2023 (4) TMI 628 - AT - Income Tax

Trading addition - net profit determined as per duplicate cash book during the course of survey proceedings u/s 133A - AO in nut shell applied the G.P. Rate of 25% and worked out the addition - HELD THAT - CIT(A) observed that the assessee had himself shown GP 29.25% and 25% in the A.Y. 1998-99 and 1999-2000. Thus considering the factual and legal position as well as the nature and volume of assessee's business, CIT(A) confirmed the action of AO holding the G.P. @ 25% as reasonable and dismissed the ground of appeal of the assessee. It may be noted that in assessee's own case for the assessment year 1999-2000, the Tribunal had upheld the G.P. Rate at 18.93%. We find that G.P. Rate at 17.5% would be reasonable in view of the addition so made by the AO. Thus Ground No.2 of the assessee is partly allowed. Addition for the peak credit made by the AO - HELD THAT - During the course of hearing, we observed that no contrary view or documents to controvert the findings was advanced by the ld. AR of the assessee concerning the issue in question. In such a situation, we have no other alternative except to confirm the order of the ld. CIT(A) on the issue in question. Thus Ground No. 3 of the assessee is dismissed.

Summary

Issues Involved:
1. Legality of the appellate order confirming additions/disallowances.
2. Confirmation of trading addition of Rs. 30,91,677/-.
3. Confirmation of addition of Rs. 2,16,046/- for peak credit.

Summary:

1. Legality of the Appellate Order:
The first ground raised by the assessee was general in nature and did not require adjudication. Hence, it was dismissed.

2. Confirmation of Trading Addition of Rs. 30,91,677/-:
The assessee contested the confirmation of a trading addition of Rs. 30,91,677/- made by the AO. The CIT(A) upheld the addition based on findings from a survey conducted on 21.12.1999, which revealed a duplicate set of cash books and other incriminating documents. The AO noted discrepancies between the thans processed and recorded in the regular books, leading to an unrecorded receipt of 48,225 thans, deemed as undisclosed income. The AO applied a GP rate of 25%, consistent with past years and industry standards, to determine the addition. The CIT(A) found the AO's method reasonable, considering the past history and comparative GP rates. Despite the appellant's arguments, the CIT(A) sustained the addition, and the Tribunal, after reviewing the materials, found a GP rate of 17.5% reasonable, partly allowing the ground.

3. Confirmation of Addition of Rs. 2,16,046/- for Peak Credit:
The assessee challenged the confirmation of an addition of Rs. 2,16,046/- for peak credit. The AO determined the net profit based on the common cash book and found discrepancies in non-trading entries. The AO added Rs. 2,16,046/- as undisclosed income due to unproven cash credits. The CIT(A) upheld the AO's findings, noting the appellant's failure to provide confirmations or evidence for the cash credits. The Tribunal, finding no contrary evidence presented by the assessee, confirmed the CIT(A)'s order, dismissing the ground.

Conclusion:
The appeal was partly allowed, with adjustments made to the trading addition while confirming the peak credit addition. The order was pronounced on 23/03/2023.