TMI Blog2019 (7) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... ate on undeclared receipts comes to 19.42% which is much above the average of last 5 years and is reasonable considering the decreasing trend. As already held that the actual profits and not the entire suppressed receipts are to be added. The profits declared on suppressed receipts (extrapolated for the whole year) at ₹ 50 lac are held reasonable and therefore, any further addition is uncalled for. - Decided against revenue - R/TAX APPEAL NO. 315 of 2019 - - - Dated:- 8-7-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Appellant (s) : MRS KALPANAK RAVAL (1046) For The Opponent (s) : None ORAL ORDER ( PER : HONOURABLE MR.JUSTICE J.B.PA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Assessee i.e. cash or mercantile, such method has to be followed keeping in view the Accounting Standard notified by the Central Government from time to time./ Sub-clause 3 provides a situation, that is, if the Assessing Officer is unable to deduce the true income. On the basis of method of accountancy followed by an Assessee than he can reject the book result and the assessee s income according to his estimation or according to his best judgment. The Assessing Officer in that case is required to point out the defects in the accounts of Assessee and required to seek explanation of the Assessee qua those defects. If the assessee failed to explain the defects than on the basis of the book result, income cannot be determined and Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in placing reliance upon the judgment of Hon ble jurisdictional High Court. It is worth to take note of finding recorded by the ld.CIT(A). It reads as under : 7. Having gone through the nature of seized documents, the final accounts, the assessment orders, the submissions and the decided law; the following pertinent observations and decisions are culled out; a) The comparison of the transactions recorded on the registers etc. seized with the books of account and bills, clearly shows that the actual receipts are substantially more than that recorded in the regular books; b) The total receipts worked by the AO are also disputed, and the appellant did not agree with the figures w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded. ( iii) I fully agree with the total receipts of the appellant worked out by the AO. She has correctly extrapolated the receipts found recorded for a period of 6 months to 1 year. The appellant had not reflected a huge amount of receipts in his books of accounts and therefore the accounts are not correct and complete. Therefore, these are liable to rejected 145(3) and the assessment is to be made to the best of judgment applying provision of section 144. The extrapolation to complete year where record of last six months has been found and seized is fully justified. It cannot be said that suddenly the whole system was devised in the middle of the year. Reliance is placed on the decision of Hon ble Andhra Pradesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Sairam Multi Speciality Hospital Vs. ACIT, (2014) 40 CCH 0132 Hyd. Trib. which relates to similar business also supports this view. The final accounts of past years and the ratio of receipts to the variable expenses (excluding the fixed or fully disclosed expenses like interest, depreciation, electricity bills etc.) would give a very good guidance to the actual profits on average additional receipts of the business and therefore, the suppression of profits which have been done by the appellant in the relevant previous year. I have worked out the net profit on total receipts, for A.Y. 2009-10 to 2013-14, excluding the following fixed or fully disclosed expenses like interest, depreciation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.42 21.69 The average net profit excluding the fixed expenses works out at 17.12% and maximum net profit was 21.69% 5 years back and has shown a decreasing trend. The appellant has disclosed additional 50 ac rupees in its return filed. The net profit of 50 lac on unrecorded-receipts for the year worked out at ₹ 2,12,91,706/-; gives a net profit rate of 23.48%. Therefore, the profits declared are held reasonable looking to the profit in the business even after reducing the fixed expense. Without prejudice to the above, even otherwise, if unrecorded receipts as worked out by the AO at ₹ 2,57,41,751/- were considered the net profit rate on undecl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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