2011 (2) TMI 1470 - AT - Income Tax

Summary

Issues Involved:
1. Estimated undisclosed income.
2. Undisclosed expenses.
3. Investment in land.
4. Investment in building.
5. Undisclosed bank account.
6. Reliability of books of accounts.

Issue-wise Detailed Analysis:

1. Estimated Undisclosed Income:
The Assessing Officer (AO) estimated the assessee's undisclosed income at Rs. 26,23,168/- based on seized documents and rejected the computerized books produced by the assessee due to lack of supporting bills/vouchers. The AO concluded undisclosed sales of Rs. 1,74,91,988/- and applied a gross profit (G.P.) rate of 4%, estimating unaccounted profit of Rs. 6,99,680/-. The CIT(A) revised the unaccounted profit to Rs. 3,92,047/- after verifying the sales for the assessment years 2000-01 and 2001-02, reducing the total sales to Rs. 75,93,981/- from Rs. 1,52,82,347/-.

2. Undisclosed Expenses:
The AO added Rs. 10,001/- as undisclosed expenditure based on a donation receipt found in the seized documents, which the assessee claimed was never paid. The CIT(A) confirmed this addition, rejecting the assessee's explanation.

3. Investment in Land:
The AO added Rs. 7,82,700/- as undisclosed investment in land based on a seized document showing the purchase of land and related expenses. The assessee failed to produce any sale deed or money receipt. The CIT(A) upheld this addition, noting that the assessee admitted the cost of acquisition was approximately Rs. 7,00,000/-.

4. Investment in Building:
The AO added Rs. 6,10,000/- as undisclosed investment in a shopping complex constructed on the purchased land. The assessee argued that only Rs. 3,00,000/- was spent on construction. The CIT(A) accepted the cost of construction at Rs. 3,00,000/- but allowed the AO to verify further investments in regular assessments.

5. Undisclosed Bank Account:
The AO found a bank account with Centurion Bank not reflected in the assessee's balance sheet and added the peak credit of Rs. 75,430/- as undisclosed income. The CIT(A) confirmed this addition.

6. Reliability of Books of Accounts:
The AO rejected the computerized books produced by the assessee, noting they were not found during the search and lacked supporting evidence. The CIT(A) upheld this rejection, finding no reason to interfere with the AO's decision.

Conclusion:
The Tribunal confirmed the CIT(A)'s order, dismissing the assessee's appeal. The Tribunal agreed with the AO and CIT(A) on rejecting the computerized books and upholding the additions for undisclosed income, expenses, and investments. The Tribunal also confirmed the peak credit addition for the undisclosed bank account. The appeal was dismissed in its entirety.