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2017 (1) TMI 107 - AT - Income TaxReopening of assessment - addition towards unexplained cash deposits in bank account - Held that:- We find that the assessee has withdrawn cash on various dates. Unless the A.O. proves that cash withdrawals has been utilized for personal expenditure or deployed for acquisition of assets, the sources available in the form of cash withdrawals cannot be ignored while considering credits in the bank account. Therefore, we are of the view that the A.O. was erred in making additions towards total credits found in the bank account. Hence, we direct the A.O. to work out peak credits found in the bank account and make additions to the peak credit instead of total credits found in the bank account. Undisclosed income out of additional unaccounted sales and estimation of net profit - Held that:- The assessee has estimated additional turnover of ₹ 70 lakhs for the assessment year 2011-12. But the CIT(A) has enhanced the turnover to ₹ 1.40 crores without any basis. Therefore, we are of the view that the CIT(A) was incorrect in enhanced turnover from ₹ 70 lakhs to ₹ 1.40 crores, accordingly we direct the A.O. to accept turnover declared by the assessee. In so far as assessment year 2012-13, the assessee has admitted an unaccounted turnover of ₹ 1,45,76,675/- for the period of 4 months from Dec’11 to Mar’12 and further ₹ 60 lakhs for the period of 8 months from Apr’11 to Nov’11. As against this, the A.O. has estimated an additional turnover of ₹ 2,91,53,350/- for the period of 8 months based on the turnover of the period Dec’11 to Mar’12. Though the CIT(A) has reduced turnover estimated by the A.O. from ₹ 2,91,53,530/- to ₹ 80 lakhs, fails to give any reasons for estimating higher turnover of ₹ 80 lakhs. Therefore, we are of the view that the CIT(A) was incorrect in adopting higher turnover as against turnover declared by the assessee. Hence, we direct the A.O. to adopt turnover declared by the assessee in the revised return filed in response to notice u/s 148 of the Act. Estimation of net profit the assessee has declared a net profit of 12.99% to 16.74% for the year ended 31.3.2010 and 31.3.2011, we deem it appropriate to direct the A.O. to estimate net profit of 20% on total sales including unaccounted sales. Accordingly, we direct the A.O. to estimate net profit of 20% on total sales for the assessment year 2011-12 and 2012-13. Additions towards VAT component of unaccounted sales - Held that:- We find force in the arguments of the assessee, for the reason that the turnover of the assessee has been determined on estimation basis. It is also fact that the assessee also not collected VAT separately in the sales bills. Since, the net profit of the assessee has been estimated on total turnover, there is no need for separate additions towards VAT component. The CIT(A) after considering the relevant details directed the A.O. to delete additions made towards VAT. We do not find any error or infirmity in the order of the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject ground raised by the revenue. Interest u/s 234A & 234B of the Act is consequential and mandatory in nature and accordingly, the A.O. has rightly levied interest on total income determined, accordingly, we uphold interest charged u/s 234A & 234B of the Act.
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