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TMI Blog2016 (10) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... s property by an owner. Revenue could not produce the document, which they are relying upon and at the same time they are unable to demonistrate how and where the learned CIT was wrong. Viewing from any angle we do not find any error in the finding of the learned CIT that the income from Bani Bhawan Puri constitutes business income and not income from house property. We, therefore, uphold the finding of learned CIT and answer the issue in favour of the assessee. Undisclosed or unexplained investment or income - Held that:- Merely because the documents recovered from the premises of assessee in the survey conducted on 18.902.2003 indicate that there was undisclosed turnover of ₹ 91,65,486/- as per learned AO or ₹ 1,00,79,633/- as per learned CIT, the entire turnover amount cannot treated as the undisclosed income or investment, without having regard to the facts and figures surrounding the business of the assessee. While assessing the income of the assessee, should have had to the common course of natural elements, and public and private business in relation to facts and figures obtained in a particular case. AO did not consider this aspect and the learned CIT havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the purpose of this appeal. The assessee filed his return on 28.11.2003 declaring a total income of ₹ 12,28,450/-. By way of an order dated 28.03.2006 learned AO assessed the income of the assessee at 1,53,77,200/-. Aggrieved by the said order, the assessee carried the matter in appeal to learned CIT. Ld. CIT by order dated 5.1.2007 gave certain relief to the assessee pursuant to which learned AO passed an order under section 251 of the Act granting relief to a tune of ₹ 2,99,629/-. Matter reached ITAT in appeal and the ITAT by order dated 14.12.2007 remanded the matter to learned AO for fresh disposal after de novo consideration. Subsequently, pursuant to the orders of the ITAT, learned AO vide order dated 30.12.2008 made certain additions on account of rental income and the advances received from the parties in respect of Bani Bhavan at Puri, and unexplained and undisclosed investments and income. He framed the assessment at 1,10,35,881/-. Subsequently, on 2.2.2009 he modified the same under section 154/143(3)/251/254 of the Act and assessed the income at 1,07,20,210/-. 3. Aggrieved by the said order of learned AO, the assessee carried the matter in appeal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o purchases for four times during the financial year, instead of adding the entire unexplained investment as undisclosed income. For these reasons, learned DR prayed to restore the order of the learned AO. 7. It is the argument of the Ld. AR that the learned CIT has taken the total unexplained investment as the result of rotating the same amount for four times instead of taking it as rotation for nine times in view of the tax audit report where the ratio of stock to turnover was found to be 10.10%. He further submitted that the learned CIT increased in the Gross Profit Ratio from 10.36% to 11.55% and made certain addition on this basis. 8. At the outset, it we wish to state that in respect of the learned CIT taking the undisclosed investment as the investment in four cycles instead of investment in nine cycles as pleaded by assessee, and learned CIT enhancing the Gross Profit Ratio from 10.36% to 11.55%, there is no appeal preferred by the assessee. It is only the revenue that has come in this appeal challenging the treatment of income from Bani Bhawan and also granting relief to the assessee to a tune of ₹ 52,21,380/-. 9. Basing on the above contentions and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of one for every ten pilgrims for the collections of rubbish refuse. (iii) Cause the living rooms, varandaha and court yards to be swept and cleaned daily and the collections of rubbish and refuse to be removed. (iv) Cause all wells attached to the licensed house to be throughly cleaned once a year except in the case of covered wells fitted with a pump shall have all well disinfected at such times and in such manner as the Magistrate shall prescribe. (v) Cause all latrines, urinal, drain cesspools and receptacles for rubbish to be cleaned daily. (vi) Display on a conspicuous part of the main entrance of the house, a ticket showing red letters not less than six inches in height: (a) The registered number of the license, (b) The number of pilgrims which the house is licensed to accommodate. (c) The period during which the license is in force. (vii) Display in a conspicuous place on the lintel of each room or on the posts of each varandah licensed for the accommodation of pilgrims a ticket showing the number of pilgrims for which it is licensed shall our accommodate more than the number authorised by the Magistrate. (viii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k the assessee produced the copy of an order in ITA No. 49/Cal/2000 in respect of assessment year 1995-96. In this order, a Coordinate Bench of this Tribunal clearly observed that the copy of the order in respect of AY 1993-94 was produced before the Tribunal and the Tribunal observed therein that the income from the Bani Bhawan was treated as business income. Further, vide no. 107 to 114 of the paper book, the assessee produced the order dated 26.2.2010 passed by the learned CIT in respect of AY 2001-02. In this order, vide Para (i) under ground no. 3, the learned CIT observed that the Puri Municipality has given licence to run the commercial project only as a lodging/holiday home restricting the number of lodgers at 165, and the matter relating to the income of Bani Bhawan as a business income had already been decided in the past by the ITAT in the AYs. 1993-94 and 1995- 96. The learned CIT also referred therein to the order in ITA No. 49/Cal/2000 for AY 1995-96 wherein the issue was held in favour of assessee. Following the same in respect of the AY 2001-02, learned CIT concluded that the income from Bani Bhawan Puri should be treated as business income. In the impugned order Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Gross Profit Ratio at 10.36%. Finally the learned AO added ₹ 2,60,000/- in respect of the amount under TCS-2, to reach the final figure of ₹ 91,65,486/- on account of undisclosed or unexplained investment or income. 18. We have carefully perused the order of the learned CIT. After an elaborate discussion and comprehensive consideration of the documents under TCS-2, TCS-4, TCS-9, TCS-22, TCS-44 and TCS-48, the learned CIT reached at ₹ 1,00,79,633/- as the total amount of turnover. Learned CIT did not agree with the learned AO in respect of Gross Profit Ratio, and as against the Gross Profit Ratio of 10.36% framed by AO, learned CIT enhanced it to 11.55% and added the difference amount to the income of the assessee. As already stated above, the assessee does not challenge the enhancement of the turnover from ₹ 95,61,486/- as framed by the learned AO to ₹ 1,00,79,633/- or enhancing the Gross Profit Ratio from 10.36% to 11.55%. The entire dispute in this appeal revolves around the finding of the learned CIT that the same amount was rotated for four times to make the total turn over of ₹ 1,00,79,633/- as such of only one fourth of this total tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common course of natural elements, and public and private business in relation to facts and figures obtained in a particular case. It seems learned AO did not consider this aspect and the learned CIT having gone through the details relating to the purchases sales and payments in respect of the business of the assessee reached a conclusion that the total turnover was accumulated through a periodic cycling of the sales amount to purchases and it generally takes three months for each cycle to complete. This finding of the learned CIT is in conformity with the initial plea of the assessee that the funds were being rotated at least four times during the year. 20. Now coming to the aspect of enhancing the Gross Profit Ratio from 10.36% to 11.55%, learned CIT has considered the Gross Profit Ratio rate by working the formula, i.e. Gross Profit Ratio on sales X 100/100-GP on sales. By working out like this he arrived at 11.55% of Gross Profit Ratio on the total turnover of ₹ 1,00,79,633/-. By calculating the G.P. in that method and adding such amount to the undisclosed amount of ₹ 25,19,908/-, learned CIT reached the amount to be added back at ₹ 39,44,106/-. By doing so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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