9911796707
TMI Blog2015 (4) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Therefore, we confirm the order of the learned CIT(A) on issuance of notice U/s 153A of the Act in all the years.- Decided against assessee. G.P. rate as well as total sales turnover estimated challenged - Held that:- The learned Assessing Officer applied comparable case of M/s Rajan Fireworks and Emporium Prop. M/s Sunder Dass Hasani HUF, who is wholesalers/retailers of fireworks, who has shown G.P. rate ranging G.P. from 17% to 18%. The learned AR argued that the case of M/s Rajan Fireworks and Emporium Prop. M/s Sunder Dass Hasani HUF is not a comparable case hence distinguished on various facts and figures and nature of trading activity in quantum and experience. The assessee has shown G.P. in 2009-10 @ 14.99% on recorded sales of 21,57,817/-, therefore, we apply G.P. rate in A.Y. 2003-04 @ 13%, in A.Y. 2004-05 @ 14%, in A.Y. 2005-06 @ 13% and in A.Y. 2006-07 @ 13.5% in the interest of justice. The Assessing Officer is directed to recalculate the income of the assessee on the basis of G.P. rate decided by this Court in year wise on estimated total turnover by the learned CIT(A).- Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... erred on facts and in law in estimating the unrecorded sales, twice the recorded sales and thus estimating the total sales at ₹ 69,27,294/- (wrongly taken at ₹ 46 lacs). She has further in applying G.P. rate of 17% on such estimated turnover as against G.P. rate of 11.04% declared by the assessee on the actual turnover of ₹ 23,09,098/- resulting into trading addition of ₹ 9,22,728/- (wrongly computed at ₹ 45,27,088/-)." Grounds of assessee's appeal being ITA No. 1007/JP/2013 (A.Y. 2006-07) "1. The learned CIT(A) has erred on facts and in law in confirming the trading addition of ₹ 1,98,392/- by applying G.P. rate of 17% on the turnover of ₹ 41,86,314/- as against G.P. rate of 12.26% declared by the assessee." 2. In A.Y.2003-04 to 2005-06, the assessee challenged the validity of issuance of notice U/s 153-A of the Income Tax Act, 1961 (hereinafter referred as the Act) and addition on account of G.P. rate. In A.Y. 2006-07, the appellant only challenged the G.P. rate addition. 2.1 Brief facts of the case are that there was a search and seizure operation carried out on 22/10/2008 at the business and residential premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- During the course of search operation, it is also found that the books of the assessee are incomplete as per the statement of Shri Pankaj Agarwal in reply to Q. No. 8 recorded U/s 131 of the I.T. Act, 1961 on 05/01/2008 which is reproduced below: On the basis of above facts, the learned Assessing Officer concluded that the opening stock as well as closing stock of the firm was not verifiable. During the course of assessment proceedings, the learned Assessing Officer issued notice U/s 133(6) of the Act to verify the purchases in some of the cases. Out of these notices issues, following notices were returned back by the postal authority unserved giving remark "Not known" or "No such address" etc. 1. M/s Arjun Fireworks, Sivakashi. 2. M/s Shri Divan Foreworks, Thiruthangal, Sivkashi 3. M/s Rajavel Fireworks factor, Sivkashi. 4. M/s Jaya Latchana Fireworks, Sivkashi. 5. M/s Durgaiamman Fireworks, Vishwanathan, Sivkashi. 6. M/s Anitha Sparklers Fireworks, Sivkashi 7. M/s Gokila Fireworks, Sivkashi. The learned Assessing Officer again gave the reasonable opportunity of being heard to prove the genuineness of the purchases made by it. The learned Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer applied G.P. rate in A.Y. 2003-04 after rejecting the book result U/s 143(3) of the Act @ 17%, 17.25% in A.Y. 2004-05, 17.50% in A.Y. 2005-06 and 17.75% in A.Y. 2006-07 and made trading addition of ₹ 6,67,899/- in A.Y. 2003-04, ₹ 10,20,448/- in A.Y. 2004-05, ₹ 13,61,457/- in A.Y. 2005-06 and ₹ 2,29,789/- in A.Y. 2006-07. