HC upheld Application of GP on unaccounted sales to make additions

CIT Vs. V R Textiles (Ahmedabad High Court)- The Tribunal further noted that the assessee had not placed any material to depict whether it had made any claim before the Income Tax Officer or at the stage of appeal. It had not disputed the income as well as sales made outside the books of account and had also paid the excise duty. By further noting that the Excise Department had noted that the assessee has made unaccounted sales of Rs. 3.86 Crores, the CIT {A} was justified in taking the figure of unaccounted sales computed by the excise authorities as against the figure worked out by the Assessing Officer.

On the ground that the entire undisclosed sales could not be treated as profit of the assessee, relying on the judgement of this Court in the case of CIT v. President Industries Limited, [258 ITR 654 (Guj)], it upheld the findings of the CIT [A] which applies the gross profit ratio against the unaccounted sales for the purpose of making additions on account of undisclosed income. The Tribunal also ratified the decision of the CIT [A] in considering the issue of deployment of minimum capital investment for the purpose of making and rotating the sales outside the books of account. For not having found anything contrary to the findings arrived at by the CIT [A] and on cumulatively examining the facts, which were presented before the Tribunal, it upheld the findings of the CIT [A] which applied the gross profit ration as against the undisclosed sales made by the assessee for the purpose of making the additions. Thus, it could be seen from the order of the Tribunal, on proper appreciation of facts and material on record, it concluded the issue in favour of the assessee and against the Revenue. It found sufficient material on record to uphold the findings arrived at by the CIT [A] and for so doing, it had given cogent reasons in its order

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

 TAX APPEAL No. 1828 of 2010

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