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TMI Blog2012 (7) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the disallowance of Rs.14,82,877 since it was established that the assessee had made cash purchases of Rs.71,88,782/- which were more than Rs.20,000/- outside the books of accounts - against assessee. Addition on account of profit earned from purchases and sales of goods outside the books of accounts - CIT(A) deleted the addition - Held that:- As the AO made addition on account of difference in physical cash balance and book balance as per the books of accounts there is no dispute to the fact that assessee is earning profit from purchases and sales made outside the books of accounts. It is obvious that such profit will remain in the hands of the assessee outside the books of accounts and requires to be taxed. However, in such situation the surplus cash found during the course of survey which was not recorded in the books of accounts can be obviously pointed out to be the profit earned from the purchases and sales of goods made outside the books of accounts - in favour of assessee. - ITA No.1011/Ahd/2010 - - - Dated:- 31-5-2012 - SHRI D. K. TYAGI, A. MOHAN ALANKAMONY, JJ. Appellant by Shri S. P. Talati, Sr. DR Respondent by Shri Mukund Bakshi, AR O R D E R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with other disallowances aggregating to Rs.38,33,755/-. The assessee carried the matter before the learned CIT(A). 5. The learned CIT(A) deleted the additions made by the learned AO for peak investment for Rs.19,14,623/- and observed as under: 4.3.2 Regarding the legal contention of the assessee with respect to the addition being made merely on the basis of statement recorded in the course of survey proceedings without any cogent and corroborative evidence and on going through the records and materials, I find that though an admission was made in the course of survey, the same was not accepted while filing the return wherein the assessee has mentioned that the statement recorded during the survey was not binding on him and thus, in these circumstances, it was imperative on the Assessing Officer to gather evidence or material to strengthen the addition. I find that the explanation of the assessee that the unaccounted purchases were made from a local party itself and the purchases from him are made almost on daily basis as per the Annexures impounded. If the statement given by the assessee at the time of survey was to be accepted that the purchases made are sold and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned DR further submitted that these additions were agreed upon by the assessee at the time of survey based on the books of accounts and other materials found during the course of survey. The learned DR, therefore, prayed that the order of the learned AO with respect to these additions may be sustained. 7. The learned AR on the other hand, stoutly argued that thought the assessee was purchasing and selling edible oil outside the books of accounts on wholesale basis, there was no investment made by the assessee for such trading activity since all the purchases were made either on credit or by payment of cash and all the stock purchased was simultaneously sold for cash. He further submitted that since the trading activity of the assessee was kept outside the books of accounts no credits were extended to any party for the fear of it going bad and unenforceability in the court of law. The learned AR relied on the order of the learned CIT(A) with respect to the deletion of Rs.14,82,877/- u/s 40A (3) of the Act and Rs.1,23,450/- by giving telescoping benefit. 8. We have heard the rival submissions and perused the material on record. 8.1 (I) Deletion of Rs.19,14,623/-: The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment for any year not being an assessment year commencing prior to 1st day of April, 1969, in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year the assessee makes any payment in respect thereof in a sum exceeding [ (twenty) thousand] rupees otherwise than by [ an account payee cheque drawn on a bank or account payee bank draft] the allowance originally made shall be deemed to have been wrongly made and the [Assessing] officer may recomputed the total income of the assessee for the previous year in which such liability was incurred and make the necessary amendment, and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the assessment year next following the previous year in which the payment was also made; Provided further that no disallowance under this sub-section shall be made where any payment in a sum exceeding [(twenty) thousand] rupees is made otherwise than by [an account payee cheque drawn on a bank or account payee bank draft] in such cases and under such circumstances as may be p ..... 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