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2010 (10) TMI 1130

Agrawal, Accountant Member. These are two appeals filed by the assessee for Asst. Year 2002-03. 2. ITA NO.842/Ahd/2006 Asst. Year 2002-03 is the appeal against the order passed by the ld. CIT under section 263 wherein he has directed the AO to make the addition of ₹ 8 lacs being the disclosure made by the assessee during the survey proceedings. The assessee has raised following ground: On the facts and in circumstances of the case and in law, ld. CIT-II, Baroda erred in - 1. passing the order u/s 263 of the IT Act and thereby directing the ITO to treat the disclosure of ₹ 8,00,000/- during the course of survey as income from other sources by applying the ratio of Hon. Gujarat High Court in the case of Fakir Mohamed Haji Hassan 2 .....

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ounting to ₹ 8 lacs and odd were found. In the statement recorded during the course of survey Shri Sunil R. Patel being the power of attorney holder of Smt. Smitaben Mahendrabhai Patel admitted that such receipts and expenditure are outside the books. He accordingly disclosed a sum of ₹ 8 lacs and agreed to pay tax thereon. But when return of income was filed, the AO noted that net income has been declared at ₹ 69,880/- even though sum of ₹ 8 lacs was shown as credit in the profit and loss account. The assessee had shown total contract receipts of ₹ 41,58,726/- with gross profit of ₹ 3,97,055/- as against total contract receipts of ₹ 83,62,502/- with gross profit of ₹ 4,16,326/- giving GP rate .....

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2,00,000/- 3. Disallowance out of Octroi/transportation expenses as discussed in para 6.2 (C) above 1,00,000/- 4. Disallowance out of construction work expenses as discussed in para 6.2 (D) above 7,00,000/- 5. Unrecorded Cash payment as discussed in para 6.3 above 44,000/- 6. Disallowance of cement expenses as discussed in para 7 above 1,61,119/- 7. Disallowance of wood expenses as discussed in para 8 above 80,839/- 8. Disallowance of glass expenses as discussed in para 9 above 32,801/- Rs.14,18,759/- The ld. CIT in proceedings under section 263 considered that AO has not specifically made the addition of ₹ 8 lacs. It was explained to the ld. CIT that this issue has been considered by the AO while examining the books of account but t .....

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her this disclosure was made on the basis of documents impounded during the course of survey. Such documents indicate that assessee had undisclosed receipts as well as payments and net thereon had been worked out at ₹ 8 lacs. Merely because this undisclosed income of ₹ 8 lacs has been shown as a part of profit and loss account it does not lose its separate identity and has to be taken out from the profit and loss account for separate consideration. This would be notwithstanding the trading results which are finally settled in the appeal pending before us in ITA No.2659/Ahd/2005. Since the AO failed to take note of separate and independent identity of this income in the profit and loss account and consider it independent of other .....

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is made out only on the ground that assessee is not able to support the claim of expenditure. Only addition which can be made would be a GP addition. Since assessee has shown GP of 4.97% in preceding year then not more than that rate should be applied on the contract receipts. 10. The ld. DR on the other hand, submitted that addition of ₹ 8 lacs should be over and above the additions of various expenses or addition on account of GP. 11. We have considered the rival submissions and perused the material on record. While disposing of appeal in ITA No.842/Ahd/2006 we have held that separate addition of ₹ 8 lacs should be made being disclosed by the assessee on the basis of loose papers and documents found during survey. There-after .....

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