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TMI Blog2014 (12) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient information and without examining them additions were made without assigning any reasons. (d) A sum of Rs. 8,56,931/- credited in the bank account of Sh. Ashok Kumar who was a benami of the assessee has been treated as income from undisclosed sources, but no addition of this account has been made in the total income of the assessee. 2.1 Consequent upon the aforesaid order u/s. 263 the assessment was taken up by the AO. AO observed the points mentioned by the Ld. CIT in its order u/s. 263 are dealt with as under:- (a) The assessee's representative has filed a letter dated 17.3.2003 wherein it has been contended that the assessee was not in any business of chit and lucky car draw scheme. It is observed from the records that the income from chit and lucky car draw scheme has been taken in the hands of its partners namely Sh. Bahadur Singh Sabharwal, Sh. Harjeet Singh, Sh. Surjeet Singh and Sh. Joginder Singh. (b) As per the trade practice and the records of other assesses profit estimated 10% on the sales is found to be reasonable. (c) The seized documents have again been verified properly and correlations with the additions made have been cross checked. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after reducing the cost of furniture and fixture of Rs. 252240/- and estimated cash in hand of Rs. 1 lakh balance capital value for investment in purchase of stock comes to Rs. 545648/-. Since closing stock of was Rs. 1186544/-, a sum of Rs. 640986/- remain unexplained as per the working of the Ld. AO. It was further submitted before the Ld. CIT(A) that AO has not supplied the assessee information and material collected from Sales Tax Department which was requested to him. It was submitted that AO has wrongly presumed that entire purchases of Rs. 2384524/- is paid stock. That cash and bank balance has been estimated without any basis to Rs. 1 lakh. It was further submitted that as per the AO the furniture was of Rs. 2,52,240/- whereas as per balance sheet as on 8.8.98 it was of Rs. 25240/-. Considering the above, Ld. CIT(A) held that the entire exercise of the AO in concluding the investment in excess stock was based on surmises and conjectures and was not supported by the evidence or material on record. Ld. CIT(A) concluded as under:- "The purchase of the assessee upto 31.12.98 taken at Rs. 23,84,524/- by the AO is not backed up by any evidence. So much so that despite repeated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- "As regards the estimation of sales at Rs. 28,36,500/- by the AO, I hold as follows:- As per the assessment order, the sales as per parallel sales books, document no. A-7 come to Rs. 7,37,675/-. The AR's contention that document no. A-7 was, in fact, the copies of Performa invoices issued by the assessee to various prospective customers does not hold ground, since there is nothing on the documents t prove likewise. In fact, the words cash or bill is clearly mentioned on the document as also the item sold, the date on which it was sold, and in some cases, the person also to whom it was sold. The seized document A-7, therefore, is clearly unaccounted sale bills of the assessee and ought to be added to the total sales returned by the assessee. As for estimation / extrapolation resorted to by the AO, thereby calculating the sales for the entire year on the basis of documents seized relating to a small period of time under consideration, the same cannot be resorted to by the AO, in view of the fact that firstly estimation, that too without any basis, cannot be resorted to in the proceedings u/s. 158BC of the I.T. Act, 1961. The assessment u/s. 158BC has to be framed strictly on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. DR is devoid of cogency. Hence, the same is dismissed as such. 7. As regards issue of deletion of addition of Rs. 8,56,931/-. We agree with the Ld. CIT(A) that there is no basis for the AO to treat the amount credited in the bank account of Sh. Ashok Kumar as the benami transaction. AO in his order has mentioned that as per the seized documents it is clearly established that the said sum credited in the bank account of Sh. Ashok Kumar pertains to assessee's firm, but the AO has not at all deal with the nature of the seized material and what was the content thereof. Ld. CIT(A) has given a finding that, how Sh. Ashok Kumar has been treated as the benami of the assessee is neither coming out from the impugned order of the AO nor from the assessment records examined by Ld. CIT(A). Under the circumstances, we are of the considered opinion, that there is no infirmity in the order of the Ld. CIT(A) in this regard. Ld. DR's contention that since in the order under section 263, Ld. CIT has referred to this addition and the AO was bound to make the addition cannot be said to be a ground for sustaining the order of the AO. Another plea of the Ld. DR is that Ld. CIT should have refrained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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