M/s Suguna Motors Private Limited, Warangal v. DCIT, Warangal

ITA 1215/HYD/2009 | 2003-2004
Pronouncement Date: 22-03-2011 | Result: Dismissed

Appeal Details

RSA Number 121522514 RSA 2009
Assessee PAN AAACS4471N
Bench Hyderabad
Appeal Number ITA 1215/HYD/2009
Duration Of Justice 1 year(s) 2 month(s) 23 day(s)
Appellant M/s Suguna Motors Private Limited, Warangal
Respondent DCIT, Warangal
Appeal Type Income Tax Appeal
Pronouncement Date 22-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 22-03-2011
Date Of Final Hearing 22-03-2011
Next Hearing Date 22-03-2011
Assessment Year 2003-2004
Appeal Filed On 29-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER ITA NO.1212/HYD/2009 : ASSESSMENT YEAR 2000 - 01 ITA NO.1213/HYD/2009 : ASSESSMENT YEAR 2001 - 02 ITA NO.1214/HYD/2009 : ASSESSMENT YEAR 2002 - 03 ITA NO.1215/HYD/2009 : ASSESSMENT YEAR 2003 - 04 ITA NO.1216/HYD/2009 : ASSESSMENT YEAR 2004 - 05 ITA NO.1217/HYD/2009 : ASSESSMENT YEAR 2005 - 06 M/S. SUGUNA MOTORS PVT. LTD. WARANGAL ( PAN - AAACS 4471 N) V/S. DY. COMMISSIONER OF INCOME - TAX CIRCLE 1 WARANGAL (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI B.YADAGIRI DR DATE OF HEARING 1 9 .12.2013 DATE OF PRONOUNCEMENT 12.2.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER: THESE SIX APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST A COMMON ORDER OF THE CIT(A) VI HYDERABAD DATED 30.9.2008 FOR THE ASSESSMENT YEARS 2000 - 01 TO 2005 - 06. SINCE COMMON ISSUE S ARE INVOLVED THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. AT THE OUTSET IT MAY BE NOTED THAT THERE IS A DELAY OF 345 DAYS IN THE FILING OF THESE APPEALS BY THE ASSESSEE. A PETITION SEEKING CONDONATION OF DELAY HAS BEEN FILED BY THE ASSESSEE WHEREIN IT HAS BEEN CLAIMED THAT THE BUSINESS OF THE ASSESSEE HAS BEEN DISCONTINUED IN THE YEAR 2008 ON ACCOUNT OF CONTINUING LOSSES YEAR AFTER YEAR. IT IS CLAIMED THAT THE ASSESSEE FOR THIS REASON HAS ALSO VACATED THE BUSINESS PREMISES AND IN THAT PROCESS THE IMPUGNED ORDER OF THE CIT(A) HAS NOT BEEN SERVED ON THE ASSE SSEE IN TIME. IN SUPPORT OF HIS CONTENTIONS AS TO DISCONTINUANCE OF THE BUSINESS ASSESSEE ALSO FURNISHED A LETTER WRITTEN FOR THE CANCELLATION OF THE VAT REGISTRATION. ON CAREFUL ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 2 CONSIDERATION OF THE MATTER WE FIND THAT THERE IS A REASONABLE CAUSE FOR THE DELAYED FILING OF THESE APPEALS BY THE ASSESSEE. WE ACCORDINGLY CONDONE THE DELAY AND PROCEED TO DISPOSE OF THESE APPEALS ON MERITS. 