2023 (2) TMI 865 - HC - Income Tax

Addition under the heading Trading Account being the estimated profit at the rate of 8.4% on the excess stock - HELD THAT - Tribunal took note of the facts recorded by the authorities and found that there was no dispute that the assessee was dealing in clothes and hosiery wherein stock has been inventorised by the survey team in the presence of the partners of the assessee and the same was valued which was in excess of what was entered in the books of accounts. Thus, in the absence of any explanation given by the assessee either before the AO or before the CIT(A) or before the Tribunal, the Tribunal rejected the plea. Thus, we find that the learned Tribunal rightly took note of the facts and refused to interfere with the order passed by the CIT(A) which had granted partial relief to the assessee and in the absence of any error or perversity in the order passed by the Tribunal, we are not inclined to interfere with the same. Accordingly, the substantial question of law no.1 is answered against the assessee. Estimating the profit on excess stock on the basis of Khata itself - HELD THAT - Tribunal, on going through the entire facts, held that the assessee did not produce any material to substantiate their submission and rebut the findings recorded by the AO which was affirmed by the CIT(A). Therefore, in absence of any evidence produced by the assessee, the addition was sustained. We find that there is no error in the approach of the Tribunal which had taken note of the facts, more particularly, that the assessee failed to discharge the burden cast upon him but producing evidence. For such reason, the substantial question of law no.2 is answered against the assessee. Money paid to the different parties by the assessee-firm - payments were not found recorded in the books of account of the assessee firm - AO treated the same as undisclosed income and added it to the total income - HELD THAT - Tribunal noted that the assessee could not produce any evidence or material before the lower authorities or before the Tribunal and merely stated that the transactions were not related to the business of the assessee-firm. Tribunal noted that despite opportunity granted by the Tribunal on the earlier occasion when the matter was remanded to the AO for fresh decision, the assessee did not avail the opportunity. This could be confirmed by perusal of the assessment order from which it is seen that in spite of repeated notices issued to the assessee, the assessee did not turn up nor respond to those notices thus showing that the did not cooperate in the assessment proceedings. Thus, we find no error in the order passed by the learned Tribunal confirming the said addition - Decided against assessee.

Summary

Issues:
1. Addition of estimated profit on excess stock.
2. Alleged double taxation on unaccounted purchase price of goods.
3. Addition of undisclosed income for payments not recorded in books.

Analysis:

Issue 1 - Addition of estimated profit on excess stock:
The appeal challenged the addition of Rs.3,10,374 under the "Trading Account" as estimated profit on excess stock, contending it was not exclusively owned by the assessee. The Assessing Officer added 8.65% profit on the difference in stock value, upheld by CIT(A) but later revised by the Tribunal. The Tribunal found no explanation from the assessee and refused to interfere with the CIT(A)'s partial relief decision. The Tribunal's decision was based on the factual position and lack of evidence provided by the assessee, leading to the dismissal of the appeal.

Issue 2 - Alleged double taxation on unaccounted purchase price of goods:
The second issue involved the addition of Rs.49,640 as profit on unrecorded goods purchased, leading to alleged double taxation. The Assessing Officer estimated profit based on purchases not in the books, which was affirmed by CIT(A) and upheld by the Tribunal. The Tribunal found the assessee failed to substantiate their claim and did not produce evidence to rebut the findings, resulting in the sustained addition. The Tribunal's decision was supported by the lack of evidence presented by the assessee, leading to the dismissal of this issue.

Issue 3 - Addition of undisclosed income for unrecorded payments:
Regarding the addition of Rs.10,25,022 as undisclosed income for unrecorded payments, the Assessing Officer treated these payments as undisclosed income, upheld by CIT(A) and the Tribunal. The Tribunal accepted the revenue's submission that no explanation was provided for the unrecorded payments, leading to the confirmation of the addition. The Tribunal noted the lack of evidence or cooperation from the assessee, ultimately dismissing the appeal and upholding the addition of undisclosed income.

In conclusion, the appeal filed by the assessee was dismissed, with all substantial questions of law answered against the assessee. The Tribunal's decisions were based on the lack of evidence, failure to provide explanations, and non-cooperation from the assessee during the assessment proceedings, leading to the confirmation of the additions made by the Assessing Officer and CIT(A).