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TMI Blog2019 (4) TMI 2172X X X X Extracts X X X X X X X X Extracts X X X X ..... ed sales. In the result, this ground of the assessee is allowed in part.
Disallowance u/s 40A(3) of the Act and Section 40(a)(ia) made when profits have been estimated as a percentage of turnover - HELD THAT:- We delete the disallowance made u/s 40A(3) and 40(a)(ia) of the Act as in this case, as the income has been estimated by the Assessing Officer. Hence, we allow this ground of the assessee.
Taxation of excess stock found by the revenue during the course of survey - HELD THAT:- We direct the AO to tax only the gross profit embedded in the excess stock found for the Assessment Year. The balance addition is hereby deleted. In the result this ground of the assessee is allowed in part. X X X X Extracts X X X X X X X X Extracts X X X X ..... . First Appellate Authority granted part relief. 4. Further aggrieved the assessee is in appeal before us. 5. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 6. The first issue that arises for our consideration is whether the Assessing Officer was right in adopting the gross profit of suppressed sales as the income of the assessee, instead of the net profit on such suppressed sales. The undisputed fact is that the assessee had suppressed sales. The ld. Counsel for the assessee relies on the judgment of the Bombay High Court in the case of CIT vs. Shri Hariram Bhambhani in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en held as follows:- "In the process the High Court has failed to notice that even that aspect of not filing Form No. 15J is kept aside, in the present case, the income of the assessee on the total contract receipts of ₹74,81,106/- had been reached at by applying the net rate of profit after reduction and, thus, no further addition could be made under Section 40(a)(ia) of the Act. This is the reason which is rightly ascribed by the Commissioner of Income Tax (Appeals) to the order." 7.1. No contrary decisions is brought to our notice by the ld. D/R. Under such circumstances, we delete the disallowance made u/s 40A(3) and 40(a)(ia) of the Act as in this case, as the income has been estimated by the Assessing Officer. Hence, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following observations :- "The assessee's appeal before the Commissioner (Appeals) failed and by an order of August 25, 2014, the assessment order of March 28, 2013 was upheld. The Commissioner looked into the facts, the statements made by or on behalf of the assessee and the books of the assessee that had been looked into at the time of survey which the assessee subsequently claimed had been lost or destroyed and, in respect whereof, no complaint had been lodged by the assessee. On facts, the Commissioner (Appeals) found no grounds to interfere with the quantum of excess stocks discovered by the assessing officer in course of the survey. The Commissioner also agreed with the assessing officer as to the quantum of income which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Appellate Tribunal in disregarding the physical verification of the stocks carried out by the Assessing Officer. Further, the area of the godown as indicated in the FCI certificate was of no consequence since the Assessing Officer found stocks piled outside the godown at the time of the survey. Accordingly, to the extent that the Appellate Tribunal accepted the quantum of additional stocks on the basis of the certificate issued by the concerned FC! official, such order is unacceptable and is set aside. The order of the Commissioner (Appeals) in such regard is restored. The additional quantum as discovered during the course of the survey operation win fasten to the assessee. However, the other aspect of the matter was dealt with by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income for tax to be assessed on such basis. Such view of the Appellate Tribunal does not call for any interference. Accordingly, ITAT NO.196 of 2015 and GA No. 4047 of 2015 are disposed of by modifying the judgment and order of the Appellate Tribunal dated June 30, 2015 as indicated. There will be no order as to costs." 16. The coordinate Bench of this Tribunal held as follows :- "5. Now comes the equally Important question as to whether the- entire discrepancy in stock addition or only the profit element embedded therein is to be considered for the impugned addition. We find this issue to be no more res integra as co-ordinate bench of this tribunal in M/s Subarna Rice Mill vs. ITO ITA No. 1781/Kol/2014 decided on 30.06. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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