2018 (6) TMI 1397 - HC - Income Tax

Undisclosed bank accounts - survey u/s 133A - AO clubbed the sales with the turnover declared by the assessee in respect of his business concern and applied a profit rate of 8% to the total turnover - arrival by the First Appellate Autority of the profit figure at the rate of 25% of total deposit - Held that - As appellant has submitted that the importation by the CIT(Appeals) the concept of 25% of the total deposit to be unaccounted profit as income to be without any foundation and arbitrary. His submission is that both the statutory appellate fora were wrong in coming to the finding that the business in which the appellant is engaged involves mostly cash and credit card payments. But these are all factual issues and we do not want to reappreciate the materials on the basis of which the Tribunal arrived at its finding. No substantial question of law

Summary

Issues:
1. Treatment of undisclosed bank accounts by Income Tax Authorities.
2. Fresh assessments under sections 154/147/143(3) of the Income Tax Act, 1961.
3. Assessing Officer's treatment of withdrawals as undisclosed sales and income.
4. Contesting assessment order before the Commissioner of Income Tax (Appeals).
5. Modification of Assessing Officer's finding by the Appellate Authority.
6. Tribunal confirming the CIT(Appeals) finding on profit estimation.
7. Questioning the basis of profit figure estimation before the Tribunal.
8. Dismissal of appeal challenging the profit estimation by the CIT(Appeals).

Analysis:
1. The judgment dealt with the discovery of undisclosed bank accounts during an Income Tax survey operation. Fresh assessments were made for the years 2003-04 to 2007-08 under sections 154/147/143(3) of the Income Tax Act, 1961 based on the findings. The Assessing Officer treated withdrawals from these accounts as undisclosed sales and income of the assessee.

2. The appellant contested the assessment order before the Commissioner of Income Tax (Appeals) arguing that the computation had no basis. The Appellate Authority modified the Assessing Officer's finding, considering cash withdrawals as an indicator of net profit and reducing the unaccounted money available to the assessee.

3. The Tribunal confirmed the CIT(Appeals) finding, which estimated the income of the assessee from undisclosed transactions at 25% of total deposits in the undisclosed bank accounts. The Tribunal rejected the appellant's contention that the profit estimation was on the higher side, emphasizing that the estimate was fair and reasonable based on all aspects considered.

4. The appellant questioned the profit figure estimation basis before the Tribunal, arguing against the concept of 25% of total deposit as unaccounted profit. The Tribunal upheld the CIT(Appeals) order, dismissing the appeals filed by the assessee. The judgment concluded that no substantial question of law arose in the appeal, leading to the dismissal of the appeal and stay petition without costs.