2005 (1) TMI 350 - AT - Income Tax

Summary

Issues:
1. Addition of unrecorded Raida found during survey
2. Deletion of addition on suppressed sales

Analysis:

Issue 1: Addition of unrecorded Raida found during survey
The Department appealed against the CIT(A)'s order regarding the unrecorded Raida found during a survey conducted under section 133A of the Income Tax Act. The assessee explained that the Raida was purchased but not recorded due to the absence of a bill, which was later produced. The CIT(A) deleted the addition, stating that the assessee provided evidence of the source of acquisition. The Department argued based on the AO's order, while the Authorized Representative supported the CIT(A)'s decision. The ITAT Jodhpur observed that the assessee had surrendered the amount during the survey but did not include it in subsequent returns. The bills were produced during assessment proceedings, supporting the assessee's claim. The Tribunal agreed with the CIT(A)'s decision, emphasizing that the addition based solely on surrender was unjustified. The appeal on this ground was dismissed.

Issue 2: Deletion of addition on suppressed sales
The AO added an amount on account of undeclared profit from suppressed sales, attributing it to unexplained crushing of Raida based on electricity consumption. However, the Tribunal noted that there was no direct correlation between the crushing of seeds and electricity consumption. The AO calculated extra profit earned from crushing seeds and selling oil. The Tribunal consistently held that additions based solely on electricity consumption were not justified, as electricity usage depends on various factors. Citing previous decisions, the Tribunal dismissed the appeal on this ground, aligning with its consistent view. Consequently, the appeal was dismissed.

In conclusion, the ITAT Jodhpur upheld the CIT(A)'s decision to delete the addition related to the unrecorded Raida found during the survey and dismissed the appeal regarding the addition on suppressed sales, emphasizing the lack of correlation between electricity consumption and the alleged undisclosed profit.