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Issues Involved:
1. Addition of Rs. 1,28,100 on account of alleged unrecorded purchases of oil and the notional profit thereon. 2. Addition of Rs. 9,245 on account of 1/3rd car expenses incurred for personal use by partners. Issue-wise Detailed Analysis: 1. Addition of Rs. 1,28,100 on Account of Alleged Unrecorded Purchases of Oil and the Notional Profit Thereon: The appellant, a registered firm dealing in the wholesale sale of oil, contested the addition of Rs. 1,28,100 made by the Assessing Officer (AO) for the assessment year 1983-84. The AO added this amount as income from undisclosed sources, including a profit of Rs. 2,800 on these purchases at a rate of 2.14%. This addition was based on two unrecorded purchase bills dated 10-4-1982 and 13-4-1982 found during a search operation on 20-1-1984. The appellant argued that these purchases were not recorded because the goods were returned to the supplier, M/s. United Brothers (UB), due to inferior quality. This claim was supported by a letter from UB's manager and entries in UB's books of account, which were produced during the investigation. However, the AO was not satisfied with this explanation, citing a lack of evidence for the return of goods and discrepancies in the stock register of UB. The Appellate Commissioner (AC) upheld the AO's addition, stating that the appellant could not substantiate the return of goods and that there were inconsistencies in UB's records. The AC also noted that UB and its partners had declared the amount of Rs. 1,28,100 under the Amnesty Scheme, which did not absolve the appellant from tax liability. In the second appeal, the Tribunal considered the appellant's submissions and the supporting documents. The Tribunal found that the appellant had a strong case, as both the appellant and UB denied the transactions and no evidence was collected by the AO to prove the purchases and payments. The Tribunal concluded that the addition was based on mere suspicion and conjectures without positive evidence. Therefore, the Tribunal directed the AO to delete the entire addition of Rs. 1,28,100. However, a dissenting opinion by another member of the Tribunal argued that the addition was justified based on the evidence and surrounding circumstances, including the non-existence of Shree Shakti Oil Industries (SSOI) from where UB allegedly purchased the oil. This member emphasized that the disclosure by UB under the Amnesty Scheme did not absolve the appellant from the tax liability. The matter was referred to a Third Member, who agreed with the majority view that the addition was based on suspicion and conjectures without positive evidence. The Third Member noted that the AO did not bring any material on record to substantiate the allegation of unrecorded purchases and sales. Consequently, the Third Member directed the deletion of the entire addition of Rs. 1,28,100. 2. Addition of Rs. 9,245 on Account of 1/3rd Car Expenses Incurred for Personal Use by Partners: The AO made an addition of Rs. 9,245 on account of 1/3rd car expenses incurred for personal use by the partners. This addition was disputed by the appellant in the present appeal. The AC upheld this addition, and the Tribunal also decided not to interfere with this finding. The Tribunal reasoned that it could not be said that the partners did not use the firm's car for personal purposes. Therefore, the addition of Rs. 9,245 was rightly sustained by the AC. Conclusion: The appeal was partly allowed. The Tribunal directed the deletion of the addition of Rs. 1,28,100 on account of alleged unrecorded purchases of oil and the notional profit thereon, while upholding the addition of Rs. 9,245 on account of 1/3rd car expenses incurred for personal use by the partners.
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