Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2013 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (7) TMI 855 - DELHI HIGH COURTUnaccounted sales - A.O. adopted G.P. rate of 53.76% - Tribunal deleted addition made by A.O. and adopted G.P. rate of 2.25% - Held that:- GP rate of the recorded transactions of various years was a fair indicator of the gross profit, which would have been earned by the respondent in unrecorded transactions - Assessee did not challenge amount of unrecorded sales - Decision in case of VIJAY PROTEINS LTD. Versus ASSISTANT COMMISSIONER OF INCOME TAX[2002 (2) TMI 349 - ITAT RAJKOT] cannot be followed as in the said case assessee had not been able to produce any evidence regarding purchases made from 33 parties. The books of account were rejected in the said case, with the tribunal holding that 25% of the purchase price accounted for in the books through invoices could be disallowed for working out the income - Decided against Revenue. Unaccounted investment - Tribunal held that assessee did not maintain day-to-day stock record/register and, therefore, it cannot be said that unrecorded sales could not have been of accounted stock - Held that:- no evidence of unaccounted investment was found at the time of search. Once the stock register was not there as recorded by the tribunal in its order, the said finding itself apparently is contradictory - it was for the assessee to explain and state the source/funds for conducting and entering into the said transaction - Transactions of high value do require investment. Plea of the assessee that existing or available investment in the books was sufficient, has to be made good with material and proof by the assessee. The assessee had to explain that purchases recorded in the books were sufficient after adjustment of the recorded sales. In cases of unaccounted sales and purchases all documents may not be available and certain amount of guess work is always required as noticed earlier but a realistic and common sense approach is required - Unaccounted sales may result and can contribute towards the investment, but there has to be initial investment. Profits and income earned are also used for personal needs and are taken out of business - Decided in favour of Revenue. Peak credit - whether the peak credit should be added and brought to tax -Held that:- Profit earned from unaccounted transactions can be and are used and consumed by the assessee for their own personal uses - Tribunal placed the onus on the Revenue to explain the source of investment made by the assessee though there were unaccounted sale transactions - It has ignored relevant and material facts and has gone on a tangent without examining the real issue and the controversy, i.e., has the assessee explained the source of funds required for making investment to have turnover - Following decisions of Municipal Committee, Hoshiarpur v. Punjab SEB[2010 (10) TMI 932 - SUPREME COURT], Dhirajlal Girdharilal v. CIT[1954 (10) TMI 8 - SUPREME Court], CIT v. Daulat Ram Rawat Mull[1972 (9) TMI 9 - SUPREME Court] and CIT v. S.P. Jain[1972 (9) TMI 10 - SUPREME Court] - Decided in favour of Revenue.
|