3 . FACTUAL BACKGROUND LEADING TO THE FILING OF THE PRESENT APPEALS BY THE ASSESSEE BEFORE US IS THAT THE ASSESSEE C OMPANY IS A DEALER IN MARUTI UDYOG LTD. (MUL) DURING THE ASSESSMENT YEARS UNDER CONSIDERATION AND DEALT IN PU R CHA S E AND SALE OF MARUTI CARS. SUB S EQUENT TO ASSESSMENT ORDERS UNDER S.143(3) PASSED ON 29.11.2002 INFORMATION WAS RECEIVED FROM THE SALES TAX AUT HO R ITIES THAT THE ASSESSEE COMPANY H A D NO T ACCOUN TE D FOR PURCHASE S CORRECTLY AND HAD ALSO NOT REPORTED THE ACTUAL SALES TURNOVER. INFORMATION WAS VERIFIED BY THE ASSESSING OFFICER BY WRITING TO THE MARUTI UDYOG LTD. AND THE REL E VANT COMMERCIAL TAX AUTHO R I TIES. IT WAS FOUND THAT THERE WAS INDEED VARIATION BETWEEN THE PU R CHASES SHOWN IN THE RE T UR N S OF INCOME FILED BY THE ASSESSEE AND THE INFORM A TION RECEIVED FROM THE MARUT I UDYOG LTD. GURGAON. CON S I D ERING THE DISCREPANCIES IN THE PURCHASES AS PER THE BOOK S OF THE ASSESSEE AND AS PER MARUTI UDYOG LTD. AND SALES AS PER ASSESSEES BOOKS AND SALES AS PER SALES TAX DEPARTMENT THE FOLLOWING ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN THE ASSESSMENTS MADE FOR THE YEARS UNDER APPEAL. ASSESSMENT YEAR ADDITIONS MADE BY THE ASSESSING OFFICER 2000 - 01 DIFFERENCE IN PURCHASES RS. 74 48 113 2001 - 02 DIFFERENCE IN SALES RS. 2 63 70 004 ADDITIO0N U/S. 43B RS. 5 91 571 ADDITION U/S. 40A(3) RS. 1 64 176 2002 - 03 DIFFERENCE IN PURCHA S ES RS. 70 19 851 DIFFERENCE IN SALES RS. 1 26 67 326 ADDITIONS U/S. 43B RS. 13 96 518 2003 - 04 DIFFERENCE IN PURCHASES RS. 66.69 900 DIFFERENCE IN SALES RS.1 39 44 327 ADDITION UNDER S.43B RS. 2 85 3851 ADDITION UNDER S.40A(3) RS. 1 50 799 ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 3 2004 - 05 DIFFERENCE IN PURCHASES RS.1 22 94 537 DIFFERENC E IN SALES RS.1 59 23 157 ADDITION UNDER S.43B RS. 19 90 990 ADDITION UNDER S.40A(3) RS. 3 32 482 2005 - 06 DIFFERENCE IN PURCHASES RS. 33 18 462 DIFFERENCE IN SALES RS.1 06 12 645 ADDITION UNDER S.43B RS. 1 17 107 ADDITION UNDER S.40A(IA) RS. 39 500 4 . AGGRIEVED BY THE ASSESSMENTS MADE WITH THE ABOVE ADDITIONS ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A). THE CIT(A) SE NT COPIES OF THE APPEALS TO THE ASSESSING OFFICER VID E LETTER DATED 20.2.20008 AND ALSO GAVE APPROPRIATE NOTICES OF H E ARING WITH COPIES TO THE ASSESSING OFFICER. PROCEE D ING ON THE BASIS OF THE WRITTEN REPLIES GIVEN BY THE LEARNED AUTHORISED REPRESENTAT IVE FOR THE ASSESSEE REMAND REPORTS RECEIVED FROM THE ASSESSING OFFICER ON 30.5.2008 AND 9.7.2008 AND AFTER HEARING THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE ON VARIOUS ISSUES INVOLVED THE CIT(A) PROCEEDED TO DISPOSE OF THE APPEALS BY THE I MPUGNED ORDER DATED 30.9.2008. DEALING WITH THE ISSUE OF G.P. ADDITIONS WITH WHICH WE ARE CONCERNED IN THESE APPEALS T HE CIT(A) AGREEING WITH THE ASSESSEE THAT IT IS HIGHLY IMPROBABLE THAT NEW CA R S WOULD BE PURCH ASED AND SOLD OUTSIDE THE BOOKS AND THIS IS GENERALLY NOT THE PRACTICE IN TH E MARKET HELD THAT