Isha Metal Stores Vs ACIT (ITAT Raipur)
The appeal arose from the order of the Commissioner of Income Tax (Appeals), Raipur-3, for Assessment Year 2019-20. The assessee, engaged in retail and wholesale trading of household goods, had filed its return declaring total income of Rs. 28,08,610. During a survey conducted on 19.02.2019, the department found a physical bill book titled “Chandan Estimate Cash Memo” containing sales of Rs. 48,49,112 that were not recorded in the computerized accounts maintained in Tally. The partner of the assessee admitted that the purchases and sales reflected in the bill book were entirely outside the books of account and voluntarily surrendered Rs. 48,49,112 as income of the firm. Subsequently, during assessment proceedings, the assessee retracted the statement through an affidavit, alleging that the surrender had been made under pressure. The Assessing Officer rejected the retraction, observing that the statement had been given voluntarily without coercion. Instead of adding the entire unrecorded sales, the Assessing Officer estimated the gross profit at 22.17%, being the gross profit rate reflected in the assessee’s own books, and made an addition of Rs. 10,75,050.
The CIT(A) upheld the addition. It observed that the assessee failed to produce any evidence supporting the allegation that the surrender was obtained under pressure. The appellate authority held that the retraction was an afterthought intended to avoid tax liability and that the existence of unrecorded sales had been established during the survey. Since the Assessing Officer had applied the assessee’s own gross profit rate of 22.17% to the unrecorded sales, the estimation was considered reasonable and justified.
