The Income Tax Appellate Tribunal (ITAT), Jaipur Bench directed the matter to AO to examine the afresh rate of gross profit declared on unaccounted turnover.
The assessee, M/s Alokik Steels Pvt. Ltd. has duly disclosed the transaction in its return of income which stood duly verified by the Assessing Officer. The Pr. CIT observed that no enquiry has been made by the Assessing Officer is bad in law. It was submitted that the AO made the necessary inquiry and has examined the books of accounts which are duly audited and all the transactions have been shown in the return of income as well as in computation of income.
It was submitted by the assessee that there is no straight-jacket formula or parameter to make inquiry in the assessment proceedings. What is required is that the AO should frame the assessment in accordance with the provisions of the Act and in light of the relevant judicial pronouncement and other material available on record.
“In the instant case, the ld. Pr. CIT has failed to state what correct provision of law has not been examined or applied by the Assessing Officer,” the assessee contended.
The PCIT has assumed the undisclosed sales as the undisclosed stock found by the Central excise authorities whereas it is not so. Only loose slips of unaccounted sales of Rs. 1,77,95,856/- was found by the Central Excise Authorities and unaccounted stock of Rs. 1,77,95,856/- was not found. The findings recorded by the PCIT are contradictory. Initially, reference is to clandestine removal of goods, thereafter it is referred to as unexplained stock.
It has been further contended that the provisions of section 69A of the Act read with section 115BBE of the Act have been wrongly invoked by the ld Pr CIT as only loose slips of unaccounted sales and not any unaccounted stock was found by the excise authorities and secondly, the amendment to sub-section (2) to section 115BBE relating to set off of loss is effective from A.Y 2017-18 and not applicable to the impugned assessment year.
The assessee contended that the amendment brought in section 115BBE(2) of the Act wherein the words ‘or set-off of any loss’ were inserted with effect from March 1, 2017. The said amendment has been made with effect from the assessment year 2017-18 and therefore, the benefit of unabsorbed depreciation/loss has wrongly been directed to be disallowed by the Pr. CIT.
The coram of Sandeep Gosain and Vikram Singh Yadav noted that the assessee has declared the same in its return of income and which has been accepted by the AO as well as by Pr CIT as there is neither any material on record nor any adverse finding recorded by ld Pr CIT disputing the same.
“Therefore, as far as the quantum of unaccounted turnover of Rs 1,77,95,859/- is concerned, the order so passed by the AO cannot be held as erroneous and prejudicial to the interest of Revenue,” the ITAT said.
The tribunal directed AO to examine the rate of gross profit so declared by the assessee on such unaccounted turnover and decide as per law.
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