Addition of Unaccounted Sales is not sustained in absence of Cogent Material: ITAT [Read Order]

The Visakhapatnam bench of the Income Tax Appellate Tribunal (ITAT) has held that the addition of unaccounted sales is not sustained in the absence of cogent material.

Sri GVN Hari represented the assessee and Sri MN Murthy Naik represented the revenue.

The assessee is a partnership firm engaged in the business of running a jewellery shop. A survey operation U/s. 133A took place on 25/11/2016 at the business premises of the assessee and the assessee agreed to admit the following as additional incomes. CIT(A) on appeal admitted the additional ground and partly allowed the appeal.

The assessee voluntarily agreed to admit Rs. 3,00,00,000 towards unaccounted sales but has omitted Rs.3,10,69,693/- being the sale of 8786.872 grams of gold during the period from 6/11/2016 to 8/11/2016. The assessee argued that since the amount of Rs. 3 Crores has been admitted by the assessee and accounted in books and the same sales were wrongly added in the Assessment Order would amount to double taxation. 

On the other hand, the revenue argued that Rs. 3 Crores represents the unaccounted sales in addition to the admission made by the assessee for the sales which was admitted at the time of survey u/s. 133A of the Act. 

The assessee in the Cross Objection stated that the addition of Rs. 37,50,000/- wrongly admitted by the respondent twice in the return of income deserves consideration.  The assessee argued that the sale amounting to Rs. 3,10,69,693/- admitted towards the unaccounted sales at the time of survey U/s. 133A of the Act and further addition of Rs. 37,50,000/- as the gross profit for the same unaccounted sales is not valid as it amounts to double taxation. 

The Tribunal observed that if the assessee did not adhere to the surrender made during the survey, the AO had to bring on record cogent material or other evidence to support the additions rather.

Shri Duvvuru R L Reddy, judicial member & Shri S Balakrishnan, accountant member allowed the cross objection filed by the assessee and held that the taxing of gross profit of unaccounted sales had already brought on record amounts to double taxation. The appeal of the Revenue was dismissed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.