9911796707
TMI Blog2011 (7) TMI 1348X X X X Extracts X X X X X X X X Extracts X X X X ..... ground raised in this appeal by the department reads as under :- On the facts and circumstances of the case, Ld. CIT(A) erred in canceling addition made u/s. 69A by directing estimated profit @ 10% of such undisclosed deposits despite conceding that the assessee had failed to prove genuineness of expenditure. 3. The assessee-company is engaged in the business of providing security services to various clients. It filed return for the assessment year under consideration declaring total income of ₹ 13,253/-, which was processed u/s. 143(1) of the Act. Subsequently, the case was reopened u/s.148 of the Act and assessment was completed u/s. 147/ 143(3) of the Act on a total income of ₹ 24,56,230/- making thereby addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee as well as A.O. had not furnished any comparable cases of rate of profit in similar line of business, though the assessee pleaded for taking net profit rate at 5% of the gross receipts. Considering the facts and circumstances of the case, ld. C.I.T.(A) estimated the rate of net profit at 10% on both disclosed and undisclosed receipts of the assessee and directed the A.O. accordingly. While doing so, ld. C.I.T.(A) observed as under :- I have carefully perused the impugned assessment order, submissions made and the judicial decisions relied upon by the ld. AR. I am convinced that the records and evidences in respect of transactions routed through undisclosed bank account are not properly maintained and perhaps that may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 2395973 2328601 Expenditure Cost of dresses 232837 10% 286000 12% Direct expenditure 1700972 71% 1963845 84% 1933179 2249845 The chart furnished by appellant itself shows that the ratio of direct expenses to gross receipts is quite higher in respect of undisclosed receipts and therefore the claim of the appellant ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly allowed. Being aggrieved, thus, the department has filed this appeal and the assessee has also filed cross objection. 5. At the time of hearing before us, the ld. A/R submitted that the entire deposit of ₹ 23,28,601/- made in undisclosed bank account maintained with HDFC Bank is not disputed by the assessee. The A.O. without considering the expenditure incurred for earning such undisclosed income, which was to the extent of ₹ 22,84,504/-, added back the entire receipts to the total income of the assessee u/s. 69A of the Act. He further submitted that in the succeeding assessment year, i.e. A.Y. 2007-08, profit @ 6% was considered by the same A.O. and, therefore, the addition should be restricted to 6% of the undisclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, to whom payment of ₹ 2,86,000/- in cash was made by the assessee for supplying dress etc. for security guards. However, that person did not appear nor the assessee could produce him before the A.O. despite several opportunities provided. The A.O. also issued summons u/s. 131 to ten security guards out of total 77 and except two persons, no one either appeared or traceable by the Inspector. According to the A.O. further, the assessee could not produce original bills or wage register and evidences in respect of indirect expenses claimed by the assessee. In the above circumstances, the A.O. held the expenditure claimed by the assessee as not genuine and thus added back the entire receipts of ₹ 23,28,601/- deposited in the undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been described on page-8 of ld. C.I.T.(A) s order. As rightly pointed out by ld. C.I.T.(A), if the action of A.O. in treating the entire receipts in undisclosed bank account as income of the assessee is considered to be correct, the rate of net profit of the disclosed and undisclosed portion taken together would be more than 50% of the gross receipts, which is unlikely in the line of business the assessee is carrying on, more so when the A.O. himself for A.Y. 2007-08 has taken the net profit of the assessee at 6%. Therefore, considering the totality of the facts and circumstances of the case, we find no infirmity in the order of ld. C.I.T.(A) in estimating the net profit @ 10% on the aggregate receipts of both the disclosed and undiscl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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