2022 (11) TMI 822 - AT - Income Tax

Undisclosed sale of scrap - HELD THAT - On perusal of Vat returns, copies of bill issued by the assessee, extract of the Act/Rules containing the item scrap as taxable good find that the alleged sum is not an undisclosed sale of scrap. The assessee regularly discloses the sale of scrap in its books of account and charged/paid GST thereon. Thus, we do not find any merit in the findings of the ld. CIT(A) and we are inclined to hold that the AO erred in making the addition towards undisclosed sale of scrap ignoring the fact that the said sum duly disclosed/recorded as sales in the regular books of account. Therefore, the addition of Rs.10,01,000/- stands deleted. Ground nos. 1 to 3 raised by the assessee are allowed. Admission of additional ground raised by the assessee - addition of undisclosed stock - Excess stock found during the course of survey - HELD THAT - The assessee did not raise this issue before the ld. CIT(A), thus, accepted the addition. Now the assessee has challenged this issue referring to the judgment of M/S. Subarna Rice Mill 2018 (8) TMI 1475 - CALCUTTA HIGH COURT We, however, are of the considered view that this issue raised in additional ground is not a legal issue and is purely based on the facts of the case, which stands already adjudicated and assessee opted not to challenge it before Ld. CIT(A). Thus, the same cannot be raised at this stage. We, therefore, dismiss this additional ground raised by the assessee being infructuous

Summary

Issues:
1. Addition made by the AO for undisclosed sale
2. Imposition of tax twice on a single transaction
3. Addition of undisclosed stock and application of gross profit ratio

Analysis:

Issue 1: Addition made by the AO for undisclosed sale
The appeal pertains to the Assessment Year 2013-14 and challenges the addition of Rs. 10,01,000 as undisclosed sale by the Assessing Officer (AO) and upheld by the Commissioner of Income-tax (Appeals) (CIT(A)). The appellant argued that the amount was part of total sales and was duly reflected in the audited books of account and VAT returns. The Tribunal examined the documents presented by the appellant and found that the sum was not undisclosed but was regularly recorded in the books of account. Consequently, the Tribunal held that the AO erred in making the addition towards undisclosed sale of scrap and deleted the addition of Rs. 10,01,000.

Issue 2: Imposition of tax twice on a single transaction
The appellant contended that the AO and CIT(A) erred in imposing tax twice on a single transaction. However, the Tribunal did not provide detailed analysis or ruling on this issue in the judgment.

Issue 3: Addition of undisclosed stock and application of gross profit ratio
Regarding the addition of undisclosed stock of Rs. 11,58,447, the appellant raised an additional ground citing a judgment of the Jurisdictional High Court. The Tribunal noted that the appellant did not challenge this addition before the CIT(A) and accepted it. The Tribunal considered this issue as not a legal one but based on facts already adjudicated. Therefore, the Tribunal dismissed the additional ground raised by the appellant as infructuous.

In conclusion, the Tribunal partly allowed the appeal of the assessee by deleting the addition for undisclosed sale of scrap but dismissed the additional ground related to the addition of undisclosed stock.