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2017 (3) TMI 952 - AT - Income TaxEstimation of seed capital - undisclosed income - Held that:- Seed capital mainly relates to capital required for initial start of the business. In the given case assessee has not started any new business during the year but is engaged in the business activities of manufacturing jari since last many years and apparently it seems that assessee has not disclosed the alleged sales in the regular books of account which further gets support with the admission of ld. Authorised Representative to the gross profit addition on the undisclosed cash/credit. But certainly no matter it is not an initial start of business but there is certainly a hidden element of capital which the assessee had invested for making unaccounted sales. We are, therefore, of the view that in the totality of facts it would be justified to estimate the seed capital at ₹ 2,00,000/- which the assessee might have invested from its undisclosed income to effect undisclosed sales. In the result, we sustain the addition of ₹ 3,68,605/- as against ₹ 5,85,530/- sustained by ld. Commissioner of Income Tax(A) out of which ₹ 1,68,605/- is on account of gross profit addition @ 10.11% of ₹ 16,69,457/- and an approx. amount of ₹ 2,00,000/- as seed capital invested by the assessee to effect the rotation of the alleged undisclosed sales. Accordingly, the appeal of assessee is partly allowed. Penalty u/s 271(1)(c) - Held that:- At the given facts and circumstances of the case that as the assessee has furnished inaccurate particulars of income and has also concealed particulars of income, penalty u/s 271(1)(c) of the Act has rightly been imposed. However, we direct the ld. Assessing Officer to recomputed the penalty u/s 271(1)(c) of the Act vis-à-vis our decision given in adjudicating quantum appeal of assessee wherein we have sustained addition of ₹ 3,68,605/-. Accordingly the ground raised by assessee is partly allowed.
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