SAKARIYA METAL ROLLING MILLS,ODHAV, AHMEDABAD vs. ITO WARD 3(3)(5), AHMEDABAD, AHMEDABAD

The appellant, a partnership firm, has challenged the appellate order on two grounds: (i) validity of the notice issued u/s. 143(2) of the Act is challenged on the ground that notice is not in the format prescribed by the CBDT, (ii)

In the course of hearing of the appeal, the appellant’s counsel did not press ground of appeal no. 1. Thus, this ground of appeal no. 1 is dismissed as not pressed.

With regard to ground of appeal no. 2, the facts in brief are as under.

In the course of survey at the premises of the appellant, certain loose papers and discrepancies in accounts were noticed. In the statement of one partner of the assessee firm recorded during the course of survey proceedings, it was admitted that certain job work transactions were recorded at loose paper and income from such transactions could be determined from such records after taking into account expenses part whereof may also have remained un-recorded. The Assessing Officer made an addition of Rs. 1,82,97,641/- being the value of transactions found in the loose papers.

In appeal, the ld. CIT(A) after scrutinizing the details found that the correct total of the loose papers comes to Rs. 1,70,48,289/- which includes opening balance as on 01-04- 2013 of Rs. 23,90,140/-, and cheque/bank entries of Rs. 10,20,000/-. The correct un-recorded amount according to ld. CIT(A) was thus Rs. 1,36,38,149/-. It was the appellant’s contention that the total of the transaction value could only 2 be taken as the receipt and appropriate portion thereof may only be brought to tax as income of the appellant. The ld. CIT(A) noted that the decision of the ITAT Ahmedabad Bench, in the appellant’s own case for assessment year 2015-16 in ITA No. 34-Ahd-2019, had directed the Assessing Officer to tax the amount of gross profit embedded in the transactions discovered in that assessment year. The CIT(A) estimated profit to be 8% of the cash transactions discovered in the loose papers. By applying that percentage to the total amount of Rs. 1,36,38,149/- the appellant’s income was worked out at Rs. 10,91,052/- and the balance addition of Rs. 1,72,06,589/- was deleted.

Before us, the appellant’s counsel did not produce any details or documents to suggest a different rate of profit attribution to be more appropriate and merely submitted that the profit rate may be fixed at a lower rate.

We have considered the facts of the case, the appellant’s submission and the decision of the ld. CIT(A) in the impugned order. In our opinion, the ld. CIT(A) has acted judiciously and reasonably in ascertaining the correct amount that should attributed to loose papers and in determining the profit by applying a reasonable rate of 8%. We see no reason to make any alteration to the decision of the ld. CIT(A) and confirm the same. Ground of appeal no. 2 raised by the appellant is dismissed.

In the result, the appeal filed by the assessee is dismissed.