Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 1689 - AT - Income TaxAddition on account of seized material during the search - Held that:- CIT(A) held that though entries appeared to be sale transactions but addition cannot be made on the basis of GP. He gave the reason that no trading account, quantitative details or ledger accounts were produced. He further held that entire business of the assessee is undoubtedly unaccounted and therefore, he held that the gross profit cannot be added but the entire sale transaction requires to be added. However, he reduced the addition from ₹ 136489/- to ₹ 75965/-. Undoubtedly, the addition has been made on account of seized material during the search pertaining to the order and therefore, the ld AO is correct in taking cognizance of those incriminating documents for making addition during the year. - Decided against assessee. Gross profit estimation - unaccounted sales - Held that:- The assessee is in the business of jewellery. It deals in gold ornaments. Gold is general trading at margin of 1% to 2%. Unless assessee designs its own jewellery the profit margin is very low in that business as gold prices are transparent and readily verifiable. In the assessment year 2005-06 the ld CIT(A) has taken the gross profit ratio of 10%. According to us such percentage is very high and is comparable with other trading commodities. Therefore, such a high gross profit margin cannot be upheld. Therefore, we direct the ld AO to tax the income of the assessee @2% of unaccounted sales determined by the ld CIT(A) of ₹ 75965/-. In the result ground of the appeal of the assessee is partly allowed.
|