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COMMISSIONER OF INCOME TAX-III, HYDERABAD Versus RAVI FOODS PVT LTD.

Estimation of unaccounted turnover - determination of undisclosed income of the Assessee - Held that:- In case of estimation, there is an element of guess work involved and as long as the same is made following the settled principles, the determination of undisclosed income of the assessee on a reasonable basis is purely a question of fact.

Direction to AO to estimate the unaccounted turnover at 35% of the accounted turnover for the assessment years 1996-97 to 2001-02 and at 54.62% f .....

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ders of the Tribunal with regard to the determination of undisclosed income. - I.T.T.A. No. 35 of 2015 - Dated:- 16-6-2015 - SRI G. CHANDRAIAH AND SRI CHALLA KODANDA RAM, JJ. FOR THE PETITONER : NARASIMHA SARMA FOR THE RESPONDENT : VASANTKUMAR ORDER:- (per Hon ble Sri Justice G. Chandraiah) At the instance of Revenue, though, in the Memorandum of Grounds of Appeal, as many as eight questions of law said to be arising from the order of the Tribunal in IT(SS)A.No.41/Hyd/2005 for the assessment yea .....

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nted turnover at the rate of 35% of accounted turn over for the assessment years i.e. 1996-1997 to 2001-2002. Hence the impugned order being contrary to the material facts on record, is also inconsistent with the facts of the case and hence the same is liable to be set aside as erroneous and perverse in law. 2. It is a case where search operations were conducted resulting in passing of assessment order for Block period 1996-97 to 2001-02 and from 01.04.2001 to 13.02.2002. As against the order de .....

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Reddy v. ACIT 72 ITD 205 . The Tribunal recorded as under: 8. In the light of the above discussion, in view of the various infirmities and inconsistencies noted above in the approach adopted by the lower authorities while determining the undisclosed income of the assessee by extrapolation of the material found during the course of search for earlier years forming part of the block assessment, we have to determine the undisclosed income of the assessee on a reasonable basis, in consonance with th .....

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would meet the ends of justice, as against 54.62% adopted by the assessing officer and on different bases for different years, viz. at 20% for assessment years, as noted above, adopted by the CIT(A). As for the terminal broken period, since the assessee has already accepted before the CIT(A) the adoption of rate of 54.62% by the assessing officer, we find no justification to interfere with the order of the CIT(A) on that aspect. Even though in the course of appellate proceedings before this Tri .....

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not justified in determining the undisclosed income by adopting gross profit rate of the relevant years / period. It is settled position of law as laid down among others by the Delhi High Court in the case of CIT V/s Satish Kumar Chandna, New Delhi, vide judgment dated 21.9.2007 in ITA No.142 of 2004, besides the decisions of various Benches of the Tribunal including the Hyderabad Benches in similar matters, it is only the net profit and not the gross profit rate that is relevant to determine th .....

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high as 35% as in the present case. The basis for the determination of the undisclosed turnover in the present case is the seized material which relates to December, 2001 and January, 2002 faming part of assessment year 2002-03. That being so, we are of the considered opinion, considering various factors which prevailed in different years, as discussed in the earlier years, actual gross loss determined in one year, limitation of installed capacity etc., in our considered opinion, adoption of th .....

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