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TMI Blog2017 (3) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. Thus, we are of the view there was no indirect expense which was incurred by the assessee in relation to undisclosed sale and not claimed. Thus, in our considered view the GP rate adopted by the lower authorities is reasonable in the working out the taxable income on the undisclosed purchases. However, in the interest of justice & fair play we are inclined to give one more opportunity to the assessee as he is alleging that the information received in response to the notice issued u/s 133(6) of the Act has not been confronted and DR also has no objection in this regard. Addition on account of circulating capital invested in the undisclosed purchases - Held that:- We have already restored the ground No. 4 to the file of AO for fresh adjudication in relation to the taxable profit on the undisclosed purchases. Indeed, undisclosed purchases were made by the assessee and therefore the element of the circulating capital invested in the undisclosed purchases cannot be ignored. Therefore, it is necessary to bring the same under the tax net. The ld AR has submitted that the undisclosed purchases were made on the basis of credit but he failed to bring any evidence in support of his cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessment was framed u/s 147 r.w.s.143(3) of the Act at a total income of ₹ 12,40,128/- after making certain additions/disallowances to the total income of the assessee which have been discussed in details hereinafter. 3. We first take up ground no. 4 of the assessee where the issue raised by the assessee is that the ld. CIT(A) erred in confirming the order of AO by sustaining the addition of ₹ 2,36,564 on account of gross profit on the unrecorded purchases. The AO during the assessment proceedings observed certain differences in the amount of purchases shown by the assessee vis- -vis sales shown by the corresponding parties in their respective books of accounts as detailed below Company Statement by the assessee understated:- Name of the Party Amount as per Amount shown Amount Bharat Nursery Pvt.Ltd. Rs.5,11,315.00 Rs.5,04,690 Rs.6,625.00 Mahyco Seeds Ltd. Rs.22,47,863.25 Rs.1,40,150 Rs.21,07,713.25 Palli Shree Ltd. ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. The contention of the assessee is baseless. The expenses in the P L Account are generally of administrative nature or are otherwise fixed and these don't change only because the assessee has done some unaccounted purchases sales also. In these appellate proceedings the A R has not adduced anything to even remotely suggest that the assessee had to incur some new or hitherto undeclared expense to earn the additional incomes. Therefore it is held that all the expenses of the Profit Loss Account are already allowed to the assessee and there is no cause for allowing any further deduction for expenses. In addition to the above, the assessee had also made an alternative plea that the AO had not supplied the copy of confirmation of account obtained from the sellers and therefore a reply of 'Not accepted' was given to the AO earlier. The assessee had also requested for a remand back of the matter 'for a proper rebuttal. In this connection it is held that the suppliers are not third parties but are the creditors of the assessee and the assessee had quoted their names and address to support his purchases. Thus in the eyes of the law as explained in the case of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h any documentary evidence to controvert the finding of lower authorities. Therefore, the allegation of the assessee that the information gathered in accordance with the provisions of section 133(6) of the Act was not cross verified is baseless. On examination of lower authorities, we find that sufficient opportunities were given by the lower authorities to counter the allegations framed by the AO but the assessee failed to do so. The ld AR before us has also not brought anything contrary to the finding of ld CIT(A). Now coming to the rate adopted by the AO for determining the profit on the undisclosed purchases we find that the lower authorities have taken the GP rate as disclosed by the assessee in this return of income and the same rate of profit has also been applied on the undisclosed purchases. The argument of the assessee that the net profit on the undisclosed purchases should be used to work out profit does not have any force. It is because that all the indirect expenses has been duly incurred and claimed by the assessee against the disclose sales of the business. Thus, we are of the view there was no indirect expense which was incurred by the assessee in relation to undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/-. In the appellate proceedings the AR merely claimed that the estimation of the AO is erroneous and subjective. However the AR gave no alternative explanation backed by any evidence. The facts of this addition are the same as for ground No. 2 above, In this case also the assessee only makes general statement but there is no substantiation. In the absence of filing of any verifiable facts, rejoinder to remand report and other arguments, the ground of appeal No. 3 is also dismissed. Being aggrieved by the order of CIT(A) the assessee is in second appeal before us. For this, the assessee has raised the following grounds of appeal : 5) That the Id. CIT(A) erred in sustaining the addition of ₹ 693038/- under the head circulating capital on unrecorded purchase . 10. The ld. AR before us submitted that the instant issue is directly linked with unrecorded purchases for which ground no.1 has been raised. In ground no.1 it was prayed to restore the matter to the AO and therefore the ld. AR further requested to restore the matter to the AO for fresh adjudication. On the other hand the ld. DR raised no objection if the matter is restored to the AO. 11. We have gone t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld AR has not brought anything on record contrary to the finding of ld CIT(A). Though, the assessee was provided several opportunities at the time of appellate stage and remand stage but details was submitted to counter the allegation of the AO. Even before us the ld. AR failed to submit any details. Thus we do not find any reason to interfere in the order of ld CIT(A). Hence, the ground of appeal raised by the assessee is hereby dismissed. 16. The assessee in ground nos. 1 to 3 has challenged re-assessment proceedings initiated and completed u/s 147 of the Act. For this the assessee has raised the following grounds of appeal:- 1) That the Id. CIT(A) erred in not allowing reasonable and proper opportunity to the appellant to represent its case before him. 2) That the Id. CIT(A) erred in dismissing the grounds taken in appeal before him against the initiation of reassessment proceeding. 3) That the Id. CIT(A) erred in confirming the initiation of reassessment proceeding as valid. 17. At the outset, it was observed that at the time of hearing the ld. AR has not challenged the reassessment proceedings framed by the AO u/s 147 of the Act. Therefore, we are incli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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