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TMI Blog2012 (11) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the suppressed turnover for both the assessees in all the assessment years concerned. - In the result, appeals of the Revenue are partly allowed. - ITA Nos. 1813 to 1816-Ahd-2005 - - - Dated:- 20-1-2012 - Shri D.K.Tyagi Shri A.Mohan Alankamony, JJ. Appellant By : Shri Vinod Tanwani, Sr.D.R. Respondent By : Shri J.P.Shah, A.R. Order Per Shri A.Mohan Alankamony, Accountant Member : These are four appeals filed by the Revenue in the case of M/s. Orbit Textiles and M/s. Open Wealves aggrieved by the consolidated order of the Learned Commissioner of Income Tax(Appeals)-VI, Surat in Appeal Nos.CIT(A)-VI/1 to4/05-06 dated 06.05.2005 for the assessment years 2000-2001 and 2001-2002 passed under section 250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the addition of Rs.9,20,400/- made by the Assessing Officer. 3. These appeals have come before the Tribunal for the second round, since on the earlier occasion the Tribunal had remitted back the matters to the file of the ld. CIT(A) with a direction to reconsider the issues involved in these appeals as per the provisions of law, after giving a fair opportunity of being heard to the assessee. Both the assessees are sister concerns carrying on the business of manufacturing and sale of art silk grey cloth after getting the same processed through other sister concerns and other parties in the open market. A survey was conducted by the Revenue on the assessees. During the course of survey, four diaries and certain loose papers were foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in the negative. Thus, based on the finding of the Hon'ble Gujarat High Court in the case of CIT vs President Industries (supra) and that of Hon'ble M.P. high court in the case of CIT vs Balchand Ajitkumar (supra) and also keeping in view the facts as discussed above, I am of the opinion that the addition as made by the assessing officer in the case of the appellants with regard to the total amount of unaccounted sale of cloth is not justified in the eyes of law. The assessing officer is therefore, directed to work out the net profit rate in the case of each appellant for each year under appeal and apply the same to the unaccounted sale pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed income. 6.1 The ld. D.R. relied on the orders of the ld. AO and further vehemently argued that in case additions made by the ld. AO are not sustainable, the gross profit rate of the assessees may be applied and not the net profit rate as argued by the ld. A.R. The ld. D.R. further argued that if G.P. rate or N.P. rate is applied, then it is obvious that the assessees had made cash expenditures, thereby attracting provisions of section 40A(3) of the Act and hence disallowance of expenditure should be made accordingly. The ld. D.R. relied on the decision in the case of CIT-vs- Hynoup Food Oil India Pvt. Ltd. 290 ITR 702. 7. We have heard the rival submissions and perused the materials on record. At the outset, we reject the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive books of accounts are reproduced hereinbelow (Source: Page no.2, para 1 of the CIT(A) s order dated 27.8.2004 in CAS-VI/079,80,81 and 82/2003-04 in the first innings). OPEL WEAVES ORBIT TEXTILES A.Y. 2000-01 A.Y.2001-02 A.Y. 2000-01 A.Y.2001-02 1. Turnover (Sales) 18,410,864 26,950,880 25,869,723 27,007,716 2. G.P. 3.19% 5.92% 3.43,% 6.19% 3. N.P. NIL 0.33% NIL 0.43% 4. R.O.I NIL 60,975 NIL 77,437 5. Assessed Income 2,506,400 990,560 2,618,200 1,038,030 7.1 In order to arrive at the decision as to what rate should be applied for determining the undisclosed income, it is very much essential to examine the books of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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