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2017 (1) TMI 1813 - AT - Income TaxUnrecorded and unexplained transactions - Addition made on the basis of seized loose papers - treatment ot voluntary disclosure made u/s 132(4) - HELD THAT:- When entire entries of seized documents are to be considered, it cannot be taken in part or peace-meal and whole document should be considered as a whole. We find that the seized material, documents were found during the course of search, therefore, the entries recorded thereon whether it is a receipt or expenditure, has to be accepted as genuine. Therefore, for taxing, the real income is required to be taxed and not the receipts when document contains receipts and expenditure. Therefore, peak of the debit and credit entries of the seized documents is to be considered and set off of carried forward, disclosure or income being taxed either being accounted or unaccounted income is to be allowed. Therefore, to this extent, we find that the findings given by the ld. CIT(A) is justified. We find support from case of Tirupati Construction [2015 (8) TMI 83 - ITAT AHMEDABAD] relied upon by assessee, wherein it was held that only peak of debit and credit entries of the seized papers/diaries could be assessed in the hands of the assessee and there was no justification for adding the entire receipts side of the seized papers and, accordingly, there is no merit in the grounds of appeal of the Revenue with regard to this issue and, accordingly, dismissed. In the light of these facts, all the grounds of the Revenue are treated as dismissed for all the assessment years under appeal. Net profit estimation - Taking highest of the adjusted NP ratio - HELD THAT:- CIT(A) has applied uniform net profit rate of 5% for all the assessment years under appeal, which, in our view, is not correct approach as each assessment year is a separate assessment year and net profit rate of the same can be varied for assessment year to assessment year. We note that net profit ratio @ 5% for adjusted profit and loss account for each of the assessment year cannot be applied while considering net profit rate of on unaccounted sales and expenses resulting into unaccounted transaction. Therefore, the net profit rate for the relevant assessment years under appeal as worked out by the ld. CIT(A) after analyzing transaction from each year would be most appropriate to apply for working out net profit on account of unaccounted sales for the respective assessment years. Therefore, we are of the considered opinion that adjusted net profit rate pertaining to concerned assessment years as worked out by the ld. CIT(A) for each assessment year under appeal would be reasonable to apply while calculating unrecorded profit. Accordingly, the sustainable addition would be worked out after allowing the peak, set off of brought forward balances as allowed by the ld. CIT(A). Directions to compute adjusted net profit ratio.
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