trader/Dealer and the manufacturer. AO adopted the GP rate admitted by the Assessee on its business of Trade which is not permitted to be adopted for the income being commission of C & F Agent. AO worked out unaccounted sale for 10 months on the reason that the search was conducted by the Sales Tax Department on 20th January. Therefore the 10 months sale was worked out from the April 2007 to January. 2008. But it is material to note that the search was conducted on 20th January.2009 and not on 20th Janyary.2008, therefore the record found during the search cannot be said to be upto to 20th January.2008 so that the unaccounted sale on the basis of that record can be worked out upto 20th January.2008. Also when the Sales Tax Department who carried out the search and seizure operation and seized the record in question has come to the conclusion that the unaccounted sale is from the purchase from outside state then the view of the AO that the unaccounted sale is from the purchases made within the state is not sustainable. Thus set-aside the orders of the authorities below qua this issue and delete the addition of estimated GP towards unaccounted sales. Addition on account of cash payment - Held that:- Since the addition is made on the basis of the seized material by the Sales Tax Department therefore in view of finding in respect of the issue of addition on account of unaccounted sale as well as the conflicting view taken by the Sales Tax Authority and Income Tax Authorities on the same evidence this addition is deleted.
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