9911796707
TMI Blog2022 (12) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... n rectification order u/s 154 passed by Ld. CIT(A) in granting credit of additional income declared by assessee while filing return of income - CIT(A) on filing application under section 154 of the Act by assessee on account of additional business income, granted credit of such additional income. The ld CIT(A) thus, granted set of income, which was voluntarily offered by the assessee in response to notice under section 153A, to which the assessee is legally eligible. Thus, we do find any reasons for interference in the order passed by Ld. CIT(A). Hence, ground No.5 6 of Revenue s appeal is dismissed. - IT(SS)A No. 71 to 74/SRT/2021 And IT(SS)A No. 77 to 80/SRT/2021, ITA No. 172 And 175/SRT/2021 - - - Dated:- 21-12-2022 - SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER For the Assessee : Shri Rasesh Shah, C.A For the Revenue : Shri Ashok B. Koli, CIT-DR Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This set of ten appeals / cross-appeals by single assessee as well as Revenue are directed against separate orders of ld. Commissioner of Income-tax (Appeals)-4 Surat [for short to as Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted job receipts of Rs. 14,569,15,553/- as income from the year under consideration. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the net profit rate of 5% would be reasonable without appreciating the fact the Assessing Officer has made the estimation of profit after comparing the gross profit rate disclosed by the group concerns and other concerns engaged in the similar line of business and also considering the essential expenses required to be incurred by the ae in this line of business. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in placing reliance on certain judicial pronouncements for estimating the profit without appreciating the overall facts of the case and modus operandi of earning unaccounted income unearthed during the course of search proceedings and elaborately discussed by the Assessing Officer in the assessment order. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in entertaining the rectification application under Sec. 154 of the Act filed by the ae and allowing the claim of set off of the income of Rs. 31,00,005/- claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch action, certain incriminating documents related with the assessee were also found. Consequent upon search action, notice issued under section 153A dated 30.12.2015 was served upon the assessee. In response to notice under section 153A, the assessee filed its return of income for AY 2011-12 on 23.06.2016 declaring taxable income of Rs. 2.07 crores. The Assessing Officer after serving notice under section 143(2)/142(1) proceeded for assessment year under consideration. During the assessment, the Assessing Officer noted that assessee is engaged in the business of job work of dyeing and printing of textile fabrics of Sumeet Group. The Assessing Officer compared the job work furnished by the assessee with the incriminating material / evidence retrieved from purchi software, which were installed in the computer system of assessee and noted that there was huge difference of expenses of job work entered into purchi software of Rs. 15,04,36,907/-. The Assessing Officer from the data retrieved from the system prepared a summary of such difference. On the basis of such discrepancies and differences, the Assessing Officer issued show cause notice to the assessee why addition of such differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing work carried out by the assessee. The process of cycle runs through lot allotment, lot marketing, stitching, drum/jet process, setting on stanter, folding, batching, printing, loop for colour fix session, washing etc. During the process cycle, until the process results are not received as per desired outcome it is reprocessed again and again. For reprocessing entry has to be made in Purchi software until final job bill is not made. After final output as per required design and print is arrived and approved by customer, job bill is prepared for 100 metre of grey work and final product is then dispatched which is finally recorded in FAS software. The assessee claimed that if there is unaccounted job work done by the assessee then there would have been some unaccounted investment in the form of stock or other raw material, which would have been found during the course of search /survey proceedings. However, the exact stock tallied with the regular books maintained by assessee and prayed for deleting the addition. The ld. CIT(A) recorded that on considering the contention of assessee, it is clear that the data found stored in file of Purchi software does not match with the regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... io from A.Y. 2010-11 to 2015-16 held that the average net profit in all the years is 3.77%. The ld. CIT(A), accordingly restricted the addition of suppressed job work to the extent of 5% of suppressed job charges. 10. The Ld. CIT(A) rectified his order dated 26.07.2021 by filing application of assessee under section 154 of the Act. The Ld. CIT(A) while rectifying his order dated 26.07.2021, directed the Assessing Officer to allow set off of income of Rs. 31 lakhs shows in the return of income filed in response to notice issued under section 153A of the Act. Aggrieved by the order dated 26.07.2021 and rectification order dated 05.08.2021, the Revenue has filed appeal before the Tribunal. The assessee has filed cross appeal against sustaining the addition to the extent of 5% of unaccounted job work receipts. 