M/S.IMS,MUMBAI vs. DY.CIT CENTRAL CIRCLE-3(2), MUMBAI

O R D E R PER S. RIFAUR RAHMAN (AM)

“1. The learned Commissioner of Income Tax (Appeals) — 51, Mumbai [CIT(A)] erred in confirming the addition on account of unaccounted sales amounting to ₹.11,68,260.

(A.Y: 2014-15) M/s. IMS Your appellant submits that the aforesaid un-accounted cash sales is considered by the appellant at the time of filing of return of income for A.Y. 2016-17. Your appellant submits that the aforesaid addition will amount to taxing the same income twice. Your appellant submits that under the facts and circumstances of the appellant's case, the aforesaid addition is bad-in-law, illegal and ought to be deleted.

2. Without Prejudice to the above, The learned CIT(A) erred in confirming the entire addition on account of un-accounted sales amounting to ₹. 11,68,260 as against the Gross Profit Percentage on the said sales. Your appellant submits that the Assessing Officer ought to have restricted the addition to the extent of Gross Profit percentage i.e. 7% of the un-accounted cash sales.

3. Your appellant craves leaves to addto, alter, amend or vary all or any of the of aforesaid grounds of appeal as they/their representative may deem fit.”

(A.Y: 2014-15) M/s. IMS Heard Ld. DR and perused the material placed on record, orders of 5. the authorities below. On perusal of the order of the Ld.CIT(A), we find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and sustained the addition made by the Assessing Officer. While holding so, the Ld.CIT(A) observed as under: - “5.1. I have considered the facts of the case, submissions and contentions of the appellant, as also the order of the AO. It is observed that survey action u/s 133A was conducted by the Investigation Wing on IMS group on 26.11.2015, wherein various unaccounted sales transactions were unearthed. The amount of unaccounted sales transactions for the relevant year was of ₹.11,68,260/-. In course of the assessment proceedings, the assessee was. asked to explain as to why the said amount of unaccounted sales should not be added to its total income. In response --the assessee submitted that the unaccounted sales were incorporated in the regular - books by taking accommodation sale entries in AY 2016-17 and therefore, it was contended that making an addition in the relevant year will result into double addition of the same amount. However, this explanation of the assessee was not accepted and the AO proceeded to make an addition of Rs 11,68,260/- being the amount of unaccounted sales. 5.2 In the appellate proceedings, the ‘assessee ‘submitted that it ‘had made unaccounted cash sales during the relevant year to’ certain Doctors and Medical Stores due to commercial expediency. However, subsequently - it obtained accommodation entries of sales and incorporated the said cash sales in its regular books in the year relevant to AY 2016-17.-Accordingly, it was contended by the assessee that the action of the AO of making an addition of the said amount in the relevant year is incorrect since it will amount to double taxation considering that the amount of the said unaccounted sales have been included in the year relevant to AY 2016-17. 5.3 It was further submitted by the assessee that at the time of carrying out the transactions of the said unaccounted sales in the relevant year, it had not reduced its stock and the stock was reduced only when the accommodation entry of sales was availed in the year relevant to AY 2016-17. Therefore, without prejudice to its (A.Y: 2014-15) M/s. IMS contention that no addition should be made in the relevant year, the assessee made an alternate contention that an addition of only the gross profit on the said unaccounted sales can be made. 5.4 The contentions of the assessee have been duly considered. The contention of the assessee that the said amount of unaccounted sales of Rs 11,68,260/has been offered in AY 2016-17 and therefore, no addition should be made. in. the relevant year is not acceptable considering the undisputable fact that the said unaccounted sales have been made in the relevant year and therefore have to be considered for addition only in the relevant year. As regards the alternate contention of the assessee that addition of only the -gross profit arising from the said unaccounted sales can be made, the same. is also not acceptable considering: that no evidence has been furnished by the assessee to demonstrate that the stock was not reduced in the relevant year on account of the said unaccounted sale transactions. It is also noted that to substantiate its claim that the - stock-of the relevant year was not reduced on account of the said. unaccounted sales and the stock was only reduced when the accommodation entry for sales were availed in AY 2016-17, the assessee has not furnished the stock register of the relevant year and for the year relevant to AY 2016-17 either in the assessment proceedings or in the appellate proceedings. Therefore, no infirmity is found in the action of the AO in making the addition of ₹.11,68,260/ - being the unaccounted sales of the relevant year. Accordingly, all the grounds of appeal are dismissed.”

6. On a careful perusal of the order of the Ld.CIT(A) and the reasons given therein, we do not find any reason to interfere especially when there is no representation from the assessee side. Accordingly, appeal filed by the assessee is dismissed.