DCIT Vs Maharaja Silks (ITAT Chennai)
Chennai Itat Dismisses Revenue’s Appeal Against Additions For Undisclosed Profits, Excess Expenses & Stock Valuation Consequent To Survey
1. Assessee firm is stated running a textile shop was subjected to survey u/s 133A. Assessee filed return of income admitting income of Rs.341.36 Lacs. subject matter of the appeal before Tribunal is
(i) Addition of undisclosed business profits;
(ii) Excess claim of indirect expenses;
(iii) Addition of Excess Stock.
2. ADDITION OF SHORTFALL IN NET PROFIT
During survey, the P&L A/c as extracted from tally software reflected net profit of Rs.565.98 Lacs. In recorded statement, the MD, stated that since depreciation & other entries were not entered, the net profit recorded was incorrect. AO noted that as against profit of Rs.565.98 Lacs as in 05.03.18, the assessee reflected profit of Rs.332.84 Lacs. In other words, there was reduction in profit by Rs.233.14 Lacs in a span of 25 days. Assessee furnished Profit reconciliation statement:
| Particulars | ||
|---|---|---|
| Net Profit As on 05.03.18 | 5,65,98,598 | |
| Sales between 05.03.18 to 31.03.18 | 15,97,93,755 | |
| Other income between 05.03.18 to 31.03.18 | -2,32,870 | |
| Depreciation expenses for the period from 01.04.17 to 05.03.18 | 61,81,480 | |
| Less: Net Change in inventories between 05.03.18 to 31.03.18 | 1,43,32,451 | 6,56,42,365 |
| Purchases between 05.03.18 to 31.03.18 | 4,65,63,833 | |
| Freight, Stonework, Unloading Charges & packing charges between 05.03.18 to 31.03.18 | 10,20,458 | |
| Indirect Expenses incurred between 05.03.18 to 31.03.18 allowable u/s 37 | 1,51,78,929 | |
| Depreciation Expenses for the year ended 31.03.18 allowable u/s 32 | 73,60,764 | |
| Partners’ remuneration allowable u/s 40(b | 45,00,000 | 8,89,56,435 |
| Net Profit As on 31.03.18 | 3,32,84,528 |
ASSESSING OFFICER
