9911796707
TMI Blog2012 (9) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... The Revenue has raised the following grounds in its appeal. "01. In the facts and circumstances of the case, the Ld, First Appellate Authority is not justified in deleting the quantum of addition/disallowances made by the AO under the different heads such as i) investment in purchases corresponding to unaccounted sales Rs.12,25,245, ii) valuation of closing stock Rs,6,18,000, iii) Bogus liability (existing sundry creditors) Rs.7,37,566, iv) bogus liability (non existing s/creditors Rs.14,53,129, v) disallowance u/s.40A(3) Rs.3,58,74 with a wrong opinion that the AO has determined the taxable income by resorting to estimation and there is no scope for the AO for any disallowance under other sections. - where as the AO has not estimated the profit on rejection of the books of a/c, rather he has calculated GP rate at l3% only on unaccounted sales detected outside the books instead of 12% of GP shown by the assessee in his P&L a/c. 02. Whether the Ld.CIT(A) is justified to hold that there cannot be any investment outside the books of a/c in respect of purchases made outside the books and also sales made outside the books, where the Ld. Appellate Authority has confirmed the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey operation, it has ascertained by the department, the assessee has maintained two sets of sales account viz. 1) Order Khata-cum- Sales Registers on day to day basis (AWI-19), 2) General Sales Register (AWI-19). The prima facie view of the department, the assessee has made suppression of huge sales as not disclosing the entries made in order Khata- cum-sales Register in the General Sales Register. Even though, it has subsequently established most of the entries have entered in the general sales register, thereby the transactions reflected in order Khata are part and parcel at the general sales register but not entirely. Due to the above ensuing reasons this case has been approved by the CCIT, Bhubaneswar for scrutiny vide letter No. CCIT/Tech./Scrutiny/2009-10/9056 on dt.02/09/2010. The A.O. has accordingly issued the notice U/s. 143(2) and U/s. 142(1) of IT Act. The assessee has co-operated in assessment proceedings by producing the books of accounts and other relevant documents. The A.O. has made an exorbitant assessment by determining the total income at Rs. 67,62,250 as against the return income disclosed at 2,20,030. The details of such exorbitant demand on different grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawals (outgoing) while considering the unaccounted sale, purchase and relevant expenses debited in the bank accounts which entirely covers unaccounted sales, unaccounted purchases and unaccounted expenditures. Therefore, the A.O. ought to have considered the average net profit of last 5 years in to consideration while determining the estimated profit as the A.O. while adopting the estimation by rejecting the books of accounts has made addition on different angles so far as investment in purchases corresponding to unaccounted sales, valuation of closing stock, bogus liability and disallowance U/s. 40(A)(3) of I.T. Act relating to transactions both Audited accounts and suppressed turnover Hence, the determination of estimated net income should be average rate of net profit of proceeding assessment years instead of rate of gross profit. 5.3. The learned DR supported the impugned order of the learned CIT(A) insofar as the estimation of gross net profit @13% on the suppressed sales. 6. The learned DR, however, perused the Revenue appeal submitting that the very fact that the learned CIT(A) sought to tax 13% of the purported sales not accounted for on the facts and circumstances as ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months or a year which all technicalities have been taken care of by the learned CIT(A) in view of the fact that the Assessing Officer did not propose to hold the amount as remaining with the assessee which closing stock has been accepted, valued at consistent system of accounting namely, at lower of cost or market value. In other words, the effort of the Assessing Officer has to impound the books and the subsidiary records of the orders of the customers advances received was an effort to make the account of the impugned FY after a gap of 11 months was considered by the learned CIT(A) judiciously within the frame work of law for holding that the purported suppressed sales as computed by the Assessing Officer at Rs.1.62 Crores cannot be taxed as out of books of account and that is a reason he applied 13% but on the specific finding by the Assessing Officer that the assessee had returned 12% but adopting 13% in view of the facts and circumstances. The learned CIT(A) however deleted the other additions on account of valuation of closing stock, bogus liabilities, disallowance u/s.40A(3) and investment in purchase corresponding to unaccounted sales. The learned Counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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