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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 ..... as every right to adjudicate upon the order of the AO appealed before him judiciously – thus, the order of the CIT(A) is upheld - the addition was based on surmises and conjectures and was not at all supported by the evidences or the material on record - AO’s order does not cogently prove that addition of ₹ 6,40,896/- is warranted for amount of unexplained stock. Also, AO has made the addition by estimating the net profit @ 10% on the basis of figures of sales culled out by him at ₹ 1,00,71,689 - CIT(A) has examined the addition and estimation of sales by the AO after duly elaborating upon the issues - CIT(A) has given a finding that the estimate of sales as computed by the AO is not supported by cogent basis - CIT(A) has finally computed the total sales figures of the assessee at the figures of ₹ 35,79,069 - CIT(A) rightly has applied 5% rate of profit – thus, the order of the CIT(A) is upheld – Decided against revenue. - I.T. (SS).A. No 67/DEL/2009 - - - Dated:- 14-3-2014 - SHRI A.D. JAIN AND SHRI SHAMIM YAHYA, JJ. For The Department : S h. Ramesh Chandra, CIT(DR) For The Assessee : Sh. Ashwani Taneja, Adv. Sh. Tarun Adv. ORDER PER SH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al order u/s. 158 BC/143(3). Thereafter, AO computed the income as under:- Income as per original order ₹ 16,48,070/- Add:- As discussed above in para 4 ₹ 8,56,931/- Total Income ₹ 25,05,001/- 3. Upon assessee s appeal Ld. CIT(A) dealt with the AO s order as under:- I. Addition of ₹ 8,56,931/- 3.1 In this regard, Ld. CIT(A) observed that there is no basis for AO to treat the amount credited in the bank account of Sh. Ashok Kumar as the benami of the assessee. That how 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 him. Ld. CIT(A) held that there was no basis for the AO to conclude that as per the seized documents the amount credited in the bank account of Sh. Ashok Kumar was to be treated as benami of the assessee. Accordingly, Ld. CIT(A) deleted the addition of ₹ 8,56,931/-. II. Deletion of Addition of ₹ 6,40,896/- 3.2 On this issue AO made the addition of ₹ 6,40,896/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment showing these purchases, was never furnished to the assessee. Then again, no basis has been forwarded by the AO for estimating cash in hand at ₹ 1 lac. The AO has also not given credence to the fact that certain purchase may have been made on credit also which is quite normal in this trade. Further, the investment in furniture and fixture has been wrongly taken by the AO at ₹ 2,52,240/- while the same actually was as per the balance sheet submitted at ₹ 25,240/- as evident from the said balance sheet as on 8.8.1998. The total sales of the assessee thus work out to ₹ 35,79,069/- as per calculation below:- Sales as per regular sales book ₹ 13,22,044/- Sales as per document No. A-7 ₹ 7,37,675/- Sales as per Pad No. 8 ₹ 15,19,350/- ₹ 35,79,069/- The sale/receipts being less than 40 lacs, the provisions of section 44AF get attracted and profits, estimated as per this section at the rate of 5% (which is the maximum prescribed rate under that section), come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the basis of material found as a result of search. Moreover, the fact that the assessee had commenced business only on 20.5.1998, this being the first year of the working of the firm, the presumption that there ought to have been uniform sales during the year is quite untenable. Therefore, the addition on account of undisclosed sale is restricted to ₹ 7,37,675/- as against ₹ 28,36,500/- estimated by the AO. As regards sales as per Pad No. 8, I hold that I have gone through the seized document and find that the estimation made by the AO at the total of ₹ 15,19,350/- is correct. The narration in the paid and the figures mentioned against it lead to believe that only 1/100th of the actual sales was mentioned in the pad. As for estimating the sales for 288 days uniformly on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 from reversing the order of the AO in this respect as in the order under section 263, the Ld. CIT who is an officer of the equivalent rank has given a finding that the said sum was benami transaction of the assessee. We find that these submissions do not serve any purpose as neither in the order of the Ld. CIT u/s. 263 nor in the assessment order any material is there to show that the impugned sum credited in the bank account of Sh. Ashok Kumar was the benami transaction of the assessee firm. Ld. CIT(A) has every right to adjudicate upon the order of the AO appealed before him ju ..... 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