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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 ..... nue as well as by the assessee are dismissed. Addition under the head of ‘unrecorded debtors' - Held that:- We noticed that CIT(A) has estimated the gross profit @15% on the sales ₹ 12,51,327/- and estimated the profit. CIT(A) also reduced gross profit rate of 9.19% which was declared by the assessee. Before us, both the sides are not able to controvert the findings recorded by the CIT(A). Therefore, we are sustaining the order of CIT(A) on this issue. Thus ground No. 2 of the assesses and ground of the revenue stand dismissed. Addition on account of investments in based on impounded - Held that:- We found that assessee was not able to explain the investments of ₹ 4,00,000/- in tehu while other notings figures and in the paper were considered while working out account. The unaccounted sundry debtors as per the annexure A-6.After considering all relevant facts, we find that CIT(A) has rightly appreciated the facts on the issue. Therefore, we sustain the order of CIT(A). Addition on account of alleged excess cash - Held that:- Since both sides are not able to controvert the finding recorded by CIT(A) with respect to cash balance available with assessee’s on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw 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 during the course of survey proceedings. ( ii) That the Commissioner of Income Tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the cases as he has allowed relief to the assessee without appreciating the facts that the AO has rejected the updated books of account u/s 145(3) of the Act. ( iii) That the Commissioner of Income Tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in restricting the addition of ₹ 80,17,040/- to ₹ 12,19,569/- made by the AO on a/c of excess stock without appreciating material facts of the case. ( iv) That the Commissioner of Income Tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in restricting the addition of ₹ 15,01,327/- to ₹ 72,702/- made by the AO on a/c of unrecorded debtors withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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 Shri Deepak Garg was not based on any incriminating document. Moreover Shri Deepak Garg has no locus standi to make such statement. There cannot be a case for excess stock as the survey party has worked out excess stock on the basis of incomplete books . After re-drawing the trading account on the basis of updated books, there was no discrepancy in the quantities of the stock tallied with the quantities of the stock as worked out by the survey team. The quantities of the stocks tallied with the quantities to stocks as found at the same time of survey operation. There was no discrepancy in the quantities of the stock as noted by survey team at the time of survey operation. There was no discrepancy in the quantities of the stocks. The Assessing Officer could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 5.7 I have carefully considered the submissions made, material placed on record and find that a copy of day-wise stock register of gold ornaments was produced in the course of assessment proceedings. It was stated before the AO that the weight of the gold ornaments on the date of survey was 7173.77 grams as against the weight of 7284.30 grams shown in the valuation report prepared by the approved valuer at the time of survey operations. Thus, there is a difference of 110.6 grams in the quantum of gold ornaments. The appellant has explained that this difference is on account of differences in the level of purity, which is nothing but a bald statement without any supporting evidences. 5.8 However, as regards the differences in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above discussion, I hold that unexplained investment in stock comes to ₹ 8,96,921 in gold ornaments; ₹ 2,42,648 in silver articles and ornaments and ₹ 80,000 in precious stones. On the basis of above details, as discussed in the preceding paras, this unexplained investment in stock comes to ₹ 12,19,569 (Rs. 8,96,921 + 2,42,648 + 80,000). Therefore, I confirm the addition of ₹ 12,19,569 on account of unexplained investment in the stock out of the total addition of ₹ 80,17,040 made by the AO under this head. 5. On the other hand, ld. DR relied on the order of Assessing Officer. 6 We have heard the rival contentions of both the parties and perused the materials available on record. It is noticed that the assessee has submitted updated copy of day-wise stock register of gold ornaments. During the course of assessment proceedings, the Assessing Officer could not found any discrepancy in the purchases which were not entered in the books of accounts at the time of survey. The only discrepancy found was only 110.6 grams in the quantum of gold ornaments. There was the difference in the value of the stock of the gold ornaments. On that basis, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 such debtors so found recorded in the updated books of accounts nor has brought any material on record by making enquiries to verify the correctness of such debtors. In the circumstances, the debtors once found recorded in the audited books being uncontradicted cannot be regarded as un-accounted for. It is pertinent to note that the provisions of section 69 of the Act would come into play for making deeming addition only if these debtors were out of books. This is pre-condition to invoke provisions of section 69 of the Act. Again it is a settled law that once books are rejected u/s 145(3) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement 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 ₹ 12,51,327, the unaccounted profit on such sales would work out to (15%-9.19% of 12,51,327) ₹ 72,702. Accordingly, I confirm an addition of ₹ 72,702 on account of profits earned on unrecorded sales out of the total addition of ₹ 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 ₹ 12,51,327/- and estimated the profit. CIT(A) also reduced gross profit rate of 9.19% which was declared by the assessee. Before us, both the sides are not able to controvert the findings recorded by the CIT(A). Therefore, we are sustaining the order of CIT(A) on this issue. Thus ground No. 2 of the assesses and ground No. 4 of the revenue stand dismissed. 11. The ground No. 3 of assessee s appeal and ground No. 5 in the revenue s appeal are related to the partly sustaining the addition made on account of investments in based on impounded. During the course of the survey operation, the brief facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 unaccounted sundry debtors (of Annexure A6) in the above mentioned grounds of appeal. Accordingly, I confirm the addition of ₹ 4,00,000 on account of unexplained investment in the property as against the total addition of ₹ 7,13,000 on this account. 12. After hearing both the sides we found that assessee was not able to explain the investments of ₹ 4,00,000/- in tehu while other notings figures and in the paper were considered while working out account. The unaccounted sundry debtors as per the annexure A-6. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fact that the so-called investment in chit fund (lottery) stood declared by Shri Deepak Garg in his own individual case in the re-assessment proceedings initiated u/s 148 of the Act. The copy of the computation sheets and balance sheets etc. for the relevant years are submitted herewith for your kind perusal and record. On perusal of these documents, it would be seen that such investment stood duly shown by Shri Deepak Garg in his case. As such no addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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