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TMI Blog2015 (5) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly rejected the books of account u/s. 145(3). This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. - Decided against assessee. Addition for the alleged low G.P. - Held that:- AO has computed gross profit rate of various items dealt with by assessee on the basis of records of assessee, norms of industry and statement of main partner of assessee firm. He then applied gross profit rate so computed on sale of various items to compute gross profit rate of assessee. The sale figures given by assessee during assessment proceedings were adopted by Assessing Officer. Gross profit computed by Assessing Officer is ₹ 37,24,780/-. After reducing gross profit declared by assessee amounting to ₹ 17,61,483/-. Assessing Officer made addition of ₹ 19,63,297/- on account of low gross profit rate. Under facts and circumstances, CIT(A) was justified in upholding the rejection of books of accounts as discussed above and having done so, CIT(A) was justified in sustaining addition of ₹ 19,63,297/- made on account of low gross profit rate - Decided against assessee. Addition on account of sales of cattle feed - CIT(A) deleted the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the entire purchases which was not correct. At best addition of the peak amount can be made. In view of this, CIT(A) deleted addition of ₹ 71,89,691/-. This factual finding of CIT(A) needs no interference from our side. - Decided against revenue. Unaccounted purchase of Kalyan Kapas - CIT(A) deleted the addition - Held that:- CIT(A) having considered arguments of assessee and observations of Assessing Officer and remand report of Assessing Officer observed that Assessing Officer has made this addition on the basis of figures given by assessee during survey while he has made gross profit addition on the basis of sale figures given by assessee at the time of assessment proceedings. In this background, Assessing Officer was not justified in making this addition and same was rightly deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference - Decided against revenue. Unaccounted sale of cotton. bales - CIT(A) deleted the addition - Held that:- The stand of assessee has been that Assessing Officer can add the profit element on sale of such goods since sales were accounted. The amount of sale difference cannot represent the income of assessee, who ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that Assessing Officer has made addition of this amount on the ground that assessee did not produce required certificate in Form D issued by sales tax Authority. The certificate has been produced by assessee during appellate proceedings since it was not called for during assessment proceedings. In remand report, Assessing Officer has not commented on certificate which shows that he as nothing to say on the point. Since assessee fulfilled the conditions as prescribed in this regard. Assessing Officer was not justified in making addition of unpaid sales tax liability. Same was rightly deleted by CIT(A). - Decided against revenue. Unexplained cash credits - Held that:- CIT(A) observed that assessee has failed to file confirmations and also failed to produce the creditors to establish the genuineness of cash credits. Accordingly, addition made by Assessing Officer of ₹ 4, 61,445/- as unexplained cash credit was rightly confirmed by CIT(A), which needs no interference from our side. - Decided against assessee. - ITA. No. 2144/Ahd/2007, ITA. No. 2172/Ahd/2007 - - - Dated:- 27-3-2015 - Shri Shailendra Kumar Yadav And Shri N. S. Saini JJ For the Appellant :Shri Roopc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Ld. Commissioner of Income tax (A) - XVI, Ahmedabad may be set aside and that of the Assessing Officer be restored. 2.1 In ITA No. 2172/Ahd/2007, assessee has filed the appeal on the following grounds: 1. The learned Commissioner of Income Tax (A) has erred in confirming the rejection of book results u/s.145(3) of the I.T. Act, 1961. 2. The learned Commissioner of Income Tax (A) has erred in confirming an addition of ₹ 19,63,297/- made by Assessing Officer for the alleged low G.P. 3. The learned Commissioner of Income Tax (A) has erred in giving direction to compute the profit on the sale of Cotton bales and make addition of the profit on sale of the cotton bales and not the entire sale itself. He thereby erred in retaining the addition in part out of ₹ 27,71,015/- made by the A.0. 4. The learned Commissioner of Income Tax (A) has erred in confirming an addition of ₹ 4,61,445/- made by the A.O. for alleged unexplained cash Credits as Under:- 1. Jayantibhai Dalsukh Rs.1,11,587/- 2. Gajibhai Bhagwanbhai ₹ 99,858/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out gross profit rate of Kala Kapas at 7.36%, Kalyan Kapas 24.6%, Oil cattle feed at 62.71%. On purchase, sale and closing stock figures of various items furnished by assessee during assessment proceedings Assessing officer computed gross profit at ₹ 37,24,780/-. Assessee has shown gross profit of ₹ 17,61,483/-. Assessing Officer therefore made addition of ₹ 19,63,297/- on account of low gross profit being difference in gross profit computed by Assessing Officer and gross profit declared by assessee. 3.2 Matter was carried before the First Appellate Authority on this point who having considered the argument of assessee observed that Assessing Officer has rejected books result on the ground that no stock/ production register was maintained. Books of account were not completed and physical stock was not taken at the end or year. Transactions were not entered in books of accounts for months. Cash book did not reflect opening and closing balances. There was discrepancy with regard to sales/purchases and closing stock between figures given by assessee during course of survey proceedings and details submitted during assessment proceedings. In this regard, the main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade addition of ₹ 19,63,297/- on account of low gross profit rate. Under facts and circumstances, CIT(A) was justified in upholding the rejection of books of accounts as discussed above and having done so, CIT(A) was justified in sustaining addition of ₹ 19,63,297/- made on account of low gross profit rate. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. 