TMI Blog2016 (8) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... the finding of the ld CIT(A) in substituting the addition of ₹ 4345658/- against the addition made by the AO on ₹ 3352078/- rejecting the books of account. Hence, we hold that the addition of ₹ 4345658/- is not sustainable in the hands of the assessee. - Decided in favour of assessee. - ITA No. 280/Chd/2016 - - - Dated:- 10-8-2016 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Sh. Ashwani Kumar, CA For The Revenue : Sh. SK Mittal, DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT (A)3, Ludhiana dated 25.02.2016 for the Assessment year 2011-12. 2. The assessee has raised the following grounds of appeal:- 1. That the Ld. CIT-(A)-3 Ludhiana has wrongly upheld the action of the A.O. for issuing of notice u/s 148 based on reason recorded. 2. That the Ld. CIT-(A)-3 Ludhiana is not justified in holding that the reason recorded are valid reasons for issuing of notice u/s 148. 3. That the Ld. CIT-(A)- 3 Ludhiana has wrongly and indirectly held that in case of survey, if the returned income for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 12829250/-. It means he has not shown his income properly and make adjustments and shown less income. It means that the assessee had set off business loss/expenses against the surrendered income. The Hon'ble Punjab Haryana Court in the case of M/s Kim Pharma (P) Ltd. in ITA No. 106 of 2011 (O M)dated 27.04.2011 has held that income surrendered during survey is income from undisclosed sources and it has to be taxed u/s 68, 69,69A etc. of the IT. Act, 1961. Hence, deemed income taxed under 68, 69, 69A etc. cannot be set off against the income under the other heads of income. 2. Therefore, I have reasons to believe that ₹ 2244790/-(15074040 - 12829250) has escaped from assessment for A.Y. 2011-12 because of failure on the part of assessee to disclose its income fully truly. Hence, in view of explanation 2(b) of section 147 of the IT. Act, 1961 and facts stated above, it is a fit case for issue of notice u/s 148. Issue notice u/s 148 of the I. T. Act, 1961 for the A.Y. 2011-12 . [Emphasis supplied by us by underline] 5. Subsequently, on request the copies of the such reasons were provided to the assessee which was objected to vide letter dated 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the order of ld CIT(A) the assessee is in appeal before us. 7. The ld AR submitted before us that reasons recorded for reopening are not proper for the reasons as under as well as on the merits that :- i. It speaks about disclosed income of Assessment year 2010-11 of ₹ 4074040/- which should include surrendered income of ₹ 1.10 crore disclosed during the course of survey and therefore the income for the Assessment year 2011-12 should have been at ₹ 15074040/-. He submitted that returned income for Assessment year 2011-12 is ₹ 12829250/- and for AY 2010-11 is ₹ 4074040/-. Date of survey is 23-09-2010. For AY 2011-12 returned income includes the income offered during the course of survey of ₹ 1.10 crore. Therefore there is complete acceptance of the survey income declared by the assessee. ii. He referred to explanation 2(b) of the Section 147 of the Act and submitted that there is no under statement of income, no excessive loss deduction / allowance or relief has been claimed. He therefore submitted that the notice u/s 147 issued by the AO is non-application of mind and there is no understatement. iii. Further, he submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of other income‟ at Annexure VI of the annual account of the company. For the impugned assessment year, the assessee has filed his return of income, which is higher than the income disclosed during the course of survey. Assessee has filed his return of income for ₹ 12829250/- which is higher than the amount of disclosure of ₹ 1.10 crores made by assessee during survey. b. Apparently if the net profit of the assessee of ₹ 12125135/- excluded the sum of ₹ 1.10 crores declared by the assessee, resultant profit would be ₹ 1125135/-. Therefore, still income remains positive even after disclosure of income during survey accounted for in the books, hence it cannot be said that the assessee has claimed excessive loss or expenses against the surrendered income. c. LD AO has further recorded that income returned of A Y 2010-11 is ₹ 4074040/- and surrender was for ₹ 1.10 crores. Hence according to him the return for AY 2011-12 should have been filed for ₹ 15074040/- for AY 20111-12 which is filed for ₹ 12829250/-. d. Assessee has shown returned of income of ₹ 12829250/- which is higher than the surrender of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Turnover ( In Rs) 10,03,62,625 10,46,84,736/- 2. Net profit ( in Rs) 1,21,25,135 34,96,316 3 Income surrendered during the survey ( in Rs) 110,00,000 NA 4. Amount of sales tax liability being expenditure item (In Rs) 28,53,216 NA 5. Net profit ( in Rs) 39,78,351 NA 6. Net profit ratio (in %) 3.9 3.3 13. From the above financial results it is apparent that compared to the last year after ignoring the surrendered business income of ₹ 1.10 crores the assessee has shown better net profit. Further the assessee has also explained that during the year it has to incur substantial higher amount of outside job work expenses which is 71.52 lacs compared to 45.37 lacks and rebate on work done of ₹ 20.76 laks compare to 3 lakhs and therefore there is a downfall in the gross pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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