2023 (5) TMI 844 - HC - Income Tax

Additions made in the taxable income - Additions included the purchases of goods made by the sister concern of appellant - amount paid in cash by the appellant from undisclosed sources - HELD THAT - Neither before the authorities below nor before this Court the appellant could bring any material on record to show that the addition of Rs.3, 50, 000/- was not pertaining to the A.Y. 1994-95 or the same related to purchases not made by it but by its sister concern namely M/s B.R. Metal. Assessee is proved to have incurred expenditure qua the relevant year but could not offer any explanation about the sources of expenditure or part thereof. The explanation as offered by him that the addition did not pertain to the year under scrutiny and was qua the purchases made by its sister concern had not been found to be satisfactory by the authorities below. Under the provisions of Section 69-C such amount will certainly be deemed to be income of the assessee for the year 1994-95. Accordingly we find no reason as to why the order passed by the Tribunal thereby making addition in the income of the appellant as income from undisclosed sources is liable to be interfered with. Hence the argument so raised by the appellant is rejected. Addition on account of unrecorded rolling charges - HELD THAT - Tribunal had restored addition of this amount on the ground that the appellant had failed to prove that it had incurred any expenses. Appellant failed to point out any irregularity or illegality in the order as passed by learned Tribunal on this point. The appellant did not dispute that the fact that the entries made in document A-1 were qua the amount received as rolling charges. It could not produce any material on record to prove that the expenses which were shown to be incurred in respect of job work charges and received from various parties were recorded in the books of account. As such the appellant was certainly not entitled to deduction to the extent of 75% in the amount as shown and was liable to addition thereof. Resultantly no intervention is required to be made by this Court in the order of Tribunal. Addition on account of rolling charges received outside the books of account - CIT (A) had allowed deduction @75% from the addition so made and had allowed addition to the extent of 25% only after calculating the net profit on job receipts - A.Y. 1995-96 - HELD THAT - On perusal of the orders passed by the authorities below it is explicit that neither there was any challenge by the appellant of the fact that the entries made in the seized document were related to it nor it could establish that the transactions as shown in these seized document were recorded in its books of account. In the absence of any material being brought on record by the appellant to explain that the expenditure shown to have been incurred by it as per the entries made in the seized document was recorded in the books of account, no fault can be found in the order passed by the Tribunal restoring addition of amount - As such the order of the Tribunal on this point also deserves to be affirmed. Gross profit as calculated @8% of sales shown to be made in the seized document - The observations as made by the assessing officer and affirmed by the Tribunal on this point do not deserve any interference in view of the fact that the CIT (A) had not given any justification for reduction of the same. The gross profit calculated @8% cannot be stated to be on higher side at all and is reasonable one. As such the finding given by the Tribunal on this point also deserve to be affirmed.

Summary

Issues involved:
The judgment involves appeals under Section 260-A of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal. The appeals concern additions made to the taxable income of the appellant for the assessment years 1994-95 and 1995-96, based on a search and seizure operation at the premises of the appellant.

For A.Y. 1994-95:
The appellant challenged the addition of Rs.8,36,936/- in its income, arguing that the amount included purchases made by its sister concern. However, the appellant failed to provide evidence to support this claim, leading the Tribunal to calculate the undisclosed income at Rs.3,50,000/-. The Court upheld this decision, citing Section 69-C of the Act to deem the amount as the appellant's income.

The appellant also contested the addition of Rs.4,64,536/- for unrecorded rolling charges. Despite partial relief granted by the CIT (A), the Tribunal reinstated the full amount as the appellant failed to prove incurring expenses, resulting in no interference by the Court.

For A.Y. 1995-96:
The appellant disputed the addition of Rs.5,76,726/- for rolling charges received outside the books of account. The Tribunal restored 75% of the addition, as the appellant could not demonstrate the expenses were recorded, leading the Court to affirm the Tribunal's decision.

Additionally, the appellant challenged the gross profit calculation on sales shown in a seized document. The assessing officer assessed gross profit at 8%, reduced to 2% by the CIT (A), and then reinstated to 8% by the Tribunal. The Court upheld the Tribunal's decision, stating the gross profit calculation at 8% was reasonable, with no valid reason for further reduction.

In conclusion, the Court found no merit in the appeals and dismissed them, along with any miscellaneous applications.