2019 (2) TMI 1946 - AT - Income Tax

Unaccounted sales - Addition based on loose sheets found in search - difference in purchase of milk as per daily milk procurement sheets and as recorded in the books - HELD THAT - The entire unaccounted sales cannot be added because there has to be some purchases and expenses related therewith. Therefore making addition on the basis of profit margin is more logical and rationale. Moreover though the daily milk procurement sheets were found but no document was found wherein the revenue can say that the assessee was also making undisclosed purchases. The most important fact which needs to be highlighted is that the Assessing Officer in his whims and surmises has considered the extrapolation for only two A. Ys whereas if he was so confident about the seized documents and income therein he should have extrapolated for the entire block period of six years. AO did not give any reason for this. Considering the facts of the case in totality we are of the considered opinion that the CIT(A) rightly deleted the additions made by the Assessing Officer but erred in sustaining the addition which In our considered opinion on facts discussed hereinabove needs to be deleted also.

Summary

Issues Involved:
- Appeal by Revenue against CIT(A) order for A.Y. 2011-12
- Cross appeals by Revenue and assessee against CIT(A) order for A.Y. 2012-13

Analysis:
1. Appeal for A.Y. 2011-12:
- Background: Search conducted at assessee's premises led to seizure of milk procurement sheets.
- Assessing Officer's Action: Formed belief of unaccounted sales based on seized sheets, added &8377; 7.11 crores as undisclosed sales.
- Assessee's Response: Contested addition, provided details showing lesser undisclosed sales.
- CIT(A) Decision: Accepted part of Assessing Officer's findings, reduced undisclosed sales to &8377; 7.86 lakhs.
- Appellate Tribunal's Decision: Dismissed Revenue's appeal, allowed assessee's cross appeal, deleted the addition of &8377; 7.86 lakhs.

2. Cross Appeals for A.Y. 2012-13:
- Assessing Officer's Estimation: Made statistical estimation for undisclosed sales, added &8377; 7.11 crores.
- Assessee's Argument: Contended additions were based on presumptions without direct evidence.
- CIT(A) Ruling: Reduced undisclosed sales to &8377; 7.86 lakhs, deleting addition of &8377; 26.82 lakhs for undisclosed investment.
- Tribunal's Verdict: Dismissed Revenue's appeals, allowed assessee's cross appeal, deleted the addition of &8377; 7.86 lakhs.

3. Key Points:
- Documentary Evidence: Found milk procurement sheets formed basis for Assessing Officer's additions.
- Director's Disclosure: Director admitted unaccounted sales, offered &8377; 93 lakhs as undisclosed income.
- Calculation Discrepancy: Discrepancy in Assessing Officer's calculation of undisclosed sales.
- Logical Addition: Tribunal emphasized the need for logical and rational basis for additions.
- Judicial Review: Tribunal reviewed facts, concluded CIT(A) rightly deleted most additions, erred in sustaining &8377; 7.86 lakhs addition.

In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision to reduce undisclosed sales for both A.Y. 2011-12 and 2012-13, emphasizing the need for logical and evidence-based additions in tax assessments.