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the learned CIT(A), who had allowed the appeal partly in all the years after considering the Hon'ble Jurisdictional High Court's decision in the case of Jai Steel India Vs. ACIT (2013) 88 DTR 1 and Hon'ble Supreme Court decision in the case of ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30 and held that the proceeding U/s 153A of the Act is valid. During the course of search, incriminating documents were found and seized, in which unrecorded sales were found by the Assessing Officer for A.Y. 2006-07 to 2009-10. Further during the course of search, statement of partner of the firm was recorded U/s 132(4) of the Act wherein they have admitted unaccounted sales as well as the cash purchases and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in A.Y. 2003-04, she estimated the total sale turnover on the basis of ratio between recorded and unrecorded sales i.e. 1:2 at ₹ 36 lacs and applied G.P. rate @ 18% and allowed set off of gross profit declared by the assessee in estimated the G.P. at ₹ 6,48,000/- and a net addition at ₹ 4,06,015/- was confirmed in A.Y. 2004-05. In A.Y. 2005-06, the G.P. rate was applied by the learned CIT(A) @ 17% on estimated total turnover of ₹ 46 lacs and gross profit at ₹ 7,82,000/-. She allowed the set off gross profit of ₹ 2,54,912/- disclosed by the assessee and net addition of ₹ 5,27,088/- was confirmed. In A.Y. 2006-07, she applied G.P. rate @ 17% on total turn of ₹ 41,86,314/- and calculated the G.P. at ₹ 7,11,673/- and allowed the set off gross profit declared at ₹ 5,13,281/- and final net addition was confirmed at ₹ 1,98,392/-. The learned CIT(A) rectified her order vide order dated 23/12/2013 in A.Y. 2003-04 and estimated total sales of ₹ 35,69,727/- in place of 24 lacs and estimated the gross profit at ₹ 6,78,248/- in place of ₹ 4,56,000/-. In A.Y. 2004-05 estimated the total sale at ₹ 54,88,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account are as under:- Assessment Year Sales Gross Profit G. P. Rate (%) 2009-10 21,57,817/- 3,23,516/- 14.99 2008-09 20,56,885/- 2,67,395/- 13.00 2007-08 15,93,180/- 2,06,850/- 12.98 2006-07 26,27,528/- 3,22,211/- 12.26 2005-06 23,09,098/- 2,52,912/- 10.95 2004-05 18,29,613/- 2,41,985/- 13.22 2003-04 11,89,909/- 1,41,239/- 11.87 From the above table it can be noted that the G.P. rate declared by the assessee vary from year to year and comparable with other years. (iv) In A.Y. 2009-10 AO applied g.p. rate of 18.5% which was reduced by your goodself to 16%. He relied on the following case laws: (i) Sinhgad Technical Education Society Vs. ACIT 57 DTR 241 (Pune) (ii) LMJ International Ltd. Vs. DCIT 22 SOT 315 (Cal.) (iii) Shabbir Allauddin Latiwala Vs. DCIT 138 TTJ 104 (ITAT) (Rajkot) (iv) DCIT vs. Royal Marwar Tobacco Product (P) Ltd 16 DTR 129/ 120 TTJ 387 (Ahmadabad) (v) Anil Kumar Bhatia & Ors. Vs. ACIT 1 ITR 484 (Trib) (Del) (vi) Anil P Khimani Vs. DCIT 2010-TIOL-177-ITAT-MUM (vii) ACIT Vs Kamal Kumar S. Agrawal (Indl.) & Ors. 41 DTR 105 (Nag) (Trib) (viii) Jagdish Duggal vs. ACIT 24 DTR 174 (Chd.)(Trib) (ix) ACIT Vs. M/s Rochem Separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid issue of notices u/s 153A. The ground raised challenging the validity of notices u/s 153A are dismissed 6.1 In these circumstance the case laws relied on by the assessee become inapplicable as the incriminating material as a result of search exists on the record. During the course of search, incriminating documents were found. On the basis of these documents, the Assessing Officer has tabulated unrecorded sales from A.Y. 2006-07 to 2009-10 and also considered the preponderance of possibility for A.Y. 2003-04 to 2005-06 alongwith statement U/s 132(4) of the Act by the partners and on admission of unrecorded sales in the line of fireworks business without quoting a particular year. It is admitted by the appellant in his statement dated 21/10/2008 that it has been indulging in unrecorded purchase and sales; no year of exception is stated. This leads to a clear indication the assessee as a regular policy indulged in such clandestine maintenance of books and avoided taxes. Therefore, the notices issued U/s 153A for all the years by the Assessing Officer are valid and CIT(A) has rightly upheld them. Further reassessment proceedings were abated in A.Y. 2003-04, 2004-05 and 2005-06 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
