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2020 (7) TMI 366 - ITAT KOLKATAUndisclosed income on undisclosed investment in sales and profit on undisclosed sales - basis of reason to believe that there was undisclosed sales detected during the course of search operation by the office of Directorate General of Central Excise intelligence - addition u/s 69C - HELD THAT:- Assessee as per his own admission had made the undisclosed sales from undisclosed purchases. In business, there is rotation of purchase and sales. The initial investment in the purchase gets rotated throughout the year in the form of purchase and sales resulting in the total turnover. The initial investment in the undisclosed sales would constitute undisclosed investment in undisclosed sales. The A/R of the assessee during appellate proceedings could not provide any details of this undisclosed investment. Therefore, ld CIT(A) in the absence of any material on record, the entire undisclosed investment in undisclosed sales had been estimated. CIT(A) noticed that assessee`s undisclosed sales as detected during search and seizure operations carried out by the Officers of the Directorate General of Central Excise Intelligence amounts to ₹ 2,76,07,339/- during the assessment year 2010-11. The average sales per month amounts to ₹ 23,00,611/-. The average GP on sales as disclosed in the returns is 3.90% which amounts to ₹ 89,724/-. The average purchase per month amounts to ₹ 22,10,887/-. The undisclosed investment was, therefore, estimated at ₹ 22,10,887/- (₹ 23,00,611/- -89,724/-) on undisclosed sales of ₹ 2,76,07,339/-. CIT(A) also computed the profit on undisclosed sales of ₹ 2,76,07,339/- at the rate of 3.90% at ₹ 10,76,686/- [3.90% of ₹ 2,76,07,339]. Therefore, addition was restricted to ₹ 32,87,573/- (₹ 22,10,887/- plus ₹ 10,76,686/-) instead of ₹ 2,76,07,339/- as undisclosed income on undisclosed investment in sales and profit on undisclosed sales. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A). Appeal of the revenue is dismissed.
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