×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
1. This appeal, filed by the assessee, is directed against the order dated 29th March 2016 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2011-12.
2. In ground nos. 1,2, 3, 6 , 7 and 8, which we will take up together and which challenge the addition of Rs 55,00.016 (i.e. 62,95,108 addition made by the Assessing Officer minus relief of Rs 7,95,092 given by the first appellate authority) on account of estimation of the GP, the assessee has raised the following grievances:
1. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in confirming the action of the Ld. AO in rejecting the books of accounts under section 145(3) of the Income Tax Act, 1961.
2. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in partially confirming the action of the Ld. AO in estimating the sales by Rs.2,51,13,019/- on account of unaccounted credit sales.
3. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in confirming the gross profit rate of 20% instead of actual gross profit rate of 18.96% as shown by the assessee on the total sales declared by the assessee and also on unaccounted credit sales added by the Ld. AO totalling to Rs.7,10,24 538/-.
6. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in confirming the addition of Rs.50,00,000/- on account of "Seed Capital"
7. On the facts and circumstances of the appellant's case and under the law, the Ld. AO and Ld. CIT(A) has erred in making addition of unaccounted ales, gross profit and seed capital by completely ignoring the fact that income of Rs.2,19,47,722/- was offered for tax in computation of total income in pursuant to survey, that resulting into double taxation.
8. On the facts and circumstances of the appellant's case and under the law, the Ld. AO as well as Ld. CIT(A) has erred in not granting benefit of telescoping against the income quantified on "Income Theory" vis-a-vis "Application Theory".
3. So far as these grievances of the assessee are concerned, the relevant material facts are like this. The assessee before us is an individual carrying on the business of dealing in precious metals and ornaments in the name and style as “Mangalam Jewellers”. The assessee was subjected to survey proceedings on 28th October 2010. During the course of this survey, certain diaries were found indicating unaccounted credit sales. These diaries were impounded by the authorities. On the basis of the entire material and the books of accounts, the assessee offered to tax additional income of Rs 2,19,47,772. This amount was said to be worked out on the basis of application theory and consisted of (i) Rs.1,66,55,947/ - on account of stockdifference of Gold, (ii) Rs.8,23,860- on account of stock difference of silver (iii) Rs.62,429/- on account of stock difference of diamond, (iv) Rs.62,429/- on account of cash difference and (v) Rs.43,60,000- on account of debtors difference. The assessee filed an income tax return accepting this additional income. However, when the said income tax return came up for scrutiny assessment proceedings, the Assessing Officer, rather than examining the declaration based on the application theory, followed a different path, a more common and usual path infact, i.e. the income theory. What followed thereafter were a number of additions on different counts. One such addition was addition on account of estimated gross profit on estimated sales. The Assessing Officer noted hat the assessee had disclosed a total sales of Rs 4,59,11,519 on which gross profit of Rs 87,04,892 was shown. This gross profit which worked out to18.96% was much lower than last year’s gross profit rate of 23.20%. The Assessing Officer also noted that when unaccounted credit sale of Rs 2,51,13,019 is discovered, there must be unaccounted cash sales as well. As against sales of Rs 4,59,11,519, he estimated the sales at Rs 7,50,00,000 and applied the gross profit rate of 20% on entire sales. It was thus estimated that the actual gross profit should have been of Rs 1,50,00,000 as against disclosed gross profit of Rs 87,04,892. The balance amount of Rs 62,95,108 was added to the income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without much success. While learned CIT(A) did delete the gross profit in respect of estimated cash sales of Rs 39,75,462, which worked out to Rs 7,95,092, he confirmed the remaining addition. Learned CIT(A) also observed that “the contention of the appellant that he has already offered Rs 2,19,47,722 as un disclosed income, and, therefore, the GP addition is not warranted as it will amount to addition on both account, i.e. application of funds and income, is not tenable”. Itwas observed that “the AO has made GP addition on unaccounted sales only however addition on account of investment in corresponding purchase has not been