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TMI Blog2016 (7) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... This is an appeal by the Assessee against the order dated 25.3.2013 by the CIT, Kolkata-XIV-Kolkata, passed u/s.263 of the Act, relating to AY 2008-09. 2. The Assessee is an individual. He carries on the business of dealing in auto parts under the name and style M/S.Surendra Motor. For AY 2008-09, the Assessee filed return of income on 29.09.2008 declaring total income of ₹ 2,77,976/-. The return of income was processed u/s.143(1) of the Act on 31.03.2010. 3. There was a survey conducted by the revenue u/s.133A of the Income Tax Act, 1961 (Act) in the business premises of the Assessee on 25.1.2008. In the course of survey the material found by the Revenue was that the Assessee recorded sales of ₹ 2,46,23,315/-. But in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained by the Assessee. 5. The AO found that the Gross profit declared by the Assessee on sales recorded in the books of accounts was 7.53%. However in the statement recorded at the time of Survey the Assessee had in answer to question no.2 stated that the Gross Profit in his business would vary between 15.5% and 53%. The AO therefore applied 17% Gross profit on unrecorded sales of ₹ 6,55,808/- and made an addition to the total income of the Assessee. The AO passed the order u/s.143(3) of the Act on 22-12-2010. 6. The CIT in exercise of his powers u/s.263 of the Act, was of the view that the aforesaid order of the AO was erroneous and prejudicial to the interest of the revenue. The main point of dispute which is subject matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 108 (Bom.) for the above proposition. The Assessee also pointed out that since unrecorded sales are made throughout the year, unrecorded purchases were also made throughout the year. The profit margin on sale and the realization from sale would be sufficient source of funds out of which the Assessee would have made purchases and hence no separate addition of income on account of unrecorded purchases should be made. The Assessee placed reliance on the decision of the Hon ble Gujarat High Court in the case of President Industries Ltd. 258 ITR 654 (Guj.) and the ITAT Delhi in the case of India Seed House Vs. ACIT (2001) 69 TTJ (Delhi) 241 for the proposition that only gross profit on unrecorded sales have to be treated as income and not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case on hand. We also find that the addition made was consequent to the survey dated 25.01.2008. s rightly pointed out by the ld. Counsel for the assessee that the D Bench of Kolkata Tribunal ( supra ) dealt the issue elaborately and decided the same in favour of the assessee by quashing the order of C.I.T., the relevant portion of which is reproduced hereinbelow: 11. At the time of hearing it was brought to our notice that in respect of similar addition made in AY 2007-08 on the basis of material found at the time of survey, an assessment was made by the AO by order dated 21.12.2009 adding Gross Profit on unrecorded sales. That order was revised by the CIT in exercise of his powers u/s.263 of the Act by an order dated 23.3.2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are recorded in the books of accounts. Therefore, there were no suppressed sales, whatsoever. This was rejected by the AO and he made an addition on account of gross profit on unrecorded sales at 17% of unrecorded sales. The crucial words in the order of assessment reads as follows: Considering the facts and circumstances of the case the G.P. rate on undisclosed sale is calculated @ 17%. And the same is added back to the total income of the assessee. No further expenses are allowed as assessee has already debited huge expenses (Addition ₹ 38,470/-) 14. It is clear from the above observations of the AO and the observations in para-3 of the order of assessment that he had taken due cognizance of all debit items in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial to the Revenue. Even the CIT conceded the position that the AO made the inquiries, elicited replies on Gross Profit and thereafter passed the assessment order. The grievance of the CIT was that the AO should have made further inquiries as to whether any addition has to be made on account of unrecorded purchases or whether the entire suppressed sales had to be regarded as income of the Assessee rather than accepting the explanation. Therefore, it cannot be said that it is a case of 'lack of inquiry'. The decision of the Hon ble Bombay High Court in the case of Ganbriel India Ltd. (supra) clearly supports the stand taken by the Assessee in this regard. We also derive support for our conclusions as above from the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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