THE ASSESSING OFFICER HAS NOT PRO D U C ED ANY EVIDENCE TO PROVE THAT THIS WAS IND E ED THE CA S E. AS FOR THE INFLATION OF PURCHASES OF MARUTI CARS FROM MARUTI UDYOG LIMITED (MUL) THE CIT(A) NOTED THAT T HE OPTION AVAILABLE TO THE ASSESSEE WA S TO REPORT A HIGHER COST OF CARS AND REPAIRS AS COMP A R E D TO THE ACTUAL COST TO HIM. THIS IS BECAU S E OF THE FACT THAT HE HAS NOT VARIED THE NUMBER OF CA R S PU R CH A SED FROM MUL. HE NOT E D THAT THE ASSESSING OFFICER HAS N O T REPORTED ANY DIFFERENCE IN THE NUMBER OF CARS AS PER TH E DISPATCH STATEMENTS. DURIN G TH E ASSESSMENT AND REMAND PROCEEDINGS THE ASSESSING OFFICER COULD NO T FIND ANY EVIDENCE TO IN D ICATE THAT THE AMOUNTS REFLECTED IN THE BOOKS OF THE ASSESSEE W E RE DIFFERENT FROM THOSE APPEARING IN THE BILLS ISSUED BY MUL. HE HOWEVER NOTED THAT THE ASSESSEE HAS ALSO NO T BEEN ABLE TO FULLY ACCOUNT FOR THE DIFFERENCE IN THESE FIGURES. THE CIT(A) FURTHER NOTED THAT ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 4 THE ASSESSEE HAS BEEN ABLE TO SHOW THAT THERE WAS VA RIATION IN THE PERIODS IN WHICH SOME SALES WERE ACCOUNTED FOR BY THE MUL VIS - - VIS THE CORRESPONDING PURC H ASES APPEARING IN THE BOOKS O F THE ASSESSEE. CONSIDERING THESE ASPECTS THE CIT(A) NOTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO RECONCILE ALL THE DIS CREPANCIES WITH THE BOOKS AND THERE CONTINUE TO BE GLARING DIFFERENCES IN PU R CH A SES AND OTHER FIGURES WHEN COMPARED TO THE DATA OBTAINED FROM MUL. HE FURTHER OBSE R VED THAT IT IS A FACT TO BE NO T ED THAT THE ASSESSEE DID HAVE SOME DIFFERENCE WITH RESPECT T O ITS SALES FIGURES AND THOSE ESTIMATED BY THE SALES TAX AUTHO R ITIES AND THE ASSESSEE DID ADMIT THAT IT W A S WILLING TO ACCEPT SOME OF THE SALES FIGUR E S OF THE SALES T A X AUTHO R ITI E S THE RE BY IN D I C ATING THAT THERE WERE DISCREPANCIES IN ITS ACCOU N TS. 5. REFERRING TO THE DISCREPANCIES NOTICED AND THE ADDITIONS MADE THE CIT(A) HELD AS FOLLOWS - 4.3.4. THE FIGURES IN THE ABOVE CHARTS (PAGE 5 6 OF THIS ORDER) HAVE BEEN VERIFIED BY THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS. IT WILL BE CLEAR ON TA KING A BOOK AT THE ABOVE F IGURES THAT IN SOME YE A RS THERE IS EXCESS PU R CHA S E SHOWN BY THE APPELLANT WHILE IN O THER YEARS THE PURCHASES SHOWN A R E SHO R T. O V ERALL THE APPELLANT HAS SHOWN RS.1 87 98 842 WORTH OF SHO R T PURCHASES IN THIS RETURN O F INCOME FROM THE ASSESSMENT YEAR 2000 - 01 TO 2005 - 06. LOOKING AT THE SALES ONCE AGAIN IT IS NOTICED THAT IN SOME YEARS THE SALES SHOWN BY THE APPELLANT AR E LESS THAN THOSE ESTIMATED BY THE SALES TAX DEPARTMENT WHILE OTHER YEARS THE APPELLANT HAS SHOWN MOR E SALES THAN THOSE ESTIMATED BY THE SALES T A X DEPARTMENT IN ITS BOOKS FOR TH E ABO V E SIX YE A