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TMI Blog2017 (9) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... /- made by the AO under the head of 'unrecorded debtors' without appreciating the facts of the case in right perspective. The same deserves to be deleted. (iii) On the facts and in the circumstances of the case, the learned CIT(A) has factually and legally erred in confirming the addition of Rs. 4,00,000/- out of addition of Rs. 7,13,000/- made by the AO under the head of 'investment in immovable property' without appreciating the facts of the case in right perspective. The same deserves to be deleted. (iv) On the facts and in the circumstances of the case, the ld. CIT(A) has factually and legally erred in confirming the addition of Rs. 876/- out of addition of Rs. 48,700/- made by the AO on account of the 'alleged excess cash' without appreciating the facts of the case in right perspective. The same deserves to be deleted. (v) The appellant craves to added, amend or withdraw any of the ground of appeal either before or at the time of hearing of appeal. Grounds in Revenue's appeal "(i) That the Commissioner of Income Tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the cases in ignoring the statement by Shri. Deepak Garg member HUF du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's appeal and ground No. 3 of the revenue's appeal are on the issue of partly deleting and /sustaining the addition made on account of excess stock. 4. During the course of survey party worked out stock of gold jewellery of Rs. 5784.885 gms. The value of this stock comes to Rs. 76,93,897/- and silver ornament valued at Rs. 3,23,143/-. Thus Assessing Officer made in addition of Rs. 80,17,040/-. Before the CIT(A) ld. AR for the assessee submitted that Assessing Officer heavily relied upon invalid statement given by Shri Deepak Garg recorded during the survey operations. He also submitted that in the post-survey and assessment proceedings. The assessee raised certain objections which were not considered by the AO in proper prospects. He also submitted that there was no 'corroborative' evidence whatsoever which could substantiate the additional income as offered by Shri Deepak Garg. The assessee submitted documentary evidences in the form of purchase bills and bank remittance etc, with regard to the purchases which remained unrecorded in books at the time of survey. These evidences have not been rebutted by the revenue. These evidences clearly establishes that statement given by Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the difference found in the value of stock at the time of survey without considering the books of accounts which were completed after incorporating all the pending bills and vouchers. 5.5 It is submitted by the appellant that in the details placed before the AO as per the updated books, there is no discrepancy weight-wise in the quantities of the gold ornaments. It is also submitted that the difference in the quantity of gold found at the time of survey and as per books of accounts is due to the differences in the rates of gold adopted by the valuer. It is further stated that copies of purchase vouchers and bank accounts statements were placed along with the audited books of accounts before the AO and no contradictory material could be brought on record. Similarly, the difference in the value of silver stock was on account of variation in the level of purity taken by the approved valuer of the Income Tax Department. 5.6 During the course of assessment proceedings complete books of accounts and purchase vouchers of stock were produced before the AO for examination and no advance material could be gathered by the AO and no defect in the books of accounts was pointed out. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment in stock on the basis of stock valuation done at the time of survey without giving any credit for the purchase vouchers which were not entered in the books of accounts. The AO has in the course of assessment proceedings accepted the entries recorded in the books of accounts alongwith the bills and vouchers produced before him and has not brought on record any fact or finding contrary to this effect. No purchase bill or the payment made could be proved by the AO as not genuine in the course of assessment proceedings. Therefore, there is no rationale in the quantum of unexplained investment worked out by the AO in the order on the basis of presumptions and surmises. 5.12 In view of the above discussion, I hold that unexplained investment in stock comes to Rs. 8,96,921 in gold ornaments; Rs. 2,42,648 in silver articles and ornaments and Rs. 80,000 in precious stones. On the basis of above details, as discussed in the preceding paras, this unexplained investment in stock comes to Rs. 12,19,569 (Rs. 8,96,921 + 2,42,648 + 80,000). Therefore, I confirm the addition of Rs. 12,19,569 on account of unexplained investment in the stock out of the total addition of Rs. 80,17,040 made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound in the course of survey operation and were found to have been not recorded in the books of accounts. The total amount of these unrecorded sales were worked out at Rs. 12,51,327 and after making a further addition of Rs. 2,50,000/- a total addition of Rs. 15,01,327 was made on this account. 