Madhya Pradesh High Court
The Pr. Commissioner Of Income Tax Ii vs Shri Ritesh Agarwal (Simhal) on 26 October, 2015
R.P.No.582/2015 26.10.2015
Shri Sanjay Lal, learned counsel for the applicant.
This review application has been filed for recalling of an order passed by Co-ordinate Bench of this Court on 7.7.2015, passed in ITA No.78/2009.
It is pointed out in the application that while considering the question of deletion of an addition of Rs.1,45,06,000/-, this Court has relied upon certain observations made by Commissioner (Appeals) in para 39 of the order passed by the Commissioner (Appeals), whereas the reproduced portion pertains to investment and deletion of certain other amount and not the amount of Rs.1,45,06,000/-.
We have considered the submission and we find that after dealing with various questions that were raised, the Commissioner (Appeals) from page 18 onwards has taken note of the addition made pertaining to both Rs.1,45,60,000/- and Rs.4,56,80,360/- and thereafter has given a detailed finding starting from page 19 onwards. In fact, the findings with regard to deletion of Rs.1,45,06,000/- is recorded in page 19 and 20 of the order, which reads as under :-
"I have carefully verified the contention of the appellant in this regard that weight of unrecorded sale of gold ornaments as per documents BS-1 to BS-8 was not correctly done by the Assessing Officer and it needs corrections as mentioned above and I find such contention of appellant acceptable after verification. The further contention of the appellant that correction is also required in the computation ofweight of unrecorded sale of gold ornaments in respect of the fact that documents BS-6 relates to Karigar and it gives the movement of gold ornaments between shop to Karigar and vice-versa and the transactions noted therein do not relate to unrecorded sale of gold ornaments is not acceptable because nature of transactions as recorded in document BS-6 are almost the same as are found recorded in other documents namely BS-1 to BS-5 and BS-7 and BS-8.
I consider it also worthwhile to mention here that I had forwarded the submissions of the appellant with regard to incorrect computation of sale of gold ornaments in terms of weight as per Annexure I to the Assessing Officer on 12.1.2006 which was received by the Assessing Officer on 13.1.2006 but the Assessing Officer had not given any reply to this letter. Accordingly, the weight of gold ornaments representing unrecorded sale as per documents BS-1 to BS-8 will be taken at 161990.075 gms. (252269.578 gms. - 90279.503 gms. Therefore, unrecorded sale is worked out to Rs.7,12,75,633/- (161990.075 gms x Rs.440/- per gram of gold) as against of Rs.11,20,00,000/- taken by the Assessing Officer. I do not find any justification for making any estimation of unrecorded turnover. It has to be taken as found recorded in the documents found during the course of search i.e. BS-1 to BS-8. Thus, in my view it would be fair and reasonable if the unrecorded sale on account of transactions found recorded in documents BS-1 to BS-8 is taken at Rs.7,12,75,633/-.
As regards computation of undisclosed income on unrecorded turnover, the observation of Hon'ble Jurisdictional High Court in case of CIT Vs. Balchand Ajit Kumar Reported at 263 ITR 610 (MP) has to be followed wherein the Hon'ble MP High Court held that "on undisclosed sales net profit rate has to be applied for working out income. The appellant has disclosed gross profit and net profit for the block period.
F.Y. A.Y. Total Gross GP% Net Profit NP%
Sales Profit shown (in
(in Rs.) (in Rs.) Rs.)
1996-1997 1997-1998 - - - - -
1997-1998 1998-1999 520101 31853 6.12% 13415 2.58%
1998-1999 1999-2000 721979 190655 26.40% 74998 10.38%
1999-2000 2000-2001 1326017 195134 14.71% 104008 7.84%
2000-2001 2001-2002 2149479 159158 7.40% 88262 4.10%
2001-2002 2002-2003 3645945 509097 13.96% 358515 9.83%
01/04/02 to 2003-2004 947221 184072 19.43% 173814 18.34%
31/07/2002 (relevant
upto the
date of
search
Appellant had declared net profit rate of 4.10%, 9.83% and 18.34% for the A.Yrs.2001-2002, 2002-2003 and 2003-2004 upto the date of search falling in the block period. The submissions of the Ld. Counsel that appellant had done unrecorded business on wholesale basis wherein margin of profit varies between 3 to 4% carry's some weight and some allowance has to be given for the nature of business conducted by the appellant outside the regular books of account. Appellate is found to have done wholesale business as shown in documents BS-1 to BS-8 as against the retail business done by the appellant which is duly recorded in regular books of accounts. Having considered the submissions of the Ld. Counsel that margin of profit in case of wholesale business is less than in retail business, I consider it fair and reasonable if the undisclosed income of the appellant on account of unrecorded sale of turnover as per documents BS-1 to BS-8 is worked out by applying net profit rate of 4%, 6.5% and 13% on unrecorded turnover relating to A.Yrs. 2001-2002, 2002-2003 and 2003-2004 and, thus, undisclosed income is worked out as under :-
A.Y. 2001-2002 576.770 gms. X Rs.440 Rs.2,53,778/-
per gram of gold Income @ 4% on Rs.2,53,778/-
10151 A.Y.2002-2003 82216.389 gms. X Rs.440/- Rs.3,61,75,211/-
per gram of gold Income @ 6.5% on Rs.3,61,75,211/-
2351389 A.Y.2003-2004 79196.916 gms x Rs.440/- Rs.3,48,46,643/-
per gram of gold Income @ 13% on Rs.3,48,46,643/- 4530064 Undisclosed income on unrecorded 6891604 turnover Thus, undisclosed income on unrecorded turnover at Rs.68,91,604/- is worked out as per documents BS-1 to BS-8 as against an income of Rs.1,45,06,000/- computed by the Assessing Officer."
The portion reproduced by this Court has been incorrectly mentioned in the order. In fact, the correct portion is the one reproduced hereinabove. These are the reasons for disallowing the addition of Rs.1,45,06,000/- and the same was also approved by the Income Tax Appellate Tribunal and finding this to be a reasonable and concurrent finding, we have refused to entertain the application under Section 240-A, as no substantial question of law arises for consideration. That being so, there is no apparent error in the order. The only error is with regard to reproduction of the relevant portion of the order passed by the Commissioner (Appeals), which we have now corrected.
With the aforesaid clarification, we find no ground to review or recall the order.
The review application stands dismissed.
(Rajendra Menon) (K.K.Trivedi)
Judge Judge
A.Praj.