9911796707
TMI Blog2007 (11) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in: (i) Directing the AO to make addition only of profit element i.e., 10.5 per cent GP involved in the sales of Rs. 3,11,893 instead of addition of Rs. 3,11,893, made by the AO on account of shortage of stock treating it as unaccounted sales for the period 1st April, 1999 till the date of search where purchases and expenses were fully accounted for in the books and debited to the trading account. (ii) Directing the AO to adopt the undisclosed sales at Rs. 41,35,040 only, instead of Rs. 2,29,50,883 estimated by the AO, and to apply to 10.5 per cent GP rate and thereby granting a relief of Rs. 23,04,315, whereas the AO had rightly estimated the undisclosed sales in case of such a line of business for the entire period on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpared with the stock available in the books of accounts. The stock on physical verification was found at Rs. 23,25,118 whereas the stock as per books of accounts on the date of search was found at Rs. 29,13,511, which resulted into shortage of stock of Rs. 5,88,393. The assessee, however, reconciled and after adjusting calculation mistakes in the working of the stock, which were also accepted by the AO. Finally stock shortage was reduced to Rs. 3,11,893. This shortage of stock was taken as unaccounted sales for the period 1st April, 1999 till the date of search because according to the AO since the purchases and expenses were duly accounted for and debited to the trading account the entire amount of shortage will constitute undisclosed inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) in this regard. Hence, we dismiss ground No. (i) of Revenue's appeal. 8. The facts of ground No. (ii) are that during the course of search, various documents in the form of diaries and loose papers relating to the details to the trade of Rasgullas were found and seized. When the assessee was asked to explain the nature of the transactions recorded in these incriminating documents it was accepted that all these documents were related to the trade of Rasgullas, which was not accounted for in the regular books of accounts. The assessee also filed a detailed working of the unaccounted sales, which included details of sales and purchases. According to this working, the total unaccounted sales of Rasgulla came to Rs. 41,35,040, as per the sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------------- 96-97 1,02,72,021 28,76,166 3,01,997 ------------------------------------------------------- 97-98 1,13,56,528 31,79,827 3,73,882 ------------------------------------------------------- 98-99 1,58,78,704 44,46,037 4,66,833 ------------------------------------------------------- 99-2000 1,73,94,855 48,70,558 5,11,409 ------------------------------------------------------- 2000-01 59,78,745 16,74,048 1,75,775 (till 29.7.99) ------------------------------------------------------- Total 8,19,76,453 2,29,50,883 24,49,842 ------------------------------------------------------- Thus, total addition came to Rs. 28,61,824 (Rs. 24,49,842 + Rs. 3,72,834 + Rs. 39,148). The AO has estimated the undisclosed sales at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... io of 28 per cent to record sales of the entire period, on the basis of sales found during the period from 1st Nov., 1992 to 30th Nov., 1992. The various decisions have been quoted by learned Departmental Representative that the AO can make estimation on the basis of documents found during search even in block assessment orders. No one has disputed the above position of law. But at the same time the law is also settled that the AO cannot make any such estimation de hors any evidence found during the course of search. A sample of sales taken from one month cannot be treated as representation of the undisclosed trading activity of the entire block period as there cannot be uniformity throughout the year. The AO has not discovered the ratio in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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