6.4 The appellant has stated that the addition made on this ground is vague and ambiguous as AO was not clear about the nature of the addition to be made. The AO has specified this amount as disallowance of unrecorded debtors. The debtors are the part of the Balance Sheet only and are not debited to P&L A/c, so the question of disallowance of debtors does not arise as per principles of Accountancy. More-over, all the debtors as recorded in the loose papers of annexure A-6 were recorded in the audited books. Therefore, the balance of these debtors cannot be treated as unrecorded income. It is also submitted that the provisions of section 69 of the Act would come into play in respect of the transactions which are not recorded but these transactions being recorded in the books do not call for any addition u/s 69 of the Act. 6.5 The appellant has further stated that AO has neither disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue, I hold that only the unaccounted profits from such sales could be taxed rather than whole amount of sales. It is further stated by the appellant that these sales were recorded in the books of accounts at the time of completing the same and therefore, the profit earned on such sales has also been disclosed in the account books. 6.8 I have gone through the case records of the appellant and find that a GP rate of 9.19% has been declared for the period under consideration. Therefore, while estimating the income earned on such sales, credit needs to be given for that element of profit which has already been declared by the appellant while recording such sales in the books of accounts. Considering a GP rate of 15% on sales of Rs. 12,51,327, the unaccounted profit on such sales would work out to (15%-9.19% of 12,51,327) Rs. 72,702. Accordingly, I confirm an addition of Rs. 72,702 on account of profits earned on unrecorded sales out of the total addition of Rs. 15,01,327 made by the AO on this account. 10. We have heard both the sides on this issue. We noticed that CIT(A) has estimated the gross profit @15% on the sales Rs. 12,51,327/- and estimated the profit. CIT(A) also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence or any material is brought on record to indicate any investment by the 'HUF' in any property. In absence of any such material or evidence, no valid addition can be made on presumptions and surmises. 7.6 Having considered the material available on record, I find that it would be pertinent to examine the nature of notings made on page 3 of annexure A6, which is being reproduced for the sake of convenience. 7.7 It may be seen from the above, that the nature of transactions on this page pertain to financial dealings which certain persons, whose names have been mentioned against the amounts. The crossed figures re-present, possibly the amounts which have been settled by way of receipt/payment. In the middle of this page, there is a noting tehu aaagainst which Rs. 4,00,000 have been written and which are after crossing certain other findings. The appellant has failed to substantiate the nature of such payments and therefore it can be treated as unexplained investment in the purchase of property which has not been disclosed to the Department. However, as regards the remaining notings on the paper are concerned, they have already been considered while working out the unacco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, we sustain the findings recorded by CIT(A). In the result ground No. 7 of the revenue ground No. 4 of this appeal stand dismissed. 16. Ground No. 6 in the revenue in appeal is against the delete the addition of Rs. 1,00,000/- on account of unexplained investment in the lottery the CIT(A) has held. This issue has been considered by CIT(A) in his order at para 8.1 to 8.5 which read as under: "8.2 The AR of the appellant has contended as under:- This addition has been discussed in paras 9.1 to 9.4 at page no. 12 & 13 of the assessment order. For making this addition also, the learned AO had referred to Annexure A9 and the statement of Shri Deepak Garg without confronting the appellant on the point and proceeded to make the addition straight away without allowing any opportunity to the appellant. This fact is evident from the body of the assessment order and from the assessment proceedings as well. In absence of proper opportunity, no valid addition can be made as discussed at length in ground no. 2(iii) above. Thus the addition so made deserves to be deleted summarily on this ground alone. Further, while making this addition, the learned AO had also over-looked the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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