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TMI Blog2012 (9) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... es as well as corresponding purchases both are unaccounted then, in addition to GP, the corresponding investment i.e. purchase value is also required to be added. Thus, in either case the total sales will have to be treated as undisclosed income. CIT(A) has not given any basis as to why only GP should be added. Order of CIT(A) set aside and addition made by the AO is confirmed. Addition on account of undisclosed stock - assessee had explained the stock as belonging to M/s. P Corporation - AO did not accept the explanation as figures were not matching - CIT(A) while deleting addition observed that discrepancy found represented the stock position of different dates - Held that:- In case no date is mentioned the document has to be taken as of the current date unless the assessee explains with evidence that the same related to earlier period. Therefore, the transactions had to be treated as part of the block period. The assessee had not produced any evidence to show that the said stock was part of the common business and had already been declared in the common accounts. addition made by AO is confirmed - Decided in favor of Revenue - IT(SS)A No.92/Mum/2006 - - - Dated:- 11-7-2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed investment. The AO during the assessment proceedings noted that there were several entries of transactions made in the note book annexure A-3 containing 20 pages seized from the residential premises of the assessee. The assessee had explained that the seized document was a rough book in which entries had been made relating to family settlement dated 16.3.1996. The AO however noted from the copy of family settlement dated 16.3.1996 that it spoke only about immovable properties belonging to the group. The AO further noted that in the said documents, the stock of Bhiwandi godown as on 30.6.1996 was shown as Rs.10,13,36,000/- and there was also mention of purchase from customs for which date of payment had been mentioned as Feb. 97. The AO also noted that all five brothers were partners of the firm up to financial year 1996-97 and there was change of constitution only from assessment year 1998-99. The AO therefore did not accept the explanation of the assessee that the entries made in the document related to the family settlement. The entries fell within the block period and the AO therefore, assessed the income relating thereto in the block assessment. From the said seized d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief of Rs.6,51,38,695 allowed by CIT(A) in relation to addition of Rs.7,14,38,500/- made by the AO on account of undisclosed investment based on the entries found on the seized documents. The AO on perusal of seized documents noted that the figures entered were in codes. The AO had given justification for the said conclusion in the show cause notice dated 25.1.2005 issue to the assessee. In para-4 of the said notice the AO noted that at page- 38 of Annexure A-2 which was a hundi of Rs.1.00 lacs signed by Dalchand T. Palreja but at page-2 of annexure-1 only a sum of 50 was written against the name of Dalchand which showed that the figure was coded. Similarly at page-2 of Annexure-1, the total of left hand Side was 14.75 whereas on the Right Hand Side the figure written was 875 but the total of the two figures was written as 23.50. This shows 875 was nothing but 8.75 in lacs. Similarly in para-6, the AO pointed out that on the back side of page-2, there were entries total of which was 220.60 which denoted loan of Rs.2,22,600/- given to various persons. Thus there was justification for AO for coming to the conclusion that the figures were coded and CIT(A) was not justified in conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the purchases are accounted, the entire sales had to be added to the trading account and in case sales as well as corresponding purchases both are unaccounted then, in addition to GP, the corresponding investment i.e. purchase value is also required to be added. Thus, in either case the total sales will have to be treated as undisclosed income. CIT(A) has not given any basis as to why only GP should be added. We, therefore, set aside the order of CIT(A) and confirm the addition made by the AO. 5. The third dispute is regarding addition of Rs.1,52,16,793/- on account of undisclosed stock. The AO noted that on page-7 of Annexure-1, the value of stock as on 30.6.1996 had been entered which was Rs.1,01,33,600/- in relation to Bhiwandi stock and Rs.73,86,000/- in relation to Khetwadi stock totaling to Rs.1,75,19,600/-. The assessee explained before AO that the stock belonged to M/s. Palreja Metal Corporation. AO however, observed that there was no mention of said concern in the books assessed and at no point of time during the search, assessee had claimed that the goods lying in his godown belonged to somebody else. The AO prepared the trading account as on 30.6.1996 as per books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot given any such explanation earlier and specially during the search, the AO did not accept the explanation given and computed the income on account of such stock in case of the assessee. The excess stock with reference to books of account on this account was computed at Rs.56,59,593/-. Besides, on back side of page-3 of Annexure A-1, there were total figures of Rs.95,57,000/- written therein. The assessee had given the following explanation before AO :- The firm has purchased goods from custom 40,000/-Kg. Copper from Collector of customs during the year ended March, 1997 of Rs.53,66,400/- and 80,000 Kg. Brass Total Rs.62,06,720/- As per your show cause notice Page No.15 or Page No.19 of A-4 seized on 21.11.2003 from Desai House where the total amount paid to custom through bank draft came to Rs.81,92,072/-. Therefore, the page No.3 shows that total stock lying with M/s. Shah Rupchand Meghraj Co. and goods transferred to Poona Variety metal Pvt. Ltd. Rs.8,98,964/- 20.6.96 and other firms. 5.4 The AO however did not accept the explanation as figures were not matching. He accordingly treated the sum of Rs.95,57,000/- as unaccounted investment in stock and added to the to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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