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2015 (3) TMI 974 - ITAT LUCKNOW

2015 (3) TMI 974 - ITAT LUCKNOW - TMI - Estimation of income - applying 20% net profit rate - whether bank account No. 12505 and 7968 do not belong to the assessee company? - assessment year 2004-05 - Held that:- When Dr. A. K. Shah, M.D. of the assessee company has admitted in the statement recorded during search that the bank accounts are belonging to the assessee company, simply because the accounts are in two different names, it cannot be accepted that the transactions in these bank accounts .....

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to the extent of ₹ 12,44,000/-. Total of these two amounts has been arrived at ₹ 38,73,965/- and under these facts, the turnover was estimated at ₹ 40 lacs. In our considered opinion, in the facts of the present case, when these two bank accounts are belonging to the assessee company and receipts as per these two bank accounts were not accounted for in regular books, the receipts as per these two bank accounts and as per books of account have to be added to estimate the gross .....

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20% is excessive in the facts of the present case. We, therefore, hold that applying net profit rate of 10% will meet the ends of justice and hence, we direct the Assessing Officer to apply net profit rate of 10% on estimated gross receipt of ₹ 40 lac and in this manner, the assessee gets part relief of ₹ 4 lac. These grounds are partly allowed. - Decided partly in favour of assessee.

Estimation of income - applying net profit @25% - assessment year 2005-06 - Held that:- I .....

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e company, net profit rate declared by the assessee before depreciation was 16.09%. Hence, in this year, we feel that applying net profit rate of 17% will meet the ends of justice as against 25% applied by CIT (A). We direct the Assessing Officer accordingly. The assessee gets relief of ₹ 4.40 lac being 8% of ₹ 55 lac. - Decided partly in favour of assessee.

Addition on account of undisclosed income - CIT(A) deleted the addition - whether the total unaccounted receipts as .....

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al of the assessee that instead of 25% rate of net profit, it should be applied at 17%. Apart from this, we do not find any reason to interfere in the order of CIT(A) on this aspect. - Decided against revenue.

Bifurcation of total surrender made by the assessee of ₹ 40 lac - whether CIT(A) was justified in holding that such surrender should be bifurcated in two years i.e. ₹ 8,96,686/- in the present year and balance amount of ₹ 31,03,314/- in assessment year 2006-07 .....

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at ₹ 10,51,176/- as against the income declared by the assessee in the return of income at ₹ 1,54,956/-. In this manner, CIT(A) has confirmed an addition of ₹ 8,96,686/-. While deciding the appeal of the assessee, we have reduced this addition by ₹ 4.40 lac because we have directed the Assessing Officer to adopt net profit of 17% as against 25%. Hence, the additional income to be taxed in the present year remains only ₹ 4,56,686/- and therefore, the amount to be co .....

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s being Benami bank account were business transactions of the assessee company, only net profit out of such unaccounted receipt should be taxed and not the gross receipt. The amount being taxed out of such gross receipts of ₹ 64.69 lac is more than normal income out of such gross receipt and therefore, there is no merit in this ground of the Revenue. - Decided against revenue.

Addition being credit balances found in the bank account Nos. 12050 and 7968 also - CIT(A) deleted addi .....

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te surrender for assessment year 2005-06 and 2006-07 and therefore, there is no merit. - Decided against revenue. - ITA Nos. 277 & 278/LKW/2012, ITA Nos.407 & 429/LKW/2012 - Dated:- 23-3-2015 - Shri Sunil Kumar Yadav And Shri A. K. Garodia,JJ. For the Petitioner : Shri S. K. Garg, Advocate, Shri P. K. Kapoor, C.A. For the Respondent : Shri Anand Kumar Agarwal, C.I.T., D. R. ORDER Per A. K. Garodia, A. M. Out of this bunch of four appeals, there is one appeal by the assessee for assessment year 2 .....

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cts in not deciding the additional ground in favour of the appellant. 2. The learned CIT(A) was wrong in law & on facts in computing the income of the appellant at ₹ 6,03,277/- as against the returned income of ₹ 42,720/- by estimating the turnover at ₹ 40 lacs and applying the net profit rate at 20%. 3. The learned CIT (A) was wrong in law & on facts in holding that the bank account No.12050 & 7968 pertained to the appellant company. 4. In any case & without pr .....

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by estimating the turnover at ₹ 40 lac and applying 20% net profit rate on this estimated turnover. He further submitted that against this estimated income of ₹ 8 lacs, deduction was allowed on account of depreciation to the extent of ₹ 2,10,593/- and in this manner, the income was estimated at ₹ 5,89,407/-. He submitted that the bank account No. 12505 and 7968 do not belong to the assessee company and therefore, this addition is not justified and regarding estimation of .....

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not acceptable that this account is belonging to Shri Uma Shanker Shah and not to the assessee. He has noted that he has held in the case of Shri Uma Shanker Shah that the transactions of this account do not pertain to Shri Uma Shanker Shah but belong to the assessee company. He has also given a finding that this finding is supported by the averments made by Dr. A. K. Shah in his statement recorded during the course of search conducted on 28/03/2006 and by Shri Uma Shanker Shah in the statement .....

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pts of the assessee company. When Dr. A. K. Shah, M.D. of the assessee company has admitted in the statement recorded during search that the bank accounts are belonging to the assessee company, simply because the accounts are in two different names, it cannot be accepted that the transactions in these bank accounts do not belong to the assessee company. These findings of the learned CIT (A) could not be controverted by the learned AR of the assessee. Hence, on this aspect, we do not find any rea .....

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was estimated at ₹ 40 lacs. In our considered opinion, in the facts of the present case, when these two bank accounts are belonging to the assessee company and receipts as per these two bank accounts were not accounted for in regular books, the receipts as per these two bank accounts and as per books of account have to be added to estimate the gross receipt of the assessee company and therefore, estimation of gross receipts at ₹ 40 lacs is proper and reasonable. 8. Regarding applyin .....

