2010 (3) TMI 702 - HC - Income Tax

Search and seizure - Income from undisclosed source - assessee s husband has voluntarily given the sworn statement assessee s husband is in charge of the business of the assessee - sales suppression in the assessee s proprietary - assessee was silent without producing any material evidence - no error or irregularity in the order passed by the Tribunal Regarding estimation of income - In the absence of any valid material on record, we are of the view that the Tribunal is correct in fixing the gross profit at 8 per cent - Decided against the assessee

Summary

Issues:
1. Estimation of gross profit by the Tribunal
2. Validity of additions made by the Assessing Officer and upheld by the Tribunal

Estimation of Gross Profit by the Tribunal:
The appellant filed a tax case appeal against the Income-tax Appellate Tribunal's order, raising questions regarding the reliance on the husband's statement alone and the adoption of a gross profit rate. The appellant, engaged in a business of stainless steel utensils, faced discrepancies during a raid, leading to an addition of Rs. 8,00,000 by the Assessing Officer. The Commissioner of Income-tax (Appeals) reduced this to Rs. 50,000 and fixed the gross profit at 5%. The Tribunal, however, upheld an ad hoc addition of Rs. 6 lakhs and set the gross profit at 8%. The appellant argued against the estimation, claiming coercion in the husband's statement. The Revenue defended the Tribunal's decision, stating it was based on valid evidence. The Tribunal found the husband's statement credible, noting the appellant's silence and the husband's involvement in the business. The High Court upheld the Tribunal's decision, emphasizing the husband's voluntary statement and the lack of contradictory evidence from the appellant.

Validity of Additions Made by the Assessing Officer and Upheld by the Tribunal:
Regarding the additions made by the Assessing Officer and upheld by the Tribunal, the appellant's counsel argued against the estimation of gross profit at 8%, contrasting it with the appellant's admission of 2%. The Tribunal justified the 8% rate considering market conditions and the appellant's first year in business. All authorities had estimated gross profits, with the Tribunal's decision based on valid materials. The High Court found no grounds for interference, upholding the Tribunal's decision on the gross profit estimation. The appeal was dismissed in favor of the Revenue.