11. We have heard the submissions of both the parties on merit. The ld. CIT-DR for the Revenue submits that during the course of search action conducted on 19.02.2015 in the group cases of Sumeet Industries Ltd. of Surat and huge incriminating evidence related to unaccounted job work receipt were found during said search action and statement of Dinesh Agarwal, accountant an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous and subsequent year, the assessee was only 1.82% and the addition, if any, has to be restricted only to such gross profit and not the substantial part of alleged transaction. 14. In second alternative submission, the Ld. AR for the assessee submits that in assessees group cases in Sitaram Prints Private Limited, which was also covered in the same search action, the Assessing Officer on a similar transaction made addition @ 20% of alleged unaccounted job work receipt, however, on appeal before Ld. CIT(A) the similar addition was restricted to 5%. And on further appeal before Tribunal in IT(SS)A No(s). 67-68/SRT/2021 and ITA No. 157/SRT/2021 in the case of Sitaram Prints Private Limited Vs. DCIT, dated 17.08.2022, the action of CIT(A) in those appeals was upheld. So the issue raised in all the appeals / cross appeals are covered. 15. In rejoinder Ld. CIT-DR for the Revenue submits that order of Tribunal in the case of Sitaram Prints Private Limited (supra) is not helpful in the present set of appeals filed by assessee. As in those cases, the Revenue has not filed appeal before Tribunal due to low tax effect. And the order of Ld. CIT(A) was upheld for the reasons that H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was of the view that there are two different set of data related to job works maintained in the computer and data maintained in Purchi software is not accounted in the books of account. The Assessing officer disallowed 20% of receipt of unaccounted job work by treating as 20% profit of such unaccounted job work. 10. As noted above, before the ld. CIT(A), the assessee has filed detailed written submission. The ld. CIT(A) after considering the submission of assessee noted that it is clear that the data found stored in file of Purchi software does not match with the regular books of account, thus the Assessing officer has proved beyond doubt with detailed discussion in the assessment order that the data recorded in this file remains unaccounted. The documentary evidences in the form of invoices and job bills found, there were several differences between these documents, which the Assessing Officer has narrated in detail in the assessment order. The entries have been made from about 50 parties by the DDIT (Inv.) to verify the contention of assessee about reprocessing work from whom enquiries were made, but no one had stated that they have given any reprocessing work to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ld. CIT(A). Therefore, we do not find any justifiable reason to given further relief to the assessee. 13. In the result, this appeal of is dismissed. 17. In the present set of appeals, Ld. CIT-DR for the Revenue specifically argued that in case of Sitaram Prints Private Limited (supra) there was no cross-appeal filed by Revenue for the want of tax effect, therefore the Tribunal was unable to enhance the ratio of disallowance restricted by Ld. CIT(A). We find that the Ld. CIT(A) while restricting the addition to the extent of 5% of alleged unaccounted job work receipt followed by the decision of Hon'ble jurisdictional High Court in the case of President Industries (supra), wherein it was held that on the issue of suppression of said consideration only the addition to the extent of profit element may be made . We are also of the view that wherein there is no fool proof of evidence of unaccounted sales or independent material to substantiate such allegation, only profit element to avoid the possibility of revenue leakage is sufficient to meet the ends of justice and not the substantial part of the disputed transaction. Therefore, we are not inclined to enhance the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the rival submission of both the parties and have gone through the order of ld CIT(A) carefully. We find that there is no dispute that assessee while filing return of income under section 139(1) on 27.09.2011 declared income of Rs. 1.76 crores. However, in response to notice under section 153A the assessee offered / declared income at Rs. 2.07 crores. Thus, the assessee offered additional income of Rs. 31 lacks and case of assessee is that there was voluntary disclosure of undisclosed business income and was eligible for telescoping of such income. We find that only issue in the assessment order was with regard to unaccounted job work receipt. The addition was made on account of estimated profit of unaccounted job work receipt. Initially, Assessing Officer made addition @ 20% of such impugned unaccounted job charges. On appeal, which was restricted @ 5% of the total disputed unaccounted job work receipt by Ld. CIT(A). We find that Ld. CIT(A) on filing application under section 154 of the Act by assessee on account of additional business income, granted credit of such additional income. The ld CIT(A) thus, granted set of income, which was voluntarily offered by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