RS. I FIND FORM THE ABOVE THAT THE ASSESSING OFFICER HAS ADDED EXCESS PU R CH A SES AS WELL AS SHO R T PU R CHASES EVEN THOUGH THE SALES A R E DISCLOSED. FROM THE ABOVE I FIND THAT THERE IS NO DOUBT THAT THERE ARE DISCREPANCIES WHICH THE APPELLANT HAS NO T BEEN ABLE TO RECONCILE. HOWEVER THE ASSESSING OFFICER HAS NO T BROUGHT FORTH ANY EVIDENCE TO BRIN G ON RECORD SPECIFIC DETAILS OF DI S CREPANCI E S OR THE UNACCOUN T ED CAPITAL EMPL O YED BY THE APPELLANT OR THE MO D US OPERANDI OF TAX EVASION. HE HAS ADDED ALL DISCREPANCIES. TO MY MIND A MORE APPROPRIATE AND JU S T METHOD WOULD BE TO REJECT THE BOOKS OF ACCOUN T AND ESTIMATE THE G.P. THIS HAS BEEN CLEARLY ELUCIDATED IN OMAX SHOE FACTORY V/S. CIT(2006) 281 I TR 268(ALL) BY THE HONBLE ALLAHA B AD HIGH COU R T. ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 5 4.3.5. ACCOR D INGLY I HOL D THAT THE APPELLANTS BOOKS ARE NO T ABL E TO PROVIDE AN ACCURATE ACCOUNT O F I T S FINANCIAL AFF A IRS. THE RE CONTINUE TO BE UNRESOLVED DISCREPANCIES IN THE STATEMENTS OF ACCOUNT PRODUCED BY THE APP E LLANT AS WELL AS THOSE OBTAINED FROM MUL AND THE SALES T A X DEPAR T MENT. KEEPING IN VIEW ALL THE ABOVE FACTS AND THE DISCREPANCIES I HOL D THAT THE APPELLA N TS REAL I NCOM E CAN BE ESTIMATED BY ADDING ONE PERCENT GROSS PR OF IT WITH RESPECT TO TH E SALES IN EACH ASSESSMENT YEAR. ACCOR D INGLY THE ASSESSING OFFICER IS DIRECTED TO RECO M PUTE THE P R O F ITS OF EACH YEAR BY ADDING 1% GROSS PROFIT IN EACH ASSESSMENT YEAR OVER AND AB OVE THE DECLARED G .P. CALCULATED AS 1% OF THE SALES DECL A RED BY TH E APPELLANT WITHOUT THE COMPONENT OF SALES TAX ADDED TO THE TURNOVER. FOR EXAMPLE FOR THE ASSESSMENT YEAR 2005 - 06 THE SALE DECL A RED BY THE APPELLANT AS PER HIS RETURN OF INCOME ARE RS.17 04 57 881/ - . THE ASSESSING OFFICER WILL ADD RS.17 04 578/ - TO THE INCOME O F T H E APPELLAN T FOR THE ASSESSMENT YEAR 2005 - 06 AND SO ON. 6. AS FOR THE ADDITIONS UN D ER S.43B AND S. 40A(3) OF THE ACT THE CIT(A) NOTED THAT THE ASSESSING OFFICER HAS LOOKED INT O THESE ISSUES AND GIVEN THE FOLLOWING FIGURES IN THE REM A ND REPORT DATED 9.7.2008 - . A.Y. AMOUNTS TO BE DISALLOWED AND ADDED BACK TO THE INCOME DECLARED AS PER PROVISIONS U/S. 43B OF THE I.T. ACT RS. SHO R T DEDUCTION AS PER ASSESSEES OWN COMPUTATION VIDE HIS LETT E R DT.21.4.2008 RS. 2001 - 02 4 04 682 - 2002 - 03 18 11 621 13 14 291 2003 - 04 8 41 371 7 90 222 2004 - 05 --- 1 34 506 2005 - 06 4 66 489 6 27 625 .. OBSERVING THAT THE ASSESSEE DURING THE APPELLATE PROCEEDINGS COULD NO T EXPLAIN THE DISCREPANCIES THE CIT(A) SUSTAINED THE ADDITIONS MADE BY THE ASSESS ING OFFICER UNDER S.43B AND S.40A (3 ) OF THE ACT. 7. AGGRIEVED BY THE ADDITIONS SUSTAINED BY THE CIT(A) ASSESSEE PREFERRED THESE