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nd hence, we direct the Assessing Officer to apply net profit rate of 10% on estimated gross receipt of ₹ 40 lac and in this manner, the assessee gets part relief of ₹ 4 lac. These grounds are partly allowed. 9. In the result, the appeal of the assessee stands partly allowed. 10. Now we take up the appeal of the assessee for assessment year 2005-06 i.e. I.T.A. No.278/Lkw/2012. In this appeal, the assessee has raised the following grounds: 1. The learned CIT (A) was wrong in law & .....

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rejudice to the above grounds, income of ₹ 10,51,176/- computed by learned CIT(A) is very high & excessive. 5. The order of the learned CIT(A) is against law, facts & principles of natural justice. 11. It was submitted by Learned A.R. of the assessee that the issues raised by the assessee in this year are similar to the issue raised in assessment year 2004-05. 12. Learned D.R. of the Revenue supported the orders of the authorities below. 13. We have considered the rival submissions .....

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er profit & loss account of the assessee company, net profit rate declared by the assessee before depreciation was 16.09%. Hence, in this year, we feel that applying net profit rate of 17% will meet the ends of justice as against 25% applied by CIT (A). We direct the Assessing Officer accordingly. The assessee gets relief of ₹ 4.40 lac being 8% of ₹ 55 lac. 14. In the result, the appeal of the assessee stands partly allowed. 15. Now we take up the appeal of the Revenue for assess .....

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eturn. Accordingly, since the return of income was filed at ₹ 1,54,960/- without including the surrendered amount of ₹ 20,00,000/-, the A.O. was justified in making such addition. 2. That Ld. CIT (A) has erred in law and on facts in directing the A.O. to apply net profit rate of 25% even on unaccounted or undisclosed credit of ₹ 21,10,000/- in two bank accounts maintained in the name of Shri Tanmay Tewari, ignoring the fact that the credits in these two bank accounts represente .....

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th the assessment years. 4. That the order of the Ld. CIT (A) deserves to be vacated and the assessment order passed by the A.O. be restored. 16. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 17. We have considered the rival submissions. We find that as per the grounds of the Revenue, two issues are involved. One issue is as to whether the total unaccounted receipts as per total credits in two bank account .....

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t profit, it should be applied at 17%. Apart from this, we do not find any reason to interfere in the order of CIT(A) on this aspect. 18. The second issue is as to whether CIT(A) was justified in holding that out of total surrender made by the assessee of ₹ 40 lac, whether CIT(A) was justified in holding that such surrender should be bifurcated in two years i.e. ₹ 8,96,686/- in the present year and balance amount of ₹ 31,03,314/- in assessment year 2006-07 whereas it was held b .....

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this specific finding of CIT(A). It is also held that on the basis of surrender alone, income cannot be assessed in the absence of any corroborating material and even on the basis of corroborating material, if the income liable to be taxed is less than the surrendered amount, then only such income can be taxed, which is proper on the basis of corroborating material. As per the material found in course of search, there were two bank accounts belonging to the assessee company, receipts of which w .....

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ecause we have directed the Assessing Officer to adopt net profit of 17% as against 25%. Hence, the additional income to be taxed in the present year remains only ₹ 4,56,686/- and therefore, the amount to be considered in assessment year 2006-07 should be ₹ 35,43,314/- being difference of ₹ 40 lac and ₹ 4,56,686/-. Except this modification, we decline to interfere in the order of CIT(A). 20. In the result, the appeal of the Revenue stands dismissed. 21. Now we take up the .....

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of the assessee company M/s R.K. Shah Hospital & Diagnostic Centre (P) Ltd. 2. That Ld. CIT (A) has erred in law and on facts in deleting the addition of ₹ 13,27,417/- made being credit balances found in the bank account Nos. 12050 & 79683 in the names of Sri Tanmay Tewari and Sri Uma Shanker respectively, ignoring the fact that the assessee could not furnish any satisfactory explanation and evidence before the A.O. 3. That Ld. CIT (A) has erred in law and on facts in deleting the .....

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order passed by the Assessing Officer be restored. 22. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 23. We have considered the rival submissions. We find that this issue was decided by learned CIT(A) as per Para 8.2.2 of his order, which is reproduced below for the sake of ready reference:- 8.2.2 Profits of business/profession is embedded in the turnover of the business. In this case, total turnover of th .....

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receipts totaling to ₹ 58,69,252/- in its computer at the time of search, it can be safely assumed that the income that would have been offered to tax, (if the search had not taken place), would have been in the vicinity of ₹ 3-5 lakhs. The assessee, after incorporating all the unaccounted receipts, has offered a taxable income of ₹ 44,04,380/-. Accordingly, he has duly complied with his statement wherein he had surrendered an amount of ₹ 40 lakhs. Further, the said surre .....

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earned any income beyond what has been disclosed in its return of income. In this view of the matter, there was no occasion for the A.O. to once again add ₹ 20,00,000/- to the income of the assessee on account of the surrender made. Hence the addition of ₹ 2000000/- is hereby deleted. 23.1 From the above Para from the order of CIT(A), we find that a clear finding is given by him that as per the facts of the present case, the income that would have been offered to tax (if the search h .....

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IT(A) has stated that he has confirmed addition of ₹ 8,96,686/-, which has been reduced by us to ₹ 4,86,686/- and therefore, the balance amount to be considered in this year after giving effect of our order in assessment year 2005-06 is to the extent of ₹ 35,43,314/-. The amount of income as per the return of income filed by the assessee is more than the composite amount of income without considering the surrender in the vicinity of ₹ 3-5 lacs and such additional income o .....

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