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2015 (4) TMI 541 - AT - Income TaxNet profit estimation - CIT(A) reducing the estimated profit of ₹ 28,84,038/- at 12.5% on a turnover of ₹ 2,30,72,304/- to 5% on turnover of ₹ 2,14,74,304/- to ₹ 10,63,715/- and to take working capital at ₹ 2,50,000/- and addition reduced to ₹ 19,95,196/- which includes unexplained expenditure of ₹ 7,21,233/- being profit from business - rejection of books of accounts - Held that:- Assessee was carrying on business of sweet and namkeen. During the year under consideration there was survey at the business premises of the assessee in which it was found that assessee was not maintaining proper books of account. It was found that assessee was having bank account which were not disclosed in the return of income. It was also found that the assessee has taken some loan which was repaid, however, the amount repaid was not disclosed in the books of account in the return filed with the department. Accordingly, by rejecting books of account, the AO computed the income by applying estimated net profit rate as well as made addition in respect of amount deposited in bank as well as repayment of loan effected during the year. The CIT(A) appreciated each observation of the AO and after giving detailed finding confirmed the action of the AO for rejection of the account. On the basis of observation made by the AO in its order vis-à-vis details of account submitted along with the return of income the CIT(A) found that total sale of the assessee was ₹ 2,12,72,304/-. After applying net profit rate on total sales, the net profit was worked out at ₹ 10,63,615/-. The CIT(A) also worked out working capital requirement at Thane Shop at ₹ 2,50,000/- on the basis of 15 days cycle in procurement of raw material and sale of products. The CIT(A) also made separate addition of ₹ 4,75,616/- in respect of payment made to India Bulls from whom assessee has taken loan. The addition was also confirmed on account of payment made towards the credit card. Thus, the total addition of ₹ 7,21,233/- was made u/s.69C. In sum and substance, out of total addition of ₹ 36,06,744/- made by the AO, the CIT(A) upheld the addition of ₹ 19,95,196/-. Detailed findings recorded by CIT(A) have not been controverted by department by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the finding recorded by CIT(A) resulting into part deletion of addition made by AO. Under Rule 27 of ITAT Rules, ld. AR raised a ground to the effect that amount paid to India Bulls loan amounting to ₹ 4,75,616/- was out of sale proceeds on which profit has already been estimated and addition has been made, therefore, the CIT(A) was not justified for making separate addition of ₹ 4,75,616/- on account of unexplained payments. We found that neither the assessee filed any appeal nor any cross objection and under Rule 27, assessee can raise a plea which is in support of CIT(A)’s action. The ground taken by the assessee is not in support of CIT(A)’s action but amounts to separate ground for which neither assessee has filed any appeal nor any cross objection. Accordingly, we refrain from entertaining this ground and confirm the action of CIT(A) for making addition of ₹ 4,75,616/- on account of unexplained expenditure/payment. - Decided against revenue.
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