APPEALS BEFORE US. 8. ORIGINALLY ASSESSEE RAISED ONLY THE FOLLOWING GROUNDS CONTESTING THE DIRECTIONS GIVEN BY THE CIT(A) IN RELATION TO THE GP ADDITIONS AND THOSE ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 6 ADDITIONS SUSTAINED BY THE CIT(A) IN THAT PROCESS. THOSE GROUNDS ORIGINALLY COMMON IN THESE APPEALS READ AS FOLLOWS - 1 . THE CIT(A) IS NOT JUSTIFIED WHILE DIRECTING TO RECOMPUTE THE PROFITS OF EACH YEAR BY ADDIN G 1% GROSS PROFIT IN EACH ASSESSMENT YEAR OVER AND ABOVE THE DECLARED GROSS PROFIT CALCULATED AS 1% OF THE SALES DECLARED BY APPELLANT WITHOUT THE COMPONENT OF SALES TAX ADDED TO THE TURNOVER OVER AND ABOVE THE INCOME DECLARED ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE. 2 . ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS IN THE APPEALS FOR THE ASSESSMENT YEARS 2001 - 02 TO 2005 - 06 WHEREBY THE ADDITIONS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) BY THE IMPUGNED ORDER DATED 30.9.2008 IN TERMS OF S.43B AND S.40A(3) ARE ALSO CONTESTED. SUCH ADDITIONAL GROUND TAKEN FOR THE ASSESSMENT YEAR 2001 - 02 READ AS FOLLOWS - THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) E RRED IN CON F I R MIN G THE ADDITIONS OF RS.4 04 682 M ADE U/S. 43B OF THE I.T. ACT AND RS.1 64 176 MADE U/S. 40A ( 3) OF THE I.T. ACT WHEN T H E RESORTED TO ESTIMATION OF INCOM E FROM BUSINESS. ADDITIONAL GROUNDS RAISED FOR THE OTHER YEARS ARE SIMILAR TO THE ONE TAKEN FOR THE ASSESSMENT YEAR 2001 - 02 BUT FOR THE AMOUNTS /A DDITIONS INVOLVED IN THE RESPECTIVE YEARS. SINC E THE ABOVE ADDITIONAL GROUND IS A RELEVANT OEN FOR PROPER DISPOSAL OF THE APPEAL AND DOES NOT REQUIRE INVESTIGATION INTO ANY NEW FACTS WE DEEM IT FIT TO AD M IT THE SAME. WE ACCORDI NG LY ADMIT THE SAME AND PROCEED TO DISPOSE OF TH E SE APPEALS NOT ONLY ON T HE ORIGINAL GROUNDS BUT ALSO ON THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 7 9. LEARNED COUNSEL FOR THE ASSESSEE REITERATING THE CONTENTIONS URGED BEFORE THE REVENUE AUTHORITIES SUBMITTED THAT THE CIT(A) IS NOT JUSTIFIED IN DIRECTING THE ASSESSING O FFICER TO MECHANICALLY MAKE 1% ADDITION TO THE PROFIT D E CLARED BY THE ASSESSEE EACH YEAR IRRESPECTIVE OF THE PERCENTAGE OF G.P. DISCLOSED B Y THE ASSESSEE ITSELF. HE SUBMITTED THROUGH A CHART THAT THE G.P. DISCLOSED BY THE ASSESSEE FROM ASSESSMENT YEAR 2 000 - 01 TO 2005 - 06 RANGED FROM 3.45 IN ASSESSMENT YEAR 2001 - 02 A N D 2002 - 03 TO 10.02 IN ASSESSMENT YEAR 2004 - 05. THAT BEING SO MAKING ADDITIONS TO THE G.P. OF ALL THE YEARS ON A UNIFORM BASIS IRRESPECTIVE OF THE REASONABLE G.P. DI S CLO S ED BY THE ASSESSEE I S NOT FAIR AND JUSTIFIED. AS FOR THE ADDITIONS UNDER S.403B AND 40A(3) HE SUBMITTED THAT ONCE THE INCOME FROM BUSINESS OF AN ASSESSEE IS ESTIM A TED THERE IS NO SCOPE FOR ANY OTHER ADDITIONS UNDER THE SAME HEAD VIZ. BUSINESS. IN SUPPORT OF THIS CONTEN TION HE PLACED RELIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (232 ITR 7 76 ) 10. