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TMI Blog2020 (2) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... milar type of business not maintaining any books of accounts and also considering the fact that the Ld. A.O in assessee s own case has accepted the net profit @5%, it will not be justified to apply 8% net profit rate for subsequent assessment years even when the turnover has almost doubled. Net profit rate of 5.24% shown by the assessee for Assessment Year 2008-09 should be accepted and the same should be applied for Assessment Year 2009-10 also. By application of net profit rate of 5.24% for Assessment Yea 2008-09 and 2009.10 on the declared turnover of 2,72,27,334/- and 2,14,68,304/-, net profit subject to tax will works out to 14,26,712/- and 11,24,940/-. In the result as regards the first common issue, appeal of the assessee for Assessment Year 2008-09 stands allowed Undisclosed income - statement recorded during survey proceedings relied upon - HELD THAT:- we observe that the corroborative evidence found during the course of survey have already been taken into account for computing the net profit of the assessee for Assessment Year 2009- 10. Revenue authorities failed to correlate the addition of 2,00,000/- with any corroborative evidence. Thus the addition seems to be made pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or delete any ground or grounds during the hearing of appeal. ITANo.1326/Ind/2016 Assessment Year 2009-10 1. That the CIT(A) was wrong in upholding and confirming the order of the learned Assessing Officer by applying Net Profit @ 8% instead of 5.3%% on total receipts of ₹ 21468304/-. The same is highly excessive and should be accepted in particular line of business. 2 The Ld. CIT (A) erred in holding that the provision of section 44 AB are inapplicable and determining income of the assessee on NP rate. In case if books have been rejected the profit should be applied on the basis of surrounding circumstances or the profit taken by other assessee. 3 That the Ld. CIT (A) erred in confirming the addition of ₹ 1213086/on account of net profit rate and therefore the addition of ₹ 1213086/- should be deleted. 4 The Ld. CIT (A) has erred in upholding the addition of ₹ 200000/- as undisclosed income against estimated profit, whereas the said amount was available with the assessee from business income. 5 That the learned CIT(A) has erred in confirming the addition of ₹ 723724/- for the A.Y. 2008-09 and ₹ 1413086/- for AY 2009- 10which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit rate @ 8% assuming that the assessee had taken contract for providing Road Construction Material and his income is contractual receipts. The finding of the Ld AO is contrary to records in view of following facts. •At the time of survey and the statement taken he has specifically mentioned that he is engaged in purchase and sales of petroleum products and also doing sub contractor ship for main contractor and sales of Oil. PB 32-33 •The audit report produced at the time of assessment also indicate the sales figure of ₹ 21468304(copy of audit report enclosed. 55 •That in earlier years relevant to A.Y. 2005-06 and 2006-07 the assessment completed u/s 143 (3)/147 the Id AO applied net profit @ 5 specifically mentioned in the assessment order that assessee is engaged in purchase and sales of petroleum products. copy of order for the year 2005-06 and 2006-07 enclosed. 40 •Even in the relevant A.Y. on last para of the assessment the LD AO also mentioned that few bill of sales were found. •In fact the assessee in his statement has admitted that he earned net profit @5.The relevant portion of the statement is reproduce as under; In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) CIT Vis Popular electric Company 2003 ITR 630 Even assuming that assesses is also doing sub contractor and doing petty contract the net profit rate @5 is justifiable in View of various decisions. As held: In case of Deputy Commissioner of Income tax Vs Allied Construction (2007)106 lTJ 0595(SB)(2007) 105 ITO 0001(SB); (2007)11 SOT 0101(SB) 4.6 Statement taken on oath 133 A 3 at the time of survey cannot be conclusive proof The learned AO as well as CLT(A) both of them have relied on the statement made under section 133A(3)(iii) /131 and applied net Profit Without brought any corroborative