TMI Blog2010 (11) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... as shown to be 5.85%. According to us, this is the only mode of calculation of net profit of the assessees in the given situation. We therefore, set aside the order of the CIT(A) and direct the A.O. to adopt the net profit at 6% in all the years. In one year, the assessee itself has shown the profit at 9.56% and in that year no addition is called for and the declared profit of the assessees is to be accepted. In rest of the years, the profit is to be estimated at 6% of the respective total sales. - Shri Sunil Kumar Yadav And Shri BR Baskaran,JJ. For the Appellant : Shri T. L. Peter, DR For the Respondent : Shri G. V. N. Hari, CA ORDER Per Bench:- These cross appeals are preferred by the assessee as well as the revenue against the consolidated order of the CIT(A) pertaining to the assessment years 1999-2000 to 2002-03 on common grounds. Therefore, these appeals were heard together. Controversy raised in these appeals is only with regard to the computation of the total income of the assessees for the impugned assessment years. 2. The brief facts borne out from the record are that the assessee is a partnership firm doing advertisement business. It pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itures. It was stated before the CIT(A) that the A.O. has wrongly observed that if a person is false on one aspect, he may be false in respect of all the aspects. If this maxim was to be applied, the proper course of action would be estimation of income, as the assessing officer is not believing any of the figures mentioned either in the books of accounts or in the statement found during the course of search and seizure operation. During the course of search and seizure operation, no second set of books of accounts were found. What were found during the course of search were the figures belonging to the period 1.4.1997 to 31.3.2002 compiled at one place. The said statement was neither signed nor authenticated by any one. The figures available are consolidated figures and yearwise figures are not available on record. No such information could either be provided by the assessees nor could be gathered by the assessing officer. Therefore, consolidated figures only could be gathered as per the statement found during the course of search and seizure operation. Therefore, there is neither evidence in the seizure documents to the correctness of the receipt nor the expenditure incurred. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cites few entries in the seized documents in support of the claim that some expenditure has been made through the partners but not recorded in the books of account. It is true that commission has been paid which is revealed by the seized document, but not recorded in the regular books of account. There is no dispute about the source of such expenditure since the unaccounted receipts are more than such expenditure. The judicial decisions favour the view that a seized document has to be read as a whole. It cannot be read in bits and parts to suit the convenience of one party or the other. However, in this particular case, the details of commission payments are not known to make it allowable. The genuineness of expenditure is not the question but legality of expenditure, if allowable. The appellant is dealing with public sector undertakings for putting advertisements and it cannot be ruled out that major part of the commission payments are for illegal gratification and not allowable under law. Had the payments been above board, the assessee could have shown it in the regular books of account as it is favourable to the assessee being allowable expenditure. The appellant has not giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditures. It is a settled position of law that the seized material cannot be di-sected. It has to be ignored or has to be considered as a whole. The Ld. Counsel for the assessee further contended that even from the seized material, net profit or the total income of the assessees for the impugned assessment years cannot be worked out. The CIT(A) has allowed 15% of the commission paid shown in the statement of the seized material, without taking a note that the seized material is to be read in toto and the net profit is to be worked out either on the basis of the seized material or the books of accounts. Therefore, the lower authorities have not properly calculated the net profit of the assessees. 10. The Ld. Counsel for the assessee during the course of hearing filed a reconciliation statement and the statement showing percentage of profit in all assessment years and also the addition required if percentage of profit is to be estimated at different rates. After taking into account the additional income offered by the assessee the percentage of profit is between 2.38% to 9.56% during the financial year 1998-99 to 2000-2002 and the mean there of is 5.85%. 11. The Ld. D.R. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls are complete, on the basis of which the net profit of the assessees can be worked out. Though the assessee has taken a stand before the assessing officer that in this type of situation, the books of accounts of the assessees can be rejected and the profits can be estimated by adopting a particular percentage to the total sale of the assessees. But the A.O. did not accept this contention of the assessees. 13. The CIT(A) altogether has adopted a different formula to compute the profits of the assessees. He has allowed the 15% of the commission expenditures claimed by the assessees and made the addition of the rest of the commission expenditures. We are unable to understand how only the commission can be considered from the seized material for determining the net profit of the assessees. We have also examined the details of the commission found during the course of search and we do not find that major part of the commission was paid against the public policies. The commission was paid to different private or public sectors and there was no evidence to conclude that the payment of commission was against the public policies. Therefore, we are unable to subscribe the mode of comput ..... X X X X Extracts X X X X X X X X Extracts X X X X
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