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TMI Blog2012 (11) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO and CIT(A) are all bad. 2. In fact all the additions are bad because they are made without abiding by rules of natural justice and/or proper show cause notice and/or by wrongly recording the factum of admission by assessee, when none was made by assessee. 3. The assessment order is bad because section 158BC notice is bad because of its vagueness." 3. The learned counsel for the assessee at the outset has not pressed these additional grounds of appeal, and accordingly they are not admitted and dismissed in limine. 4. The ground no.1 of the assessee's appeal is as under: "1. The ld.CIT(A) erred in law and on facts in confirming the addition to the tune of Rs.67,22,526/- on account of profit earned from alleged undisclosed trading turnover." 5. The learned counsel for the assessee submitted that the AO has arbitrarily added imaginary figure of GP from unaccounted turnover and made addition of Rs.1.14 crores as undisclosed income of the assessee. The CIT(A) has reduced the addition to Rs.67,22,526/- by applying a lesser rate of profit at the rate of 15%. He submitted that the transactions of so-called unaccounted turnover were duly recorded by the assessee in its books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the CIT(A) has elaborately cited the figure of the turnover as per the seized material, recorded in its sale register and page number of the sale register along with date, amount and full narration has been detailed therein. The CIT(A) has not even rejected the same and has not considered the submissions of the assessee made in this behalf. The assessee has pointed out that there were certain arithmetical inaccuracies also and the same were also not taken note by the CIT(A). The CIT(A) has also not considered the submissions of the assessee that the GP rate as per the I.T. records comes to 14.07% and the NP therein is about 8% only. In these facts of the case, we are unable to sustain the addition made by the AO and confirmed by the CIT(A). However, we find that as per the pleading of the assessee itself there were some arithmetical inaccuracies in the calculations of the unaccounted turnover of the assessee and petty lapses in the recording of the turnover in the sales register could not be ruled out. The learned counsel for the assessee has submitted before us that it has no objection in case some addition is sustained to cover up some petty discrepancies by way of estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom undisclosed trading of timber. Accordingly, we hold that the GP element at the rate of 14% on shortfall of timber of Rs.1.14 lakhs which comes to Rs.16,000/- (in round figure) be sustained as addition out of the addition of Rs.1.14 lakhs sustained by the CIT(A) and the balance addition is deleted and the ground no.3 of the assessee is partly allowed. 14. The Ground No.4 of the assessee's appeal is as under: "4. The ld.CIT(A) erred in law and on facts in confirming the addition of Rs.64,59,436/- made on account of alleged unexplained expenditure" 15. The learned counsel for the assessee submitted that the Revenue authorities have arbitrarily made addition on account of alleged unexplained expenditure. He submitted that no show cause notice was served on the assessee to explain its case, and therefore the addition has been made against the principle of natural justice. He referred to the relevant portions of the written submissions filed by the assessee before the CIT(A), wherein it has explained that the alleged unexplained expenditure relates to "other persons" and not to the assessee-firm, and therefore the addition made in the case of the assessee-firm is void. He submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs.1,81,694/- made on account of profit earned from alleged undisclosed trading turnover." 18. The learned counsel for the assessee at the outset fairly submitted that this ground does not arise out of the appellate order of the CIT(A) and hence should be dismissed. The learned DR has no objection to the submissions of the learned counsel of the assessee. 19. We have considered rival submissions. The issue in the ground no.5 of the assessee has not arisen out of the CIT(A)'s order, and accordingly, the ground no.5 of the assessee is dismissed. IT(SS)A.No.346/Ahd/2002 (Revenue's appeal) 20. The ground no.1 of the assessee's appeal is as under: "I. The l d.CIT(A) has erred in law and on facts in directing that the amount of unaccounted turnover be taken at Rs.4,48,15,937/- as against the amount of unaccounted turnover taken by the AO at Rs.4,80,23,843/- (after removing the totaling mistakes)" 21. Both the parties before us submitted that the issue in this ground of the Revenue's appeal is covered with the ground no.1 of the assessee's appeal in IT(SS)A.No.336/Ahd/2002. We have considered rival submissions. In view of our decision while disposing of the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment." 28. The learned DR has relied on the order of the AO. The learned counsel for the assessee has relied on the order of the CIT(A). 27. We have considered rival submissions and perused the orders of the AO and the CIT(A). We find that the CIT(A) has deleted the addition of Rs.1,62,010/- by observing that the assessee contended that the timber business being very old and running, the addition on account of initial investment could not be made. We find that the assessee's timber business is very old, and therefore there is no justification for addition on account of initial investment in block period, and accordingly the order of the CIT(A) on this issue is confirmed and the Ground No.4 of the Revenue is dismissed. 28. The Ground No.5 of the Revenue's appeal reads as under: "V. The learned CIT(A) has erred in law and on facts in directing that the unaccounted profit on the amount of stock found short (Rs.7,59,860) be worked out by applying the gross profit rate of 15% thereon, instead of the rate of 20%." 29. The learned DR has relied on the order of the AO. The learned counsel for the assessee has relied on the order of the CIT(A). 30. We have considered rival submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's appeal is as under: "3. The ld.CIT(A) erred in law and on facts in confirming the addition of Rs.15,23,347/- on account of unaccounted profit alleged to have been earned from alleged undisclosed trading turnover." 36. Both the parties before us submitted that the facts of the case and the issue in this ground of appeal is identical with the issue in the ground no.1 of the assessee's appeal in IT(SS)336/Ahd/2002. 37. We have considered rival submissions. The facts of the case of the assessee in this issue are similar to the facts of the case of the assessee in ground no.1 of the assessee's appeal in IT(SS).A.No.336/Ahd/2002. For the reasons recorded while disposing of the ground no.1 of the assessee's appeal for the block period in IT(SS)A.No.336/Ahd/2002 and the submission of the learned counsel for the assessee that petty lapses in the recording of the turnover in the sales register could not be ruled out and it has no objection in case some addition is sustained to cover up petty discrepancies by way of estimate, we hold that ends of the justice shall be met if the addition on account of profit on undisclosed trading is restricted to Rs.2 lakhs out of the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 3 are as under: "2. The assessment order is bad because section 158BC notice was vague and therefore, bad. 3. All the additions made by AO are bad because they are made without abiding the rules of natural justice and/or proper show cause notice and/or by wrongly recording the factum of admission by assessee. When none was made by assessee and/or by making wrong statement of facts." 47. The learned counsel of the assessee have not pressed these additional grounds no.2 and 3, which are accordingly dismissed. IT(SS)A.No.348/Ahd/2002 (Revenue's appeal) 48. The ground no.1 of the Revenue's appeal is as under: "I. The ld.CIT(A) has erred in law and on facts in directing that the addition on account of the amount of tock found short (Rs.4,39,452/-) be made at the rate of gross profit of 15% thereof, i.e., Rs.65,917/, instead of at the rate of gross profit of 20% thereon (which works out to Rs.87,890/-). 49. We have heard both the parties. We find that the CIT(A) has passed a well reasoned speaking order on this issue and has rightly applied the GP rate of 15% on the stock found shown and directing the addition of Rs.65,917/-, and therefore is no justification for applyi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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