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TMI Blog2018 (1) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment years and adopt the same ratio on the undisclosed turnover as well. The order of CIT(A) is modified to that extent. Entire unexplained turnover brought to tax - Held that:- Bringing to tax the entire turnover is not correct. Even the case law relied on by assessee before the Ld.CIT(A) supports the view that only profit/income can be brought to tax, not the entire turnover. Keeping that in mind, we agree with the findings of CIT(A) to the extent that the accrued turnover cannot be brought to tax. Revenue grounds are accordingly considered partly allowed Addition of amount paid in cash - Held that:- Why AO brought this amount to tax in all the assessment years is not understandable. We have perused the show cause notice. There is only one payment determined by the Excise Authorities and accordingly, we are of the opinion that addition of ₹ 10 Lakhs in each of the assessment years is not correct. Therefore, assessee’s grounds on this issue are allowed - 881/Hyd/16, 882/Hyd/16, 883/Hyd/16, 884/Hyd/16, 913/Hyd/16, 914/Hyd/16, 915/Hyd/16, 916/Hyd/16 And C.O. Nos. 52, 53, 54 And 55/HYD/2016 - - - Dated:- 12-1-2018 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. Further, the show cause notice indicated, vide para 40.3, that assessee paid an amount of ₹ 10 Lakhs vide TR-6 Challan dt. 23-09-2011 towards Central Excise Duty. AO holding that to be a cash payment, added the amount in all the impugned assessment years. Thus, the assessments were completed by the AO and raised the demands. 3. Aggrieved, assessee preferred appeals and submitted that entire turnover cannot be brought to tax. Even though assessee relied on the decision of CIT Vs. Kamdhenu Steel Alloys Ltd., [248 CTR 33] (Delhi) that mere demand of duty under another law cannot be the ground to include the same in assessment under the I.T. Act, assessee mainly submitted that entire turnover cannot be brought to tax and only income can be brought to tax and relied on various case law as stated in paras 6 7 of the written submissions before the CIT(A). Accepting the contentions, Ld.CIT(A) directed the AO to estimate the income at 6.2%, stated to be average of the impugned years profit on the gross turnovers. While giving relief on the issue of addition of turnover, Ld.CIT(A), however, confirmed the other addition of unaccounted purchases in AY. 2008-09 and payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed sales'. Assessing Officer also accepts it to be part of Turnover. And the expenditure has been presumed by the assessing Officer, to have been allowed fully. However no analysis has been made between the expenditure allowed with such turnover. Since no comparative analysis has been done, the unaccounted sales of ₹ 6,32,75,760/- has to be taken sales. The average of 5 years from 2007-08 to 2010-11, works out to be 6.2%. Hence, this turnover income has to be taken as part of sales and profits to be calculated on average net profit at 6.2%. The unaccounted Sales Turnover to be calculated and then to be offered as the income for relevant the financial years. Ground partly allowed . 7.1. First of all, how these percentages have been arrived at has not been stated and AO has not examined the rate of profit earned in the respective assessment years. The order of CIT(A) states that average of five years is taken, whereas the average is taken only for four years. In our opinion, the adoption of average over four years may not result in assessment of correct incomes in respect of that year. Either CIT(A) should have directed to adopt the same ratio or should hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that only profit/income can be brought to tax, not the entire turnover. Keeping that in mind, we agree with the findings of CIT(A) to the extent that the accrued turnover cannot be brought to tax. Revenue grounds are accordingly considered partly allowed. The Cross-Objections on this are accordingly dismissed. 7.4. Coming to assessee s appeal in AY. 2008-09, there is an addition of ₹ 26,25,220/- towards unaccounted purchases. Even though Ld.CIT(A) stated that ground is not pressed, assessee s Counsel informed that both the issues were contested in ground Nos. 2.7 to 2.9. Therefore, assessee has not consented for withdrawal of ground. It was submitted that assessee had unaccounted turnovers and also unaccounted purchases, therefore addition of unaccounted purchase alone is not warranted. As seen from the show cause notice, the Central Excise Authorities have quantified the turnover based on various inputs like fund flow into various bank accounts etc., AO has not made out any case in those lines, but the entire turnover was brought to tax. Once the turnover was brought to tax, any unaccounted purchases pertaining to that turnover would get adjusted in the same. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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