The assessee is in appeal against an order of the Income Tax Appellate Tribunal1 dated 28 July 2014. The assessment year to which the appeal relates is AY 2006-07.
The following questions of law have been formulated in support of the appeal:
1. Whether, at any rate, in the facts and circumstances of the case, the determination of undisclosed income (i) on account of extra profit on sales allegedly not recorded in the books of accounts of the assessee appellant at Rs.22,84,832/-; on account of alleged undisclosed cash sales at Rs.1,92,214/- and; on account of job work receipts allegedly not recorded in the books of account of the assessee at Rs.1,43,903/- could be made by applying a gross profit rate of Rs.25% and 48% when in the admitted facts of the assessee's case, he had disclosed in his return of income, and the assessing authority had accepted net profit rate of 15.88% to determine the true income of the assessee appellant arising on similar nature of receipts;
2. Whether, at any rate, the addition of Rs.5,00,000/- on account of alleged disclosed capital is based merely on presumptions and conjectures, without any evidence to establish its existence;
3. Whether, alternatively, in the facts and circumstances of the case, the estimation of extra income arising from job work receipts allegedly not disclosed (Rs. 2,99,798/-) could be made by applying gross profit rate of 48% when in the admitted facts of assessee's case, he had disclosed and the assessing authority had accepted net profit rate of 25% to determine the true income of the assessee appellant in respect of receipts found disclosed in the books of accounts.
The assessee carries on the business of manufacturing and trading in playing cards and of printing. On 2 November 2007, a survey was conducted at the premises of the assessee under Section 133A of the Income Tax Act, 19612, during the course of which certain books of account and other incriminating documents were impounded. The assessee was found to be operating two sets of books of account containing the trading activities without recording them in the regular books of account. Parallel accounts were thus being maintained by the assessee. In this background, the Assessing Officer made the following observations:
"...None of the amount is matching with the amount of sales as recorded in its regular books of accounts and it is clear that the assessee was maintaining a duplicate set of books of accounts which contained the cash book and ledger recording the total sales and accounts of its customers on regular basis which were not recorded in the regular books of accounts of the assessee. Only a part of the total sales were being reflected in the regular books of accounts of the assessee which certainly did not form the part of the sale carried out by the assessee and recorded in the duplicate set of books as mentioned above. Hence the amount of Rs.91,39,327/- would be taken to be the sales of the assessee recorded out of books and the net taxable income would be derived from such sales."
The Assessing Officer made an addition of Rs.2.99 lacs in respect of annexure BK2/1 and an addition of Rs.1.60 lacs in respect of annexure BK2/24. As noted above, an amount of Rs.91.39 lacs was taken to be the sales of the assessee recorded out of the books and the net taxable income was derived from such sales by applying a gross profit rate at 25%. On this basis, the net profit was worked out at Rs.26.63 lacs for the addition. The Assessing Officer made a further addition of Rs.9 lacs on the ground that at least 10% of the total sales should be regarded as capital deployed for carrying on the sales amounting to Rs.91.39 lacs. An addition of Rs.32.20 lacs was made in reference to annexure BK2/13.
The Commissioner of Income Tax (Appeals)3 granted partial relief to the assessee against which the assessee filed an appeal before the Tribunal. The Tribunal has confirmed the order passed by the CIT(A). The Tribunal has noted, at the outset, that the assessee had not raised a specific ground of appeal with regard to a particular addition but in its grounds had generally disputed the additions which were sustained by the CIT(A). These were dealt with together. The Tribunal found that during the course of the survey proceedings, no audited books of account were found or were produced before the Assessing Officer or the CIT(A). A print-out was taken from the computer which was considered as the regular book of accounts. This contained ledger accounts of sales with details with respect to each bill drawn. The Tribunal noted that the assessee failed to produce bill books whose turnover had been captured in the accounts. The Tribunal has considered in a considerable amount of detail the entries which were made under each head and has observed that the assessee has not produced any evidence to co-relate the entries of job work charges. Moreover, the Tribunal on the second aspect noted that all the sales which have been recorded in annexure BK 1/2 were reflected in the ledger BK 2/20, which indicated that both the books contained trading activities which were carried out without recording in the regular books of account.
On this basis, the Tribunal affirmed an addition of Rs.26.63 lacs as net profit applying a gross profit at the rate of 29.14% on the figure of total sales of Rs.91.39 lacs. The observations which have been made by the Tribunal are recorded in paragraph 11 of its impugned order, the relevant part of which reads as follows:
"Now the assessee has preferred an appeal before the Tribunal, but could not place any evidence on record to justify that the sales made by the assessee, found recorded in the seized material, were already recorded in the books of account, though the ld. counsel for the assessee has orally submitted that the sales found recorded in the seized material are already recorded in the books of account and it amounts to double addition. Though the ld. counsel for the assessee has filed copy of ledger and copies of the seized material, but could not co-relate the entries found in the seized material with the ledger of the regular books of account. Moreover, in the written submission filed before the ld. CIT(A), the assessee himself has admitted that the sales should have been taken by the Assessing Officer at Rs.91,39,321/- and thereafter net profit should have been worked out. Since the assessee could not place any evidence before us in support of his contention that the sales found in the seized material were duly recorded in the regular books of account, we are unable to accept his contention. The ld. CIT(A) has adjudicated the issue in the light of assessee's contention and the seized material and regular books of account and has rightly determined the unaccounted sales of Rs.91,39,327/-..."
However, on the undisclosed capital deployed for carrying on the sales, though the Assessing Officer computed an amount of Rs.9 lacs as additional capital, the CIT(A) had reduced that amount to Rs.5 lacs. The Tribunal observed that the assessee had made sales outside the books of account for which the additional capital was required and hence the addition of Rs.5 lacs was in order.
The present case involves a situation where parallel sets of books were maintained by the assessee. The Assessing Officer as well as the Tribunal observed that the assessee has not placed any evidence on the record to justify that the sales which have been made as recorded in the seized material, were already recorded in the books of account.
In view of the facts to which a reference has been made in the earlier part of this judgement, we are of the view that the Assessing Officer has carried a due and proper exercise of a reasonable estimation to the best of his judgement. The grounds, which are sought to be raised in the submissions in support of the appeal, would essentially require the Court to re-appreciate the evidentiary material. This is not permissible under the jurisdiction under Section 260A of the Act. We have adverted to the order of the Tribunal in a considerable amount of detail and having considered the record, we are satisfied that no case for interference is made out. Hence no substantial question of law would arise in the appeal.
The appeal, is accordingly, dismissed. There shall be no order as to costs.