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DCIT, Central Circle-VII, Kolkata Versus Shri Prakash Bagla

2017 (5) TMI 249 - ITAT KOLKATA

Gross profit determination - CIT(A) reducing the gross profit determined by the AO at the rate of 4% to 1.5% of the gross turnover - Held that:- The assessee has offered gross profit on such undisclosed business @ 1% whereas the AO has taken gross profit @ of 4%. However, on perusal of assessment order, we find that the estimated rate @ of 4% towards the gross profit was adopted by the AO without adducing any reason. On the contrary, the ld. CIT(A) has reduced the rate of gross profit from of 4% .....

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e, this ground of appeal of the Revenue is dismissed. - Addition on undisclosed investment made in the land - Held that:- We note that CIT-A has confirmed the undisclosed sales of ₹ 1,86,57,135/-, ₹ 7,67,35,863/- and ₹ 8,14,26,433/- in the assessment years 2007-08, 2008-09, and 2009-10 which was worked out by the AO in his assessment orders passed under section 153A of the Act respectively. We also observed that the ld. CIT-A have also upheld the order of the AO in assessin .....

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which have already been considered by the AO. The aforesaid factual finding was not controverted by the ld. DR. Therefore we fully agree with the reasons given by the ld. CIT-A - Decided against revenue - ITA No. 1203 &1223/Kol /2013, C.O. No. 94/Kol /2013 - Dated:- 3-5-2017 - Shri Aby. T Varkey, Judicial Member And Shri Waseem Ahmed, Accountant Member By Assessee : Shri S. Jhajharia, FCA & Shri Sujoy Sen, Advocate By Revenue : Shri Niraj Kumar, CIT-DR ORDER Per Waseem Ahmed, Accountant .....

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ard together and are being disposed of by way of common order for the sake of convenience. First we take up assessee s appeal in ITA No.1223/Kol/2013. 3. The assessee in ground No. 1 to 3 is inter-related and therefore being taken up together has challenged the validity of the proceedings initiated & completed u/s 153A/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). For this, the assessee has raised the following grounds of appeal:- 1. For that in view of the facts .....

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lid search having taken place in respect of the appellant, the proceedings so initiated by the AO u/s. 153A is void abinitio and the Ld. CIT(A) without appreciating the fact dismissed the appellant s ground in such respect and in view of the facts and in the circumstances the ordered so passed u/s.153A may kindly be quashed / cancelled / set aside. 3. For that in view of the facts and in the circumstances and without prejudice to Grounds No.1 & 2 above, the entire asst and all the additions .....

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nd bringing any evidence on record is wholly bad, illegal and valid abinitio and is liable to be quashed / cancelled and in view of the facts and in the circumstances it may kindly be held accordingly. 4. At the outset, it was observed that the ld AR in its appeal has challenged the reassessment proceedings initiated and completed u/s 153A of the Act. Accordingly, the ld AR made his arguments at length at the time of hearing but at the conclusion of the hearing on this issue the ld AR agreed to .....

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appeal in ITA No.1203/Kol/2013. 8. The issue raised by the Revenue in ground No. 1 is that ld CIT(A) erred in reducing the gross profit determined by the AO at the rate of 4% to 1.5% of the gross turnover. 9. A search & seizure operation u/s 132 of the Act was conducted on SALTEE Group including the assessee dated 25.02.2009 and on subsequent dates by the Investigation Unit of Income Tax Department. The assessee is one of the directors in the group. As a result of search, it was discovered t .....

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ofit at ₹ 32,57,057.00 and added to the total income of the assessee. 10. Aggrieved, assessee preferred an appeal to the Ld. CIT(A). The assessee submitted before the Ld. CIT(A) that the AO has adopted the rate of gross profit arbitrary and without any base. The assessee in support of his claim has submitted that Magna Dealers Private Limited (MDPL for short) is also engaged in similar business of trading items. The MDPL has shown its gross profit in the last 4 years as detailed under : S. .....

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r the assessment years 2007-08 to 2009-10 as determined by the AO in his assessment orders on the basis of the impounded material has not been contested by the appellant. The only dispute relates to the application of gross profit rate on such undisclosed sales. I find that the appellant had in his disclosure petition submitted before the DDIT(Inv) surrendered undisclosed profit by applying the gross profit rate of 1%. I find merit in the argument that the AO has brought no material on record to .....

