SUPER INDUSTRIES,VADODARA vs. THE DY. CIT, CIRCLE-2(2), VADODARA

The assessee has raised the following grounds of appeal: 1. The learned CIT(A) erred both on facts and in law in upholding the order passed under Section 143(3) read with Section 254 by the Assessing Officer, without justification, as no defects in the books of accounts maintained by the appellant were found under Section 145(3), which were also audited under Section 44AB of the Act.

The learned CIT(A) erred on facts and in law in upholding the order passed under Section 143(3) read with Section 254, without appreciating that transactions recorded in the regular books of accounts are not incriminating material unless contrary evidence is found during the course of a search regarding what was recorded in the books

The learned CIT(A) erred on facts and in law in upholding the order passed under Section 143(3) read with Section 254, without making any inquiry with the parties from whom the amounts were received through proper banking channels.

The learned CIT(A) erred on facts and in law in confirming the assessment order passed under Section 153A read with Section 254, making additions to the returned income, without appreciating that the assessment under reference was a completed assessment and no incriminating material was found during the search action in the case of the appellant for the assessment year under reference. No addition ought to have been upheld in the absence of any incriminating material, as held and affirmed by the Hon’ble Supreme Court in PCIT vs Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC).

The learned CIT(A) erred on facts and in law in confirming the action of the Assessing Officer in estimating undisclosed turnover at Rs.16,80,367/-, without any evidence of such undisclosed turnover in the seized material, while the disclosed turnover itself was higher than the amount estimated by the Assessing Officer from the books of accounts.

The learned CIT(A) erred on facts and in law in confirming the action of the Assessing Officer in estimating a gross profit rate of 28% on the alleged undisclosed turnover of Rs.16,80,367/-, without any basis. 3. A search and seizure operation under Section 132 was conducted at the business and residential premises of the Union Petrochem Group, including the assessee-firm and its partners, Shri Suresh B Rathod and Shri Ajay Mehta. Voluminous incriminating material, including collection books and cash books, was seized. The Assessing Officer issued a notice under Section 153A, requiring the assessee to file returns for six assessment years preceding the search. The assessee filed the returns in response to the notice, declaring the same income as in the original returns (Rs.3,53,360/-), thereby disclosing nil additional income. The Assessing Officer passed the assessment order under Section 153A(B)

Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the learned CIT(A), who dismissed the appeal ex parte.

At the outset, both parties fairly agreed that the core issue pertains to the gross profit rate of 28% applied on the alleged undisclosed turnover of Rs.16,80,367/-, resulting in an unwarranted addition of Rs.4,70,503/-, without pointing out any defect in the audited accounts under Section 44AB, and without citing any comparable case in a similar industry where such gross profit was earned. Both parties submitted that, in applying a hypothetical gross profit rate, the rate of 28% on the alleged undisclosed turnover may be reduced to 23%. We find this proposition acceptable and direct the Assessing Officer to adopt a gross profit rate of 23% instead of 28% for the purpose of assessment.

In the result, the appeal of the assessee is partly allowed for statistical purposes.