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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: HON’BLE SHRI V. DURGA RAO & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
सुनवाई की तारीख/ : 28-12-2021 Date of Hearing घोषणा की तारीख / : 03-01-2022 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal is in second round since the matter, in the first round vide order dated 10-04-2014, was remitted back to the file of Ld. CIT(A) to pass appropriate order on merits after considering the additional evidences filed by the assessee. Pursuant to the said directions, Ld. CIT(A) has passed order on 17-12-2018 partly allowing
- 2 - ITA No: 470/Chny/2019 the appeal of the assessee. Still aggrieved, the assessee is in further appeal before us with following grounds: -
1. The Learned CIT(A) is not justified in sustaining the addition to an extent of Rs. 15,91,319/- in the total addition of Rs. 30,79,288/- made by the AO.
2. In the course of appeal proceedings, on 26-11-2018 detailed written submissions was filed before CIT(A), in the above written submissions detailed facts were submitted in respect of credit balance in the account of M/s. Mahendra college of Engineering for Women to an extent of Rs.16,96,629/-. In the remand report of the AO to CIT(A), the AO has worked out the amount to be sustained in respect of the above credit balance at an credit of Rs.15,91,319/- which has been acted upon by CIT(A). In all fairness, CIT(A) should have considered all the submissions filed with him on 26-11-2018 and should not have sustained he above amount of Rs.15,91,319/-.
3. In view of the above grounds and other submissions to be made at the time of appeal hearing, the addition sustained to an extent of Rs.15,91,319/- may be deleted and justice rendered. As evident, the assessee is aggrieved by addition of Rs.15.91 Lacs as sustained by Ld. CIT(A). Having heard rival submissions and after considering the orders of lower authorities and in the light of material placed before us, our adjudication to the subject matter of appeal would be as under.
2. The assessee being resident firm stated to be engaged as wholesale Bookseller was assessed u/s 143(3) on 29-12-2011. It was saddled with addition of Rs.30.79 Lacs, being unconfirmed sundry creditor balances. The matter of addition reached up-to the level of Tribunal wherein the matter was restored back to the file of Ld. CIT(A) to consider additional evidences.
3. During set-aside appellate proceedings, the additional evidences submitted by the assessee were duly considered and subjected to remand proceedings. After considering the same, Ld. CIT(A) sustained
- 3 - ITA No: 470/Chny/2019 addition of Rs.15.91 Lacs against one party i.e. M/s Mahindra Engineering College. The same form subject matter of this appeal.
The assessee reflected debit balance of Rs.15.91 Lacs against this party as on 31-03-2008 for sale invoices raised by it on 31-03-2008. However, the actual sales and purchases in respect of these invoices were stated to have taken place during May, 2008. The assessee received cheque of Rs.15.91 Lacs from this party on 17-11-2008 and submitted that since actual transaction took place only in the year ended 31-03-2009, the above sales was not included in the accounts for the year ended 31-03-2008. The accountant of the assessee inadvertently did not include the above sales in the year ending 31-03-2009 since the invoices were dated 31-03-2008. In the above process, the sales for this year was understated to the extent of Rs.15.91 Lacs and closing stock was overstated to the extent of Rs.15.91 Lacs. However, Ld. AO, in the remand report, opined that the assessee did not furnish the documentary evidences to show that the purchases were accounted for. Further, the party confirmed that the books were purchased in financial year 2007-08 for which the payment was made subsequently. Lastly, the assessee did not account for purchases and sales for the books supplied to the party during financial year 2007-08 for which the assessee received payment in financial year 2008-08 and the same would be nothing but unaccounted income of the assessee. Considering the same, Ld. CIT(A) confirmed the additions. Aggrieved, the assessee is in further appeal before us.
After due consideration, the prima-facie fact that appear is that the assessee has failed to account for sales made to M/s Mahindra Engineering College during financial year 2007-08 as well as during
- 4 - ITA No: 470/Chny/2019 financial year 2008-09 and the profit earned by the assessee on these transactions has not been offered to tax. It is the observation of Ld. AO that the purchase as well as sales has remained unaccounted. In such a scenario, it is a fit case for estimation of income on unaccounted sales earned by the assessee. This is supported by the fact that the assessee has reflected Gross Profit rate of 7.28%, 6.99% & 6.90% during FYs 2007-08, 2008-09 & 2009-10 respectively. Adding entire sales to the income of the assessee would enhance the profit rate to unrealistic level of 13.94% which could not be held to be justified. Therefore, on the fact and circumstances of the case, we estimate profit rate of 7% on unaccounted sales of Rs.15,91,319/- which comes to Rs.1,11,392/-. The same would be added to the income of the assessee whereas the balance addition stand deleted. The Ld. AO is directed to recompute assessee’s income in terms of our above order.
The appeal stand partly allowed in terms of our above order.
Order pronounced on 03rd January, 2022.