Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (8) TMI 63 - AT - Income TaxReduction of GP Unaccounted expenses Held that:- The assessee had adopted 5% rate of profit for all the years - As against that the AO had adopted an average profit at 5.17% - The net profit percentage by CIT(A) had varied from 5.4% to 8.9% in AY 2001-02 and AY 2002-03 - It has further varied from 8.5% to 0.79% in AY 2003-04 to 2007-08 as per the calculation appeared of the appellate order - overall average arrives at 5.8% for those four years - But in a situation when there is no uniformity and vast variation in the percentage of year wise profits, which had shown steep rise up to 8.9% and thereafter steep fall up to 0.79% hence seems to be impractical method of calculation of profit - there were no sales/purchase Bills were detected, no unaccounted coal stock was unearthed, no assets beyond the income offered was seized and the application of unaccounted income has matched with the assets/expenditure hence the income so offered by and large appears to be reasonable - Still to cover up the difference between the disclosure of 1.07crore and income offered for all the years by adopting rate at 5%, for the AY 2001- 02, 2002-03, 2003-04, the profit is to be calculated by adopting net profit rate at 5.2% - Decided partly in favour of Revenue. Unaccounted transactions of cash purchases Disallowance u/s 40A(3) Held that:- The transaction being not a purchase and sale of the assessee in his own rights, there was no question of disallowance of any expenditure because the profit was declared on estimation - hence, the provisions of Section 40A(3) was not to be attracted relying upon Commissioner of Income-Tax Versus Hynoup Food And Oil Ind. P. Limited [2005 (2) TMI 99 - GUJARAT High Court] the issue of the applicability of the provisions of Section 40A(3) is to be decided on the merits and facts of this case only - even after the search was carried out there were no evidence of expenditure and the AO was not able to lay hands on unaccounted purchases - Because the evidence of total expenditure or purchases was not available to the Revenue, the assessee as well as the AO, both have decided to determine the income by applying a reasonable estimate of profit the estimation was very close to the income offered by the assessee Decided against Revenue. Undisclosed closing stock Held that:- CIT(A) has correctly appreciated the facts of the case and held that in the absence of any stock found at the time of search there was no justification to tax unaccounted stock in the hands of the assessee - the AO was not definite about the stock - no authentic finding was given but it was held by him that there might be stock in godown - in such a situation CIT(A) was correct in deleting the addition which according to him was based upon conjecture only Decided against Revenue.
|