material or evidence. The learned AO has not brought any corroborative material or evidence which suggest that the assessee earned more profit .He made addition of ₹ 12,13,086.00 on account of net profit and ₹ 200000 as undisclosed sources Reference may be made from the following decisions: i)CIT V S. Kader Khan 352 ITR 480 (SC) held that section 133A does not empower any income tax authorities to examine any person on oath .hence any such statement has no evidentry value and any admission made during such statement cannot ,by itself ,be made not a conclusive piece of evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of ₹ 2 back as undisclosed sources, as not mentioned particular head/investment for which the undisclosed income of ₹ 2 lack was, related to, no bifurcation or finding was given he simply relied on the statement taken on oath and made addition which was also confirmed by the Ld CIT (A). Even assuming without admitting that the assessee is liable for income which has been declared by him at the time of survey the deduction should have been allowed because justice demand that addition on account on various components needs to be harmonised. Reference may be made from following decision. (a) Addl. CIT V. Dharam Das Agrawal (1983) 144 ITR 143 (MP) (b) CIT V. K.S.M. Guruswami Nadar & Sons (1984) 149 ITR 127 (Mad) (C) Addl. CIT V. Mohan Engg. Co. (1985) 151 ITR 571 (Pat.) (d) The Hon'ble ITAT Indore in case of Sunil Kumar Soni Ujjain V. Income tax Officer Ujjain Reported in (2007) 8 ITJ 449 Held Undisclosed Investment - u/s 69 r/w section 133 A of the Income tax Act, 1961 - Undisclosed income of ₹ 5 Lacks disclosed during survey relating to various discrepancies found during survey - AO making further addition for profit on undisclosed sales and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Salecha [2002] 256 ITR 730 (RAJ.)] b.United Chemical Agency v. ITA [1974] 97 ITR 14 (ALL.) c.Dr. Vijay Pahwa v. Samir Mukhopadhyay, Dy. CIT [1995] 129 CTR 64 (Cal.) N.K. Mohnot v. Dy. CIT [1995] 215 ITR 275 (Mad.) d.Gheru Lal Bal Chand v. ITA [1982] 137 ITR 190 (P & H) e.United Chemical Agency v. R.K. Singh, ITa [1974] 97 ITR 14 (Ail.) Venkateshwara Tourist Home (P.) Ltd. v. Asstt. Director [1998] 233 ITR736 (Kar.) f.Ram Saroop Pawan Kumar v. ITO [1980] 125 ITR 603 7. Ld. Counsel for the assessee vehemently argued supporting the orders of both the lower authorities. 8. We have heard rival contentions and perused the records placed before us. Following two issues needs to be adjudicated in the instant appeal. (i) Whether Ld. CIT(A) was justified in confirming the action of the Ld. A.O of applying Net Profit @8% as against Net Profit @5.24% and 2.34% declared by the assessee in the Income Tax Return for Assessment Year 2008-09 and 2009- 10. (ii) Whether Ld. CIT(A) was justified in confirming the addition of ₹ 2,00,000/- for Assessment Year 2009-10 made by Ld. A.OP on the basis of the statement given during the course of survey conducted u/s 133A of the Act. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y books of accounts were maintained nor returns were filed. The gross receipts were calculated on the basis of receipts appearing in the bank statement held by the assessee in Axis Bank. 12. Now in the given facts whether the Ld. A.O is justified in applying 8% net profit rate needs to be dealt with. In the assessment completed u/s 143(3) of the Act for Assessment Years 2006-07 and 2007-08, we find that on the undisclosed turnover the Ld. A.O has computed net profit @5% and has also not disturbed the profit shown by the assessee @5% on the disclosed turnover. Though the estimation of net profit rate on turnover of the gross receipts of the assessee depends on various facts and circumstances and case to case basis but looking to the "Rule of consistency" wherein the assessee is carrying out the similar type of business not maintaining any books of accounts and also considering the fact that the Ld. A.O in assessee's own case has accepted the net profit @5%, it will not be justified to apply 8% net profit rate for subsequent assessment years even when the turnover has almost doubled. 13. We therefore are of considered view that net profit rate of 5.24% shown by the assessee for As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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