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2013 (4) TMI 227 - AT - Income TaxAddition being profit on sale out of the books of account - unexplained investment in purchase and sale - Held that - The CIT(A) has made detailed discussion regarding the profit material of the assessee. CIT(A) called for the remand report from the A.O. and finally the A.O. found that on the basis of impounded material found during course of survey in the case of sister concern that the assessee has made purchases from it. On the basis of impounded material, the assessee herself has calculated unaccounted purchases on the basis of loose paper of Rs.8,94,405/- and the same working has been given by the assessee to the CIT(A) vide letter dated 31.03.2011. In the said letter maximum profit was also calculated which was Rs.62,608/- being 7% of profit rate. The finding of CIT(A) is based on loose paper found at the time of survey in the premises sister concern and on the basis of these documents and statement of the concerned parties in the impounded document, it was clearly mentioned the name of the assessee. Before us, the assessee relied upon various decisions which does not help to the assessee as those decisions were made on the basis of facts of respective cases. The assessee has failed to discharge the burden by furnishing necessary financial statement, books of account and other material to support that the Books of accounts maintained by the assessee was perfect and there was no mistake in maintaining books of account. The assessee has also failed to furnish any supporting evidence regarding purchase and sales - appeal filed by the assessee is dismissed.
Issues Involved:
1. Addition of Rs.67,320/- being profit on sale out of the books of account. 2. Addition of Rs.8,94,405/- being unexplained investment in purchase and sale. Detailed Analysis: 1. Addition of Rs.67,320/- being profit on sale out of the books of account: The brief facts of the case are that the Assessing Officer (A.O.) received information from the Investigation Wing, Agra, about unaccounted sales of shoes by the assessee to M/s Bajwa Rubber Industries amounting to Rs.34,07,420/-. The A.O. asked the assessee to explain why this sale should not be treated as out of books. The assessee denied selling goods to M/s Bajwa Rubber Industries but admitted to purchasing from them. The A.O. did not accept the explanation and estimated the sales at Rs.75,00,000/-, applying a net profit rate of 7%, resulting in an income of Rs.5,25,000/-. Additionally, Rs.14,093/- was added as a discount, computing the total income at Rs.5,39,093/-. The A.O. further added Rs.31,68,900/- as unexplained investment in the purchase of shoes sold outside the books, making the total additions Rs.5,07,680/- and Rs.31,68,900/-. Before the Commissioner of Income Tax (Appeals) [CIT(A)], the assessee filed an affidavit denying sales to M/s Bajwa Rubber Industries and requested an opportunity for cross-examination. The CIT(A) provided photocopies of all documents used in the assessment and directed the A.O. to examine M/s Bajwa group. The A.O. found that the transactions pertained to M/s Shoe World (Bajwa) Exports, not M/s Bajwa Rubber Industries. M/s Shoe World (Bajwa) Exports admitted to unaccounted sales to the assessee. The CIT(A) calculated the unaccounted sales for different periods, confirming the amount as Rs.8,94,405/-. The CIT(A) held that the A.O. incorrectly computed unaccounted sales at Rs.34,07,420/- and allowed relief of Rs.22,74,495/-, sustaining the addition of Rs.8,94,405/-. The CIT(A) noted that the unaccounted purchases were not shown in the closing stock, presuming they were sold. Applying a 7% profit rate, the profit was calculated at Rs.67,320/-. The CIT(A) directed the A.O. to take the total income at Rs.2,22,934/- (including Rs.1,55,614/- shown in the Profit & Loss Account), allowing a relief of Rs.3,16,159/-. 2. Addition of Rs.8,94,405/- being unexplained investment in purchase and sale: The A.O. initially added Rs.31,68,900/- as unexplained investment for the purchase of shoes sold outside the books. The CIT(A) provided the assessee with an opportunity to reconcile the impounded documents with the books of M/s Bunny Trading Co. The A.O. confirmed that the transactions pertained to purchases from M/s Shoe World (Bajwa) Exports, not sales to M/s Bajwa Rubber Industries. The assessee's calculation showed unaccounted purchases at Rs.8,94,405/- instead of Rs.34,07,420/-. The CIT(A) accepted this and directed the A.O. to add Rs.8,94,405/- as unaccounted investment under section 69, allowing a relief of Rs.22,74,495/-. The CIT(A) found that the unaccounted purchases were sold, applying a 7% profit rate, resulting in a profit of Rs.67,320/-. The total profit, including the regular profit, was Rs.2,22,934/-. The CIT(A) directed the A.O. to take this as the total income, allowing a relief of Rs.3,16,159/-. The assessee contended that the A.O. wrongly rejected the books of account based on unsigned paper sheets found during the survey. The CIT(A) considered all aspects, including the affidavit and impounded material, and found that the assessee made unaccounted purchases from M/s Shoe World (Bajwa) Exports. The CIT(A) did not accept the affidavit as it was not signed by the assessee but by another individual. The CIT(A) concluded that the assessee made unaccounted purchases and calculated the correct amount based on the impounded documents. The Tribunal found no infirmity in the CIT(A)'s order, dismissing the appeal filed by the assessee.
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