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNT OR THE VOUCHERS EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A). ASSESSEE COULD NOT EVEN RECONCILE THE DIFFERENCES POINTED OUT AND CLEARLY SUBMITTED THAT IT IS NOT IN A POSITION TO EXPLAIN E ACH AND EVERY ENTRY IN THE BOOKS OF ACCOUNT SINCE THE MANAGING DIRECTOR HAS EXPIRED AND THE OLD ACCOUNTANT WHO KEPT ALL THE ACCOUNTS WAS ALSO NOT THERE. HE FURTHER SUBMITTED THAT THE CIT(A) HAS ALREADY GIVEN REASONABLE RELIEF TO THE ASSESSEE AND THERE IS NO JUSTIFICATION FOR ANY FURTHER INTERFERENCE. 11. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ASSESSEE IS IN THE BUSINESS OF PURCHASE AND SALE OF CARS AS A DEALER OF MARUTI UDYOG LTD. AND AS NOTED BY THE CIT(A) ITSELF THERE IS NO SCOPE FOR ANY BU S IN E SS OUTSIDE THE BOOKS O F ACCOUNT IN THIS LINE OF BUSINESS OF THE ASSESSEE. AT THE SAME TIME THERE IS NO DISPUTE WITH REGARD TO DIFFERENCES IN THE PURCHASES AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE AND AS PER THE MUL ON THE ONE HAND ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 8 AND SALES AS PER THE BOOKS OF THE ASSESSEE AND THE SALES AS PER THE SALES TAX DEPARTMENT ON THE OTHER. TAKING INTO ACCOUNT VARIOUS DISCREPANCIES IN THE BOOKS OF ACCOUNT THE CIT(A) REJECTED THE BOOKS OF THE ASSESSEE AND PROCEEDED TO ESTIMATE THE INCOME OF THE ASSESSEE FROM BUSINESS. CONSIDERING THE UNRECONCILED DIFFERENCES ON ACCOUNT OF SALE S AND PURCHASES AS NOTED ABOVE THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO MAKE A UNIFORM ADDITION WORKED OUT AT 1% OF THE SALES DECLARED BY THE ASSESSEE NET OF THE SALES TAX. AS NOTED ABOVE ASSESSEES GRIEVANCE IN THE FIRST PLACE IS THAT SUCH MECH ANICAL ADDITION IS NOT WARRANTED ON ACCOUNT OF MORE THAN RESPECTABLE FIGURE OF PROFIT DECLARED BY THE ASSESSEE ITSELF. IN THIS BEHALF HE DREW OUR ATTENTION TO THE FOLLOWING CHART FURNISHED BEFORE US - ASSESSMENT YEAR TURNOVER AFTER SALES TAX AS PER R OI RS. GROSS PROFIT NET PROFIT 2000 - 01 212 65 30 132 9.16% 0.09% 2001 - 02 8 59 29 565 3.45% 0.17% 2002 - 03 9 36 82 682 3.45% 0.16% 2003 - 04 15 42 06 597 5.70% 0.11% 2004 - 05 14 65 94 670 10.02% 0.23% 2005 - 06 17 04 57 881 4.32% 0.20% EVEN IN THE ASSESSMENT YEARS 2000 - 01 AND 2004 - 05 WHEN THE GROSS PROFIT DISCLOSED BY THE ASSESSEE IS AS MUCH HIGH AS 9.16% AND 10.02% RESPECTIVELY THE CIT(A) DIRECTED FOR ADDITION OF 1% WHICH THE ASSESSEE FEELS IS UNJUSTIFIED AND NOT CALLED FOR. AT THE SAME TIME WE FIND THAT THE CIT(A) ITSELF HAS NOTED IN PARA 4.3.4 OF THE IMPUGNED ORDER EXTRACTED ABOVE THAT THE