2005 (3) TMI 416 - AT - Income Tax

Summary

Issues Involved:
1. Discrepancy in GP rate applied by AO and CIT(A).
2. Legality of survey conducted by Inspector of IT Department under s. 133A.
3. Charging of interest.

Analysis:
Discrepancy in GP rate:
The appellant derived income from excavation of marble blocks and job works of sawing for third parties. The AO applied a GP rate of 20%, making additions under various heads. The CIT(A) reduced the GP rate to 18% considering fluctuating rates in the business. The appellant contested this discrepancy. The ITAT noted the GP rate history and opined that without a specific base, the GP rate cannot be uniform. Upholding the appellant's declared GP rate of 16%, the addition was disallowed.

Legality of survey conducted:
The appellant raised a legal ground challenging the jurisdiction of the Inspector of the IT Department to conduct the survey under s. 133A. Citing precedents, the appellant argued the survey was illegal. The ITAT agreed, deeming the survey conducted by the Inspector as unauthorized. Consequently, the addition made based on the survey was deleted, amounting to Rs. 1,00,926.

Charging of interest:
The judgment briefly mentions the issue of charging interest as mandatory and consequential, without delving into further details.

In conclusion, the ITAT allowed the appeal in part, addressing the discrepancies in the GP rate applied, declaring the survey conducted by the Inspector as illegal, and briefly mentioning the charging of interest as mandatory.