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TMI Blog2010 (10) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 8 lacs being the disclosure made by the assessee during the survey proceedings. The assessee has raised following ground: On the facts and in circumstances of the case and in law, ld. CIT-II, Baroda erred in - 1. passing the order u/s 263 of the IT Act and thereby directing the ITO to treat the disclosure of ₹ 8,00,000/- during the course of survey as income from other sources by applying the ratio of Hon. Gujarat High Court in the case of Fakir Mohamed Haji Hassan 247 ITR 290. 3. ITA No.2659/Ahd/2005 Asst. Year 2002-03 is the appeal filed by the assessee against the order of ld. CIT(A) dated 23.9.2005 in respect of various quantum additions confirmed by him made by the AO in the assessment order dated 30.3.2005. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the books. He accordingly disclosed a sum of ₹ 8 lacs and agreed to pay tax thereon. But when return of income was filed, the AO noted that net income has been declared at ₹ 69,880/- even though sum of ₹ 8 lacs was shown as credit in the profit and loss account. The assessee had shown total contract receipts of ₹ 41,58,726/- with gross profit of ₹ 3,97,055/- as against total contract receipts of ₹ 83,62,502/- with gross profit of ₹ 4,16,326/- giving GP rate of 4.97%. When the AO examined the impounded papers and books of account he found that there are discrepancies in the notings as per loose papers and entries made in the cash book as under :- Notices as per loose papers Entry made in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction work expenses as discussed in para 6.2 (D) above 7,00,000/- 5. Unrecorded Cash payment as discussed in para 6.3 above 44,000/- 6. Disallowance of cement expenses as discussed in para 7 above 1,61,119/- 7. Disallowance of wood expenses as discussed in para 8 above 80,839/- 8. Disallowance of glass expenses as discussed in para 9 above 32,801/- Rs.14,18,759/- The ld. CIT in proceedings under section 263 considered that AO has not specifically made the addition of ₹ 8 lacs. It was explained to the ld. CIT that this issue has been considered by the AO while examining the books of account but the ld. CIT did not agree and directed to make specific addition of ₹ 8 lacs disclosed by the assessee during survey. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had undisclosed receipts as well as payments and net thereon had been worked out at ₹ 8 lacs. Merely because this undisclosed income of ₹ 8 lacs has been shown as a part of profit and loss account it does not lose its separate identity and has to be taken out from the profit and loss account for separate consideration. This would be notwithstanding the trading results which are finally settled in the appeal pending before us in ITA No.2659/Ahd/2005. Since the AO failed to take note of separate and independent identity of this income in the profit and loss account and consider it independent of other trading results, his order becomes erroneous and prejudicial to the interest of Revenue. We accordingly confirm the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be made would be a GP addition. Since assessee has shown GP of 4.97% in preceding year then not more than that rate should be applied on the contract receipts. 10. The ld. DR on the other hand, submitted that addition of ₹ 8 lacs should be over and above the additions of various expenses or addition on account of GP. 11. We have considered the rival submissions and perused the material on record. While disposing of appeal in ITA No.842/Ahd/2006 we have held that separate addition of ₹ 8 lacs should be made being disclosed by the assessee on the basis of loose papers and documents found during survey. There-after once books are rejected there is no relevance of making specific additions disallowing the claim of various expen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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