2012 (4) TMI 699 - AT - Income Tax

Summary

Issues involved:
The judgment involves appeals by two different assessees against orders of CIT(A) regarding estimation of gross profit for the assessment year 2004-05.

Issue 1 - Shri Ashok B Modi's appeal (I.T.A.No. 1060/Ahd/2008):
The AO estimated gross profit at 13.38% for the full year, rejecting the loss shown for the pre-survey period. The assessee contested this decision.

The AO observed discrepancies in the trading account, unreliable production of grey cloth, and rejected the book results u/s 145(3) of the Income Tax Act, 1961. The AO applied a GP rate of 13.38% on the turnover for both periods, resulting in an addition to the assessee's income. The CIT(A) upheld the AO's decision, leading to the appeal before the ITAT.

The AR argued that the disclosed amount during the survey should not be added again, as it pertained to deficiencies in the pre-survey period. The DR contended that the loss shown in the books was unsubstantiated. The ITAT held that the book results for the pre-survey period should be accepted, while approving the GP rate application for the post-survey period.

Issue 2 - Ashish B Modi (HUF) appeal (I.T.A.No.1061/Ahd/2008):
Similar to the first case, the AO estimated gross profit at 13.62% for the full year, not accepting the loss shown for the pre-survey period. The assessee challenged this decision.

The ITAT decided that book results for the pre-survey period should be accepted, while applying the GP rate for the post-survey period. No separate addition was deemed necessary for the post-survey period in this case.

In conclusion, both appeals were partly allowed by the ITAT, with directions given to the AO based on the findings for each case.