2014 (11) TMI 561 - HC - Income Tax

Re-appreciation of evidentiary material permissible u/s 260A or not Held that - The Tribunal rightly observed that the assessee had made sales outside the books of account for which the additional capital was required - Parallel sets of books were maintained by the assessee - The AO as well as the Tribunal observed that the assessee has not placed any evidence on the record to justify that the sales which have been made as recorded in the seized material, were already recorded in the books of account - the AO has carried a due and proper exercise of a reasonable estimation to the best of his judgment- The grounds, which are sought to be raised in the submissions in support of the appeal, would essentially require the Court to re-appreciate the evidentiary material - This is not permissible under the jurisdiction u/s 260A of the Act as such no substantial question of law arises for consideration Decided against assessee.

Summary

Issues:
1. Determination of undisclosed income on various accounts
2. Addition of alleged disclosed capital
3. Estimation of extra income from job work receipts

Analysis:
1. The appellant contested the determination of undisclosed income on multiple grounds, including extra profit on sales, alleged undisclosed cash sales, and job work receipts. The Assessing Officer found that the appellant maintained parallel sets of books, with discrepancies in recorded sales. The net profit was calculated based on the sales recorded out of books, leading to additions totaling &8377; 26.63 lacs. The Tribunal affirmed this addition, noting the lack of evidence to justify that the sales were already recorded in the regular books of account. The Tribunal upheld the addition, applying a gross profit rate of 29.14% on the total sales figure.

2. The addition of &8377; 5 lacs as alleged disclosed capital was upheld by the Tribunal, reducing the Assessing Officer's initial computation of &8377; 9 lacs. The Tribunal reasoned that the appellant made sales outside the books of account, necessitating additional capital. The Tribunal found this addition justified based on the circumstances of the case.

3. Regarding the estimation of extra income from job work receipts, the Tribunal upheld an addition of &8377; 26.63 lacs as net profit, applying a gross profit rate of 29.14% on the total sales figure. The Tribunal emphasized the lack of evidence to support the appellant's claim that the sales found in the seized material were duly recorded in the regular books of account. The Tribunal concluded that no case for interference was made out, as the Assessing Officer's estimation was deemed reasonable and based on the available evidence.

In conclusion, the High Court dismissed the appeal, stating that no substantial question of law arose in the case. The Court found that the Assessing Officer had conducted a proper estimation exercise, and re-evaluating the evidentiary material was beyond the scope of the appeal under Section 260A of the Act. Therefore, the Tribunal's decision was upheld, and the appeal was dismissed with no order as to costs.