2024 (5) TMI 1074 - AT - Income Tax

Additions made based on the statement recorded during the course of survey - Estimation of gross profit rate - the assessee by way of an Affidavit retracted the statement recorded u/s. 133A - HELD THAT - We find that the AO is not correct in making the addition as the undisclosed income of the assessee, whereas CIT(A) has made thorough analysis of the income of the assessee project-wise and estimated the gross profit at 12.5% which does not require any interference. CIT(A) given direction to the reopen the other Assessment Years and recompute the income for the Assessment Years 2009-10 to 2016-17. Thus the grounds raised by the Revenue is devoid of merits and the same is hereby dismissed. Appeal filed by the Revenue is hereby dismissed.

Summary

Issues:
1. Appeal against assessment order under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15.
2. Discrepancy in undisclosed income determination based on survey action and retraction statement.
3. Estimation of gross profit rate and telescoping effect for other Assessment Years.
4. Dispute over the addition of undisclosed income and the role of the Commissioner of Income Tax (Appeals).

Analysis:
1. The appeal was filed by the Revenue against the appellate order dated 23.01.2017 passed by the Commissioner of Income Tax (Appeals), Gandhinagar, Ahmedabad, concerning the assessment order under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2014-15.
2. The case involved a Partnership Firm engaged in construction work, where a discrepancy arose due to a survey action conducted under section 133A of the Act. The Assessing Officer made an addition of Rs. 3,45,09,500/- as undisclosed income, rejecting the retraction statement filed by the partners.
3. The assessee contended that the undisclosed income determination was not accurate, providing project-wise details to support their claim. The Commissioner of Income Tax (Appeals) estimated the gross profit at 12.5% and directed to reopen assessments for other years under section 150(1) of the Act.
4. The Revenue appealed against the estimation of total addition by the Commissioner of Income Tax (Appeals). The dispute centered around the correctness of the addition made by the Assessing Officer based on the survey statement and the subsequent analysis by the Commissioner of Income Tax (Appeals).
5. The Tribunal analyzed the legal principles regarding the evidentiary value of statements recorded during surveys and the retraction of such statements. Referring to relevant case laws, the Tribunal concluded that the Assessing Officer's addition was not justified, and upheld the Commissioner's estimation of gross profit and direction for reopening assessments of other years.
6. Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the decision of the Commissioner of Income Tax (Appeals) and emphasizing the importance of a comprehensive analysis of facts and legal principles in determining undisclosed income and gross profit rates.

This detailed analysis covers the issues involved in the legal judgment, highlighting the key arguments, decisions, and legal principles applied in the case.