TMI Blog2020 (2) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the Ld. A.O in assessee s own case has accepted the net profit @5%, it will not be justified to apply 8% net profit rate for subsequent assessment years even when the turnover has almost doubled. Net profit rate of 5.24% shown by the assessee for Assessment Year 2008-09 should be accepted and the same should be applied for Assessment Year 2009-10 also. By application of net profit rate of 5.24% for Assessment Yea₹ 2008-09 and 2009.10 on the declared turnover of ₹ 2,72,27,334/- and ₹ 2,14,68,304/-, net profit subject to tax will works out to ₹ 14,26,712/- and ₹ 11,24,940/-. In the result as regards the first common issue, appeal of the assessee for Assessment Year 2008-09 stands allowed Undisclosed income - statement recorded during survey proceedings relied upon - HELD THAT:- we observe that the corroborative evidence found during the course of survey have already been taken into account for computing the net profit of the assessee for Assessment Year 2009- 10. Revenue authorities failed to correlate the addition of ₹ 2,00,000/- with any corroborative evidence. Thus the addition seems to be made purely on the basis of statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed as deduction under the principle of telescoping. 6 That the appellant craves to add, alter or delete any ground or grounds during the hearing of appeal. ITANo.1326/Ind/2016 Assessment Year 2009-10 1. That the CIT(A) was wrong in upholding and confirming the order of the learned Assessing Officer by applying Net Profit @ 8% instead of 5.3%% on total receipts of ₹ 21468304/-. The same is highly excessive and should be accepted in particular line of business. 2 The Ld. CIT (A) erred in holding that the provision of section 44 AB are inapplicable and determining income of the assessee on NP rate. In case if books have been rejected the profit should be applied on the basis of surrounding circumstances or the profit taken by other assessee. 3 That the Ld. CIT (A) erred in confirming the addition of ₹ 1213086/on account of net profit rate and therefore the addition of ₹ 1213086/- should be deleted. 4 The Ld. CIT (A) has erred in upholding the addition of ₹ 200000/- as undisclosed income against estimated profit, whereas the said amount was available with the assessee from business income. 5 That the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,2 and 3) 4.1 The appellant has produced audited books of account along with audit report which was not accepted by the Ld AO in rejected the same he applying net profit rate @ 8% assuming that the assessee had taken contract for providing Road Construction Material and his income is contractual receipts. The finding of the Ld AO is contrary to records in view of following facts. At the time of survey and the statement taken he has specifically mentioned that he is engaged in purchase and sales of petroleum products and also doing sub contractor ship for main contractor and sales of Oil. PB 32-33 The audit report produced at the time of assessment also indicate the sales figure of ₹ 21468304(copy of audit report enclosed. 55 That in earlier years relevant to A.Y. 2005-06 and 2006-07 the assessment completed u/s 143 (3)/147 the Id AO applied net profit @ 5 specifically mentioned in the assessment order that assessee is engaged in purchase and sales of petroleum products. copy of order for the year 2005-06 and 2006-07 enclosed. 40 Even in the relevant A.Y. on last para of the assessment the LD AO also mentioned that few bill of sales were fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld AO as well as CIT (A) both of the erred in law applying net profit @ 8%. In absence of any corroborative evidence even no comparable case to the case of assesse has been cited. Reference may be made from following decisions that where books of accounts are rejected and profit is to be estimated it is past history, which is the most relevant criteria. (a) Asstt.CIT vs OM Brothers (2010)44 DTR 13 (ALL) (APB-S7-62) (b) CIT vs Targeted Construction Co. Ltd (2015) 55taxmann.oom 294 (All) (APB -63- 65 (c) Pragati Engineering Corporation Co.Vs ITO (order dt 5th April 2013 passed by Hon ble Allahabd High Court in ITA No 11 of 2012)(APB 66-70) (d) ACIT Vis kanhalyala, Choudhary 29 CCH 0766 It Was held that where books of accounts are rejected net profit should be applied on the basis of the past history (e) CIT V/s Gotan line Khanij Udyog 169 CTR 318 (f) Ajay Goyal v/s ITO 99 TTJ 164, (g) CIT Vis Popular electric Company 2003 ITR 630 Even assuming that assesses is also doing sub contractor and doing petty contract the net profit rate @5 is justifiable in View of various decisions. As held: In case of Deputy Commissioner of Income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has attendant the post Survey proceedings u/s 131 on 09-09-2008 than he chosen to declare his un disclose Income. She also mentioned that disclosure has been made voluntarily during post survey investigation thus action of AO making addition of 200000.00 over and above is found justifiable. 