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TMI Blog2015 (12) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... ring and trading. Hence in the nature of the trade, we cannot presume that assessee held all the purchased stock with it without effecting any sales. Since there was no discrepancy in stock, obvious conclusion is that whatever was purchased was sold by the assessee. As to the argument of the Ld. DR that stock might have been kept elsewhere, there is nothing on record to suggest any place of business for the assessee other than the one which was surveyed. Thus to consider the whole of the purchases as unexplained investment was incorrect. Assessee was continuously purchasing and selling and therefore the preponderance of probability is that successive purchases would have been financed by the sales of the earlier purchases. In such situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the balance addition made by the AO. 02. Facts apropos are that the assessee, manufacturer of deoiled cake and refined oils had filed its return declaring a total income of ₹ 2,43,310/- electronically on 30.10.2007 for the impugned assessment year. There was a survey u/s.133A of the Income-tax Act, 1961 ( the Act in short) in the business premises of the assessee on 02.11.2006. During the course of survey proceedings it seems certain loose sheets were found which reflected therein certain cash purchases made by the assessee. AO listed out the cash purchases from the loose sheets. Such purchases pertained to the month of October 2006 and aggregated to a sum of ₹ 2,15,05,363/-. Purchases were made from 37 parties of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht. He held the cash purchases of ₹ 2,15,05,353/- as unexplained investment u/s.69 of the Act and made an addition thereof. 05. Aggrieved assessee moved in appeal before the CIT (A). Argument of the assessee was that thirteen parties had never confirmed any sale of goods to the assessee. As per the assessee such unconfirmed amounts itself came to ₹ 16,54,143/-. Further as per the assessee there were duplicate bills included in the list compiled by the AO which totalled to ₹ 42,63,036/-. Since assessee brought to the notice of CIT (A) that the persons whose statements were recorded by the AO were never cross examined by it, CIT (A) sought a remand report from the AO. It seems in the remand report dt.18.03.2011, AO stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged unaccounted purchases. He therefore restricted the addition to 6% of ₹ 1,30,68,163/-. 07. Now before us, Ld. DR strongly assailing the order of CIT (A) submitted that the loose sheets found from the premises of the assessee had clearly recorded purchases made by the assessee. Relying on Annexure-1 to the assessment order, Ld. DR submitted that all the details like date of purchase, , name of the seller, commodity, quantity and price were mentioned in such loose sheets. As per the Ld. DR, these purchases were never recorded in the books of account of the assessee. Thus as per the Ld. DR these were nothing but unexplained investment made by the assessee for purchase. Since assessee was not able to show the source for funds used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso doing commission sales and whatever commission was earned on the goods sold as commission agent were reflected in its books of account. Thus according to him, addition was made purely on surmises. 09. We have perused the orders and heard the rival contentions. AO has listed out 250 items in the annexure to the assessment order showing purchases worth ₹ 2,15,05,364/-. In the course of remand proceedings it was accepted by the AO that the said amount contained duplication of bills to the extent of ₹ 42,63,036/-. It was also accepted by the AO that bill for ₹ 5,01,331/- was accepted by one supplier to be a duplicate one. One, M/s. Murali Industries who was summoned had denied any transactions with the assessee. The all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchases were in the month of October, 2006 and the first purchase was on 03.10.2006. Assessee would have sold these and used such funds for the next purchase. In such a situation, in our opinion, what the assessee could have earned is only the profits from such purchases. Even if we consider the first purchase to have been made out of unaccounted income, the estimated profits from the unaccounted sales would be more than sufficient to justify the source. Against the gross profit rate of 2 to 3% suggested by the assessee, based on a decision of Third Member bench of Ahmedabad Tribunal in the case of ITO v. Gurubachansingh J. Juneja [(1995) 55 ITD 0075], CIT (A) had taken a higher rate of 6%. We find that in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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