ASSESSING OFFICER HAS NOT BROUGHT FORTH ANY EVIDENCE TO BRING ON RECORD SPECIF IC DETAILS O F DISCREPANCY OR THE UNACCOUNTED CAPITAL EMPLOYED BY THE ASSESSEE OR THE MODUS OPERANDI OF TAX EVASION. IN THE SAME BREATH THE CIT(A) HAS ALSO NOTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN ALL THE DISCREPANCIES NOTICED AND RECONCILE T HE DIFFERENCES NOTICED WITH REGARD TO PURCHASES AND SALES. CONSIDERING TOTALITY ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 9 OF FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE FACT THAT THE AVERAGE NET PROFIT RATE ARRIVED AT BY THE ASSESSEE IN EACH OF THESE YEARS AS DEPICTED IN THE ABOVE T ABLE WORKS OUT TO 0.16% WE MODIFY THE IMPUGNED ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION S IN EACH OF THESE YEARS IN SUCH A WAY SO AS TO RESULT IN A NET PROFIT OF 0.16% ON THE DIFFERENTIAL TURNOVER OVER AND ABOVE THE PROFIT DECLARED BY THE ASSESSEE. IN OTHER WORDS THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE NET PROFIT ON DIFFERENTIAL TURNOVER AT 0.16% AND MAKE ADDITION BY THAT AMOUNT TO THE INCOME DECLARED BY THE ASSESSEE SO AS TO NULLIFY THE DISCREPANCIES IN THE TURNOVER NOTICED . WE ORDER ACCORDINGLY . 12. NOW TURNING TO THE OTHER GRIEVANCE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2001 - 02 TO 2005 - 06 WITH REGARD TO ADDITIONS MADE IN TERMS OF S.40A(3) AND S. 43B OF THE ACT WE AGREE WITH THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE INCOME OF THE ASSESSEE FROM BUSINESS HAVING BEEN DETERMINED BY RESORTING TO ESTIMATION THERE IS NO SCOPE FOR ANY SEPARATE ADDITION IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS V/S. CIT(232 ITR 776). WE ACCORDINGLY DELETE THE ADDITIONS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) IN THIS BEHALF ACCEPTING THE GROUNDS OF THE ASSESSEE IN THIS BEHALF. 13. WE HASTEN TO ADD BEFORE PARTING WITH THESE APPEALS THAT THE INCOME THAT MAY BE DETERMINED BY THE ASSESSING OFFICER FOR EACH OF THESE YEARS SHALL NOT FALL BELOW THE INCOME RETURNED BY THE ASSESSEE FOR THE RELEVANT YEAR AND IN CASE RETURNED INCOME IS HIGHER FOR ANY Y EAR(S) RETURNED INCOME SHALL BE ACCEPTED. ITA NO. 1212 TO 1217 / HYD/20 09 M/S. SUGUNA MOTORS P. LTD. WARANGAL. 10 1 4 . IN THE RESULT ALL THE SIX APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12 TH FEBRUARY 2014 SD/ - SD/ - (CHANDRA POOJARI ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 12 TH FEBRUARY 2014 COPY FORWARDED TO: 1. M/S. SUGUNA MOTORS PVT. LTD. 15 - 1 - 59/1 OPP. GOVT. POLYTEHNIC AUTO NAGAR CROSS ROAD WARANGAL 2 . DY. COMMISSIONER OF INCOME - TAX CIRCLE 1 WARANGAL 3. COMMISSIONER OF INCOME - TAX(APPEALS) V I HYDERABAD 4. COMMISSIONER OF INCOME - TAX V HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S