SHRI VISHAL MADHUSUDAN CHOKSHI,AHMEDABAD vs. THE ACIT,(OSD), CIR.9,, AHMEDABAD

The assessee has raised the following grounds of appeal.

2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the rejection of book results disclosed by the appellant.

1 The Ld. CIT(A) has grievously erred in law and on facts in estimating GP at 22% and thereby making an addition of Rs. 66,08,953 as against book loss of Rs.42,26,870 declared by the appellant. The enhancement of income so made by CIT(A) was wholly illegal, unlawful and against the principles of natural justice.

2 Without prejudice to above and in the alternative, the estimation of GP and consequential addition made by CIT(A) were highly excessive and calls for substantial reduction .

1 The Ld. CIT(A) has grievously erred in law and/or on facts in confirming the disallowance of Rs. That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have confirmed the disallowance of Rs.18,000 u/s.40(a)(ia).

At the outset the Ld. Counsel for the assessee before us submitted that he had been instructed by the assessee not to press the confirmation of the addition made by the Ld.CIT (A) for Rs. 18,000/- Therefore, we dismiss the same as not pressed. Asstt. Year 2009-10 3

The only issue raised by the assessee against the confirmation of the addition made by the AO for Rs. 66,08,953/-on account of undisclosed receipts.

The facts of the case are that the assessee in the present case is an individual and engaged in the business of transportation under the name and style M/s Shreenath Transport company. The assessee in the year under consideration assessee has filed the return of income declaring loss of Rs. 53,28,582/- only.

The AO during the assessment proceedings found that the assessee during survey proceedings under section 133A of the Act has admitted the unaccounted receipt of Rs. 25 lacs from its proprietary concern and unaccounted receipt of Rs. 66.97 lacs on account of sale of the truck aggregating to Rs. 91.97 lacs only. But the assessee filed the return of income declaring loss. Accordingly, the AO rejected the loss claimed by the assessee and assessed the income at Rs. 91.97 lacs treating the amount described above as undisclosed income of the assessee.

The assessee carried the matter to the Ld.CIT (A) who rejected the books of accounts of the assessee and estimated the gross profit at the rate of 22% of the gross receipts. Accordingly, the total income was determined by the Ld.CIT (A) in the manner reproduced as under:

2 (c) (vi) In conclusion, the A.O’s treatment of disclosure of Rs.91.97 lakh is not correct as ‘income from other sources’. At this place, the A.O’s contention for rejection of books of accounts are upheld and through gross profit estimation, the income from appellant’s prop. business M/s Shreenath transport corporation under the head ‘profit’ & gains from business & profession was computed at Rs.10,09,752/-. This working is with the assumption that appellant’s disclosure of unaccounted receipt of Rs.25,00,000/- is already included in G.P. estimation since there was no correctness or complexness in such disclosure. Further, while computing this income, the appellant was allowed deduction of depreciation at Rs.91,82,343/- as per I.T. Act which inter alia is after considering the effect of appellant’s disclosure of Rs.66.97 lakh as ‘on money’ on sale of truck as per section 50 of the I.T. Act. The ground is therefore partly allowed.

Being aggrieved by the order of Ld.CIT (A) assessee is in appeal before us.

The Ld. AR before us filed a paper book running from pages 1 to 90 and submitted that the receipt on account of sale of Trucks could not be added Asstt. Year 2009-10 5

On the other hand the Ld. DR vehemently supported the order of authorities below.

We have heard the rival contentions and perused the materials available on record. From the preceding discussion, we note that the assessee has not challenged the rejection of the books of accounts. There remains no ambiguity that in the event of rejection of the books of accounts the only basis to determine the income is to estimate the profit on a reasonable basis.

1 Now the amount of gross profit as worked above needs to be reduced from the following items to arrive at the net profit: i. Administrative expenses Rs. 41,03,371.00 ii. Interest & finance charges Rs. 1,22,62,720.00 iii. Depreciation as per books Rs. 1,95,13,971.00 Total Rs. 3,58,80,062.00 Balance Net profit as per books Rs. -97,66,062.00 Asstt. Year 2009-10 6

2 Now the above profit as per books needs to be adjusted in the manner as below: Net profit as per books Rs. -97,66,062.00 Addition: addition as per computation of the assessee Rs. 2,03,78,776.00 1,06,12,714.00 Subtraction: Bank Interest Rs. 20,619.00 Dep as income tax Rs. 91,82,343.00 92,02,962.00 Balance taxable income: 14,09,752.00

3 From the above, it is clear that there was no addition made by the Ld CIT(A) on account of receipts from the sale of trucks. Thus once there was no addition made by the Ld.CIT (A) on account of sale of trucks as income of the assessee, there is no question of reducing the same from the taxable income of the assessee.

4 However, we note that the Ld.CIT (A) has worked out taxable income at Rs. 10,09,752/- as evident from its finding placed on page 25 of its order. But as per our calculation as mentioned above the taxable income works out at Rs. 14,09,752/- only. Thus the difference of Rs. 4 lacs is arising on account of a calculation error in the order of the Ld.CIT (A). As such the Ld.CIT (A) has made a calculation error inadvertently in determining the taxable income. The relevant finding of the Ld.CIT (A) is reproduced as under:

5 Accordingly we disagree with the allegation of the assessee that there is the addition of the receipts of Rs. 66,97,000/- on account of sale of trucks.

6 We also find pertinent to mention that, the Ld.CIT (A) has further omitted to make the addition of income of Rs. 26,59,824/- claimed by the assessee as other income. However, we find that the Revenue has not challenged the same by filing the appeal before us. Therefore we refrain ourselves from adjudicating the same.

7 In view of the above we hold that there is no infirmity in the order of the Ld.CIT (A). Hence we decline to interfere in the order of the Ld.CIT (A).

In the result appeal of the assessee is dismissed.

""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त(अपील) / The CIT(A)

"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण / DR, ITAT, 6. गाड" फाईल / Guard file. आदेशानुसार/BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.