6 Submission The assessee is engaged in purchase and sales of bitumen and at the time of survey he offered ₹ 1000000.00 as his business income. The margin of product in Bitumen product is 2 of total turnover. Looking at things from macro overall point of view the amount of ₹ 200000.00 would be very well covered in total business income It is evident that the statement recorded u/s 131 was also in continuation of the statement recorded at the time of survey u/s 133 (A) the assessee has co operate the department at the time of survey and no obstruction was made the statement also reflects the manner of the behaving of appellant is co operative. While making addition of ₹ 2 back as undisclosed sources, as not mentioned particular head/investment for which the undisclosed income of ₹ 2 lack was, related to, no bifurcation or finding was given he simply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where a person refuses, refrain to do so at the time -of survey. Summons under 131(1) can be served only in case of obstruction by person or some sort of hindrance is put by him on the contrary, the appellant has cooperated at the time of survey under section 133A on perusal of the statement recorded under 131 immediately after completion of survey it reveals that it calls the assessee to declare the profit. It is clearly established that assessee has cooperated during the survey and he did not make any default as stipulated under 133A(6). It is also apparent that survey was already completed on 5-9-2008 and papers and other record was also impounded no proceeding was pending, the statement taken under section 131 is not legally correct and the amount agreed on such statement is not tenable. Reference may be made on following decisions: If assessee cooperated during survey and there is no default under section 133A(6), no recourse can be made under section 131 as held in various decisions: a.CIT v. Mool Chand Salecha [2002] 256 ITR 730 (RAJ.)] b.United Chemical Agency v. ITA [1974] 97 ITR 14 (ALL.) c.Dr. Vijay Pahwa v. Samir Mukhopadhyay, Dy. CIT [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at by the A.O. is highly ambiguous or totally lacking the bonafides, no interference is called for. After perusal of entire material on record, A.O. is found fully justified in estimating appellant's net profits @8% on declared business receipts. Accordingly addition of ₹ 4,71,092/- and ₹ 12,13,086/- made for A.Y. 2008-09 and 2009-10 respectively is, hereby, confirmed. 10. Before us Ld. Counsel for the assessee strongly relied on the fact that for Assessment Years 2006-07 and 2007-08 where the Net Profit of 5.90% and 4.88% was shown by the assessee, Ld. A.O completed the assessment u/s 143(3) of the Act by applying 5% of Net Profit rate on the undisclosed turnover. It was further contended that the business of the assessee remained the same and turnover has almost doubled in the years under appeal. 11. It is also noteworthy to observe that survey u/s 133A of the Act was conducted at the business premises of the assessee on 5.9.2008 and statement u/s 133A were recorded. Assessee was carrying out its business from 2005 onwards and neither any books of accounts were maintained nor returns were filed. The gross receipts were calculated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- made by the Ld. A.O is not on the basis of any incriminating material and is merely based on the statement recorded during survey proceedings. 15. It is judicially well settled that the statements given during the course of survey u/s 133A of the Act has no evidentiary value and any admission made in the statements cannot by itself be taken as a conclusive piece of evidence to make addition in the hands of the assessee. This ratio was confirmed by Hon ble Apex Court in the case of CIT V/s Kader Khan 352 ITR 480 (SC). Further the Coordinate Bench in the case of Khoobchand Pagarani V/s ITO 15 ITJ 738 held that if the Ld. A.O has already made addition for profit rate holding that books are not reliable then the A.O cannot make further additions. Hon ble Jurisdictional High Court in the case of CIT V/s Digamber Kumar Jain 2013-84 DTR 365 held that statement recorded u/s 133A for no evidentiary value and addition could not be made merely on the basis of statement. Presence of some corroborative evidence against undisclosed income was essential . 16. Examining the facts of the instant appeal in the light of above judgments, we observe that the corroborative evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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