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TMI Blog2010 (2) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... les and closing stock, it becomes clear that some goods were in fact purchased by the assessee which were subsequently sold, as but for the inclusion of such quantity purchased the sale of the quantity declared is not possible. At the same time the AO also brought the inquiry to the logical conclusion that the purchases from these three parties were bogus. In view of the fact that it has been amply established that the purchases recorded in the books of account from these three parties were bogus with a view to suppress the profit, now need to zero in on the correct rate of net profit which could be applied under these circumstances. Therefore, it will be just and fair if the net profit rate of 5% is applied on the goods sold which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 as business deductions, in our considered opinion, it will be just and fair if the ad hoc addition of ₹ 50,000 is sustained on account of low household withdrawal. We order accordingly. Appeal is partly allowed. - Shri R.S.Syal, AM and Shri R.S.Padvekar, JM Appellant by : Dr.K.Shivram Respondent by : S/Shri L.K.Agrawal, S.S.Rana Pitambar Das O R D E R Per : R.S.Syal, AM : This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals) on 14.1.2009 in relation to the assessment year 2005-2006. 2. The first revised ground is against the confirmation of addition of ₹ 42,99,845 made by the Assessing Officer on account of bogus purchases. Briefly stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submitted that no such cheque was ever received by him. It was also stated that he had already filed police complaint on 16th March, 2007 against the assessee for forging his name. The assessee had also shown purchases from M/s.Megha Impex and M/s.Jyoti Enterprises amounting to ₹ 18,12,500 and ₹ 14,72,345 respectively. The A.O. issued notices u/s.133(6) to these two parties, also which were returned by the postal authorities with the remarks Not known . The assessee was requested to give correct address or produce the parties. The assessee failed to produce these parties or furnish correct address. The A.O. recorded statement of the assessee in which he agreed to produce the parties with relevant documents in about 10 days t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases transactions were bogus. He, therefore, made addition of ₹ 42,99,845 u/s.69C as unproved purchases. No relief was allowed in the first appeal. 3. After considering the rival submissions and perusing the relevant material on record we find from the trading and profit and loss account of the assessee for the year ended 31st march, 2005 relevant to the assessment year under consideration, copy placed at page 18 of the paper book, that the opening stock and closing stock was shown at ₹ 3.55 lakhs and ₹ 12.37 lakhs respectively. Purchases worth ₹ 67.53 lakhs were made against which the sales of ₹ 66.45 lakhs were reflected. Page 52 onwards is a quantitative tally of the opening stock, purchase, sale and clos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchases recorded in the books of account from these three parties were bogus with a view to suppress the profit, now need to zero in on the correct rate of net profit which could be applied under these circumstances. Section 44AF, though not strictly applicable in this case, provides for 5% net profit rate on the total turnover. In our considered opinion, it will be just and fair if the net profit rate of 5% is applied on the goods sold which were allegedly purchased through these parties. On the conclusion of the hearing in this case, a proposal to this effect was made from the bench. Both the sides finally agreed to it. We hold that the net profit rate of 5% be applied. On the application of such net profit rate, the effective additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival submissions and perusing the relevant material on record we find that the said cash of ₹ 18,70,000 was deposited by the assessee in his bank account. The Assessing Officer came to know of such deposit from the entries made as recorded in the regular books of account. When cash is deposited in the bank through the books of account, the source of the said deposit can never be doubted. Such source can be examined where no books of account were maintained. It is axiomatic that the source of deposit in the bank is always out of cash balance available at the beginning of the day as adjusted with the receipts and payments for the day. There cannot be any question of making addition u/s.68 in respect of entries of deposit in the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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