2017 (1) TMI 1493 - HC - Income Tax

Block assessment - Notice under Section 158 BC - Addition on account of loose soap bricks found unrecorded during the course of search - Held that - This is evident not only from the comparative sales prices between the component mix of the two. In so far as the report of Rajasthan Consultancy Organisation Ltd. Is concerned, we find that the organisation is sponsored by several Financial Institutions/Banks and all are public sector undertakings. Thus, this report is more credible/reliable. Moreover, the report is based on inspection of assessee s place and actual physical verification of process and production. We do not accept the contention of the Id. D/R that this report should not be believed. However, considering the facts and said report, we hold that it would be fair and reasonable if the weight gain is adopted at 7.5% in the case of appellant. The AO has prepared the calculation of undisclosed income of assessment order in a table taking the weight gain at 15%. We hereby direct the AO to recalculate the undisclosed income by adopting 7.5% in place of 15% in the said table. See Commissioner of Income Tax, Jaipur vs. Smt. Radha Bajaj 2016 (9) TMI 1390 - RAJASTHAN HIGH COURT - Decided in favour of the assessee

Summary

Issues:
1. Challenge to Tribunal's judgment and order for statistical purposes.

Analysis:
The appellant challenged the Tribunal's order allowing the appeal for statistical purposes. The substantial questions of law framed by the Court included issues related to additions made on unrecorded loose soap bricks, suppressed sales, retrospective amendment in Section 158BB of the Act, acceptance of the Accountant's statement, and the scope of the ITAT's decision on the assessee's Misc. Application. The case involved a search under Section 132 of the Income Tax Act, 1961, conducted on a business entity engaged in soap manufacturing. The notice under Section 158 BC required the assessee to file a return of income for the block period, which was beyond the given time. The case was taken up for scrutiny by issuing a notice under section 143(2).

The respondent relied on a decision by the Court in a similar matter involving undisclosed income estimation for different assessment years. The Tribunal's decision was based on the assessment of weight gain in soap manufacturing, with the Tribunal directing the Assessing Officer to recalculate undisclosed income by adopting a lower weight gain percentage. The Tribunal's reasoning was supported by evidence and reports, leading to a reduction in the estimated profit percentage. The Court upheld the Tribunal's decision, emphasizing the proper appreciation of evidence and law based on the record.

The Court concluded that the Tribunal's view was just and proper, requiring no interference. All issues were resolved in favor of the assessee against the Department. Consequently, the Department's appeals were dismissed, and the cross-objections were disposed of accordingly. The judgment favored the assessee over the department, resulting in the dismissal of the appeal.

In summary, the judgment addressed the challenge to the Tribunal's decision for statistical purposes, focusing on substantial questions of law related to additions, undisclosed income estimation, and weight gain in soap manufacturing. The Court upheld the Tribunal's decision, emphasizing the proper appreciation of evidence and law based on the record, ultimately ruling in favor of the assessee and dismissing the Department's appeals.