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ized by the appellant for its unaccounted business. The AO has also not explained the basis for applying the gross profit rate of 4% in the case of the appellant. In view of the above, I am of the opinion that the action of the AO in applying the gross profit rate of 4% is arbitrary and without any basis as it is not supported by any material or evidence on record. It was submitted before me that Magna Dealers (P) Ltd was also engaged in similar business whose trading results were accepted by it .....

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11,51,038 2009-10 12,21,396 In view of the above, the addition on account of profit on undisclosed sales as made by the AO in the assessment years 2007-08, 2008-09 and 209-10 is restricted to ₹ 2,79,857/-, 11,51,038/- and 12,21,396/- respectively. Being aggrieved by the order of ld CIT(A) the Revenue is in appeal before us on the following ground of appeal :- 1. The ld. CIT(A), Central-I, Kolkata has erred in deleting the gross profit of ₹ 20,35,661/- from ₹ 32,57,057/- at the .....

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ged by the Revenue that the ld. CIT(A) has reduced the GP rate. In this regard it was found that the addition was made by estimating the gross profit @ 4% on the undisclosed turnover. Admittedly, the assessee was engaged in the trading business which was not disclosed to the Revenue. Now, the issue arises for adjudication to work out the income earned by the assessee from his undisclosed business. The assessee has offered gross profit on such undisclosed business @ 1% whereas the AO has taken gr .....

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the rate of gross profit without any basis. On the contrary, the ld CIT(A) has adopted the scientific approach for determining the gross profit on the undisclosed income. As such, we find no infirmity in the order of ld CIT(A) and we uphold the same. Hence, this ground of appeal of the Revenue is dismissed. 13. Next issue raised by the Revenue is that ld CIT(A) erred in deleting the addition made by the AO for ₹ 34 Lacs on account of investment made in the land. 14. The AO on the basis of .....

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ssee. Therefore, the same was treated as undisclosed investment in land and added to the total income of the assessee. 15. Aggrieved, assessee preferred an appeal to the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that the additions has already been made by the AO on the basis of seized documents. These additions were made in the form of gross profit on the undisclosed business as well as undisclosed investment in such business. On the similar set of documents of no separate additio .....

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es all the debit and credit entries recorded in the seized documents SPB/19, SPB/20, SPB/21 and SPB/23. The AO has also admitted that the cash payments record in the impounded documents represent personal expenses as well as unaccounted investment. I find from the assessment order that the AO has considered all the receipts as appearing in the impounded documents SPB/19, SPB/20, SPB/21 and SPB/23 while computing the undisclosed sales for the assessment years 2007-08, 2008-09 and 2009-10. The AO .....

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sclosed sales of ₹ 1,86,57,135/-, ₹ 7,67,35,863/- and ₹ 8,14,26,433/- in the assessment years 2007-08, 2008-09, and 2009-10 as computed by the AO in his assessment orders. I have also upheld the order of the AO in assessing the gross profit on such undisclosed sales as well as addition on account of undisclosed investment. Under the circumstances, the cash payments as recorded in the impounded document SPB/19 has to be treated as made out of the receipts recorded in SPB/19 whic .....

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ion. In view of the above, the addition of ₹ 35,00,000/- I the assessment year 2009-10 as made by the AO in the assessment order is directed to be deleted. Being aggrieved by the order of ld CIT(A) the Revenue is in appeal before us on the following ground of appeal :- 2. The ld. CIT(A) erred in deleting the addition made a the time of assessment as undisclosed investment in land (S. Haralalka ₹ 35 lakhs) stating that the investment is covered in the undisclosed turnover. 16. Before .....

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t by the AO in his assessment orders passed under section 153A of the Act respectively. We also observed that the ld. CIT-A have also upheld the order of the AO in assessing the gross profit on such undisclosed sales as well as addition on account of undisclosed investment. Thus the ld. CIT-A was of the opinion that the cash payments as recorded in the impounded document SPB/19 has to be treated as made out of the receipts recorded in SPB/19 which have already been considered by the AO. In other .....

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n it was held as under:- The Tribunal is the final fact-finding authority and normally it should record its conclusion on every disputed question raised before it, setting out its reasons in support of its conclusion. But, in failing to record reasons, when the Tribunal fully agrees with the view expressed by AAC and has no other ground to record in support of its conclusion, it does not act illegally or irregularly, merely because it does not repeat the grounds of the AAC on which the decision .....

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