COMMISSIONER OF INCOME TAX vs. ALANKAR RADIO EQUIPMENTS

Whether Reporters of local papers may be allowed to see the judgment?

To be referred to the Reporters or not ?

Whether the judgment should be reported in the Digest?

After statutory notice under Section 158BC of the Act was served, block assessment return was filed by the respondent on 14.6.2000 declaring undisclosed income of Rs.13,26,380/-. The details of the said undisclosed income has been mentioned in the assessment order and clearly reflects that the respondent had declared undisclosed sales made by them during the assessment year 1996-1997 onwards and had computed the gross profit on the said sale at 1.86% as per seized document A-81, A-85, A-86 etc. In addition, the respondent had also declared undisclosed sale of Rs.11,73,128/- in respect of decks as per A- 2011:DHC:6445-DB Page 3 of 8

The Assessing Officer made four specific additions. First addition of Rs.15,92,601/- was made on account of undisclosed investment made for purchase of audio cassettes, which were recorded in the books of accounts during the period 1988-1989 till 1998-1999. The second addition of Rs.7,53,953/- was on account of undisclosed investment made for purchase of audio cassettes which were not recorded in the books of accounts. The third addition of Rs.11,10,134/- was by increasing the GP rate to 2.5% on undisclosed sales instead of 1.86% as declared by the 2011:DHC:6445-DB Page 4 of 8

The CIT (A) deleted the first addition of Rs.15,92,601/- and reduce the second addition to Rs.3,76,976/-. The GP rate was reduced from 2.5% to 2% and expenditure claimed of Rs.4,65,481/- was allowed. The last addition of undisclosed closing stock was deleted.

The respondent accepted the aforesaid order passed by the CIT (A) but the Revenue moved the Tribunal. By the impugned order Tribunal has dismissed the appeal with regard to the first contention, the GP rate as well as closing stock. However, the expenditure of R.4,65,481/- which had been claimed by the respondent for earning of undisclosed income of Rs.13,69,394/-, was reduced to Rs.2 lakhs. Thus addition to the extent of Rs.2,65,481/- on expenditure was upheld.

Accordingly, ultimately additions made in the case of the respondent are as under:-

After hearing counsel for the parties, we frame the following substantial question of law:- (i) Whether the order passed by the Tribunal dated 10.08.2006 is perverse and contrary to material in evidence on record?

Learned counsel for the appellant had rightly contended that the Tribunal had laid undue emphasis and stress on the retracted statement made by the respondent vide letter dated 12.2.2001, which was filed during the course of assessment proceedings in the case of M/s Super Cassettes Industry Limited. As noted above partner of the respondent Dipak Sethi had appeared in the course of proceedings on 11.10.2000 and had made a statement before the Assessing officer in the presence of his Chartered Accountant/Authorised representative. For the purpose of present appeal, we are treating and accepting that the statement made on 11.10.2000 as correct and can be relied. Whether or not the said retraction was justified or merits consideration will be examined, if 2011:DHC:6445-DB Page 6 of 8

As notice in the present case the assessee had surrendered Rs.13,26,380/- as undisclosed income for the block assessment period in the return filed pursuant to the notice issued under Section 158BC. This surrender is important and significant. Addition of Rs.3,76,000/-, Rs.2,65,481/- and Rs. 2,22,000/- (approx.) as noted above have been sustained by the Tribunal. The last addition which has been made on enhancement of GP rate of 1.86% to 2% is on the profit earned by the firm on the undisclosed sales of cassettes.

The Assessing Officer while making addition of Rs.15,92,600/- had computed the disclosed sales made in the assessment years 1998-1999 onwards and calculated undisclosed investment required in each assessment year. Undisclosed investment as computed was added. The total comes to the figure of Rs.15,92,601/-.

It is noticeable that the Assessing Officer did not take into account the fact that undisclosed investment made in one year is not distinct or separate and can be accounted/discounted for in the next years. It is noticeable that the respondent was doing business in the wholesale market 2011:DHC:6445-DB Page 7 of 8

With regard to the GP rate, the Assessing Officer in the assessment order had recorded that comparable GP in the similar trades was Rs.2.5%. 2011:DHC:6445-DB Page 8 of 8

With regard to the closing stock, the CIT (A) and the Tribunal have held in view of the addition already made, no further addition of Rs.2,46,047/- was required.

Keeping in view the aforesaid facts we are not inclined to accept the plea of the appellant and interfere with the order passed by the Tribunal. Sufficient and adequate additions have been made. The respondent had also cooperated by disclosing undeclared income of Rs.13,36,380/-, which is more than Rs.10,00,000/- declared as undisclosed income immediately after the search. The question of law is accordingly answered. The appeal is dismissed. No costs.