4. Various other additions made by Assessing Officer are being dealt as under: 4.1 First issue as raised in Revenue s appeal is with regards to addition of ₹ 5,93,832/- on account of unaccounted sale of cattle feed. Assessing Officer has made addition of ₹ 21,150/- on account of bogus sale of 50 bags of cattle feed, addition of ₹ 1,23,021/- on account of sale recorded in bill book but not entered in regular books of account and addition of ₹ 4,49,682/- on account of sale of cattle feed which was entered in sale note books but for which bills have not been prepared and entered in the books of account. As regards the addition of ₹ 21,150/- and ₹ 1,23,021/-, CIT(A) observed that these sales have been recorded in books of account produced dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se only 142534 kgs was accounted for in the books. Assessing Officer did not accept contention of assessee that other concern M/s Raghuvir Cotton Co. was also operating from the same premises and purchases of that concern may have been included. Assessing Officer has further mentioned that as per pages 2 to 5 of the Annexure X-26, assessee purchased shanker cotton seeds weighing 470260 kgs from 5.12.2001 to 25.01.2001. These purchases were also unaccounted. Assessing Officer did not accept the contention of assessee that these purchases are same as recorded in X-13. Stand of assessee has been that purchases recorded in X-13 belong to two firms and these purchases were duly recorded in their books of accounts. Assessee firm purchased 4,30,297 Kg. and M/s Raghuvir Cotton Co. have purchased 87,815 Kgs of cotton seeds. It was further stated that all these explanations were furnished during course of assessment proceeding. Assessing Officer has not accepted the purchases made by M/s. Raghuvir Cotton Co. whereas payments in respect of purchases made by that concern have been made by normal banking channel and payments have been made prior to the date of survey. Hence these purchases pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of purchase given at the time of survey and impounded books. Whatever quantity is mentioned in Annexure X-13 is duly recorded in the books of account. These are also entered in impounded records. Assessing Officer has chosen to ignore the impounded records. Accordingly, requested to delete the addition. CIT(A) having considered arguments of assessee and observations of Assessing Officer and remand report of Assessing Officer observed that Assessing Officer has made this addition on the basis of figures given by assessee during survey while he has made gross profit addition on the basis of sale figures given by assessee at the time of assessment proceedings. In this background, Assessing Officer was not justified in making this addition and same was rightly deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same. 4.5 Next issue as raised in Revenue s appeal is with regards to addition of ₹ 27,71,015/- as unaccounted sale of cotton. bales. Assessing Officer has mentioned that opening stock of cotton and cotton bales is 51460 kgs and 55300 kgs respectively. Total production was 170975 kgs. The sale of cotton was 152 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kgs of cotton and 2,40,540 kgs of cotton seed. There was no closing stock available at the business premises at the time of survey. As per books of accounts of Sh. Raghubir Cotton sale of 76,677 kgs of cotton and 96,943 kgs of cotton seeds has been made. Assessing Officer computed the value of balance at ₹ 28,30,996/- of cotton seeds and ₹ 15,47,976 of cotton. Assessing Officer did not accept the stand of assessee that purchases pertained to M/s Raghubir Cotton Company. Assessing Officer worked out the profit on sale of cotton and cotton seed at ₹ 8,10,665 and made addition of the same. 4.6.1 Matter was carried before First Appellate Authority, wherein stand of assessee has been that Assessing Officer has relied on X-13 which has been impounded from premises of assessee and contains transactions carried out by assessee firm. It was stated on behalf of assessee that it was explained to Assessing Officer that applicant firm is not dealing in kala. This was clearly and categorically stated in the statement recorded during survey proceedings. During course of assessment proceedings, it was pointed out that purchase of kala was made by M/s. Raghuvir Cotton Co. and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Revenue s appeal is with regards to addition of ₹ 3,47,181 /- on account of disallowance of unpaid sales tax u/s. 43B of the Income Tax Act. Assessing Officer has mentioned that sales tax amounting to ₹ 3, 47,181/- has remained unpaid. Before Assessing Officer, assessee stated that it was exempt from sales tax and filed a copy of sale tax exemption certificate and hence assessee claimed that unpaid amount should not be added u/s 43B of the Act. Assessing Officer did not accept the contention of assessee on the ground that asscssee had not followed procedure prescribed in Gujarat Sales Tax Act. Assessing Officer further mentioned that sales tax recovered by assessee from customers constitutes trading receipt of assessee. Assessing Officer held that sales tax collected by the assessee is business receipt and Assessing Officer has also quoted CBDT circular No.674 dated 29.12.1993 as per which the amount of sales tax liability converted into loan is to be allowed as a deduction in which conversion has been permitted by said Governemnt. Since assessee failed to furnish any evidence in this regard Assessing Officer treated the unpaid sales lax as income of assessee. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Rs.4,61,445/- Assessing Officer made addition of ₹ 4,61,445/- on account of unexplained cash credit. Assessing Officer has mentioned that assessee has raised cash credit amounting to ₹ 4,61,445/- from 5 persons. Assessee submitted only copies of accounts of these five persons as appealing in its books of accounts. However, assessee failed lo file any confirmation from these 5 poisons and also failed to produce these persons for verification and thus failed to prove the genuineness of credits appearing in the books. Assessing Officer therefore held that assessee has failed to prove the identity and credit worthiness of these 5 persons and made addition of ₹ 4,61,445/- as unexplained cash credits u/s 68 of the Income Tax Act. 4.10.1 In appeal, various contentions were raised on behalf of assessee, having considered the same CIT(A) observed that assessee has failed to file confirmations and also failed to produce the creditors to establish the genuineness of cash credits. Accordingly, addition made by Assessing Officer of ₹ 4, 61,445/- as unexplained cash credit was rightly confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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