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TMI Blog2012 (3) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... eliable. In this view of the matter, the order passed by the CIT(A) rejecting the books of account is confirmed. Additions on account of low GP rate - AO has applied the previous year GP as declared by the appellant which is held to be just and fair. The addition of Rs. 3,26,556/- made by the AO is upheld. - ITA No. 367/Chd/2011 - - - Dated:- 4-1-2012 - SHRI H.L.KARWA, SHRI D.K.SRIVASTAVA, JJ. Appel lant By: Shri A.K.Jindal Respondent By: Shri Akhi lesh Gupta ORDER D.K.SRIVASTAVA: The appeal field by the assessee is directed against the order passed by the CIT(A) on 27.1.2011. The appeal relates to assessment year 2006-07. The assessee filed his return of income for the assessment year under appeal on 27.10.2006 returning his total income at Rs.17,04,700/-. After processing, the return was selected for scrutiny. The assessee is proprietor of M/s Khubi Ram Dwarka Dass and is engaged in the business of dealing in foodgrains, atta, maida etc. He is also a partner in M/s Mittal Trading Company. Survey operation u/s 133A of the Income-tax Act was carried out at the business premises of the assessee on 31.12.2005 during which he surrendered a sum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lain as to how the impugned sum surrendered by him was his business income. The operative part of the appellate order passed by the CIT(A) reads as under:- 3.3 I have carefully considered the submissions made by the appellant . It is seen that no evidence has been brought on record during the survey operation, assessment proceedings and during the appellate proceedings regarding the source of money advanced at Rs.25 lakhs. Further, the assessee has not been able to give any evidence to say that the advances made were out of unaccounted money generated out of business. Al l that the assessee has stated is that the advances are not recorded in the books of account . It does not automatically mean that it is unaccounted income of the business being carried on by the assessee unless it is proved so. More so, when the assessee was given an opportunity to explain its posit ion. The Hon'ble Gujarat High Court in Fakir Mohmed Hazi Hassan v. CIT on which the AO has relied has held as under:- The scheme of sections 69, 69A, 69B and 69C of the Income-tax Act , 1961 would show that in cases where the nature and sources of investments made by the assessee or the nature and sources of acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the corresponding deduct ions which are applicable to the incomes under any of these various heads, will not be attracted in the case of deemed incomes which are covered under the provisions of sect ion 69, 69A, 69B and 69C of the Act in view of the scheme of those provisions. In the absence of any satisfactory explanation/evidence regarding the sources of the additional income declared by the appellant during survey on account of advances made to various landlords and applying the ratio of Hon'ble Gujarat High Court, the AO s action in treating the additional income Rs. 25 lakhs as deemed income u/s 69A is upheld. 3.4 Rel iance in this regard is also placed on Hon'ble Chandigarh Bench decision in the case of M/s Kim Pharma Pvt Ltd. in ITA No. 189/Chd/2010 dated 30.4.2010 where in on similar facts, the Hon'ble Bench has upheld the action of the AO observing as under:- In the absence of the explanation/evidence regarding the sources of the additional income being satisfactorily explained by the assessee and applying the ratio of the Hon'ble Gujarat High Court in Fakir Mohmed Hazi Hassan v. CIT (supra), we hold that the additional income offered is deemed income asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from a known source, namely, prof its and gains of business or profession or income from other sources. The ld. CIT(A) has correctly relied upon the judgment of the Hon'ble Gujarat High Court in Fakir Mohamed Haji Hasan, 247 ITR 290 (Guj) and the decision of this Tribunal in M/s Kim Pharma Pvt . Ltd, ITA No.189/Chd/2010 in support of her order in this behalf . Her order is reasonable on the facts of the case and also in conformity with law. We, therefore, confirm her order. She has rightly confirmed the act ion of the AO in treating the surrendered amount as unexplained investment under Chapter VI of the I-T Act and not as his business income u/s 28 as claimed by the assessee. Ground No.1 is dismissed. 8. Ground No.2 reads as under;- 2. That the ld. CIT(A) is not justified in holding that the AO has erred in al lowing the set off of business loss against the surrendered income as business loss cannot be set off against deemed income assessed u/s 69 of the Income-tax Act , 1961. 9. We have heard the parties. Set off of loss from one source against the income from another source under the same head of income is permissible under sect ion 70 while set off of loss from one head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation by the Assessing Officer. Therefore, as far as the value of stock as per books of account is concerned, the same has been adopted as shown by the appellant himself . The appellant during the course of appellate proceedings has challenged the valuation of stock/inventory by the survey team. The appellant s explanation/objection with regard to inventory weightment and valuation are not acceptable in the absence of specific instances pointed out by the appellant with regard to difference in the value adopted by the survey team and as per actual rate. Therefore, the contention of the appellant with regard to the defect in the inventory prepared by the survey team is rejected being unsubstantiated. The addition made by the Assessing Officer is confirmed. This ground of appeal is dismissed. 13. In support of appeal , the ld. authorized representative for the assessee submitted that the assessee had already surrendered a sum of Rs. 76,430/- as unexplained investment in stock and, therefore, the impugned addition was liable to be deleted. In this connection, he relied upon the statement recorded at the time of survey. 14. In reply, the ld. Departmental Representative invited o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eletion or amendment in the grounds of appeal on or before the disposal of the same. 17. We have heard both the parties. Perusal of Ground No.1 as taken by the assessee before us shows that the assessee himself accepts that sales, purchases, stock have not been truly/completely recorded by him in his books of account . The very fact that the assessee has surrendered a sum of Rs.25 lakhs on account of unexplained transactions also shows that the books of account maintained by the assessee are neither complete nor correct nor reliable. In this view of the matter, the order passed by the CIT(A) rejecting the books of account is confirmed. Ground No. 4(a) is dismissed. 18. Apropos Ground No.4(b)/(c), the AO, after rejecting the books of account , has added a sum of Rs.3,26,556/- on account of low rate of gross prof it shown by the assessee. On appeal , the CIT(A) has confirmed the impugned addition with the following observations:- 5.1 I have carefully considered the submissions made by the appellant and find no merit in the same. It is not iced from the assessment order that the appellant himself accepted that there were certain posting mistakes from cash book to ledger due to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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