ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SAMBALPUR, SAMBALPUR vs. SHREE SALASAR CASTING PRIVATE LIMITED, ROURKELA

It was submitted by the Ld. CIT. DR that there was a search on the premises of Sunayana Metal Industries Ltd. on 03.12.2020. In the course of search, it came to the attention that the assessee has made undisclosed sales to the tune of Rs.04,10,56,022/- for the assessment year 2018-19 and Rs.07,91,72,315/- for the assessment 2019-20. The AO treated the entire sales as an unexplained income of the assessee. On Appeal the Ld. CIT (A) following the decisions of the Hon’ble Gujarat High Court in the case of Rameswar Textile Mills Limited in Appeal No. 527 of 2015 and Tax Appeal No. 528 of 2015 held that the entire sales cannot be added as the income of the assessee but the addition can be made only to the extent of the estimated profit embedded in the sales. It was the submission that the order of the Ld. CIT(A) is erroneous and that the entire sales must be treated as the unexplained income of the assessee. It was an alternate prayer by the Ld. CIT DR that the Ld.CIT (A) when estimating the income has adopted the GP for the assessment year 2018-19 at 1.64% which was regular GP disclosed by the assessee for the A.Y. 2018-19 and for the A.Y. 2019-20 the Ld. CIT(A) has adopted 1.47% which was the regular GP disclosed for the assessment Year 2019- 20. It was submission that obviously when the undisclosed sales have taken place the profit margin must be higher. It was the submission that at least 2% GP must be applied for both the assessment years.