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TMI Blog2019 (6) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... he 'Act'), dt. 21/03/2017 for the Assessment Years 2005-06, 2006-07, 2007-08 & 2009-10. 2. As the issues arising in all these appeals are common, for the sake of convenience, they are heard together and disposed off by way of this common order. 3. The assessee is a partnership firm and filed its return of income on 31/03/2006 declaring total income of Rs. 72,973/- for the Assessment Year 2005- 06, Rs. 87,925/- for the Assessment Year 2006-07 on 31/03/2007, Rs. 1,04,340/- for the Assessment Year 2007-08 on 31/03/2008 & Rs. 2,05,900/- for the Assessment Year 2009-10 and on 14/10/2010 declaring total income of Rs. 87,089/-. Later a survey operation u/s 133A of the Act was conducted on the business premises of the assessee company 23/04/2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sales. He further relied on the judgment of the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Balchand Ajit Kumar reported in [2003] 263 ITR 610 (MP), & Man Mohan Sadani vs. CIT reported in [2008] 304 ITR 52 (MP) for the same proposition. 6.1. The ld. D/R could not cite before this Bench any contrary judgment. Under these circumstances, we apply the proposition of law laid down in the judgments of the Hon'ble Bombay High Court and the Hon'ble Madhya Pradesh High Court, referred above, and direct the Assessing Officer to assess the income from undisclosed sales in question by applying the net profit rate in place of the "gross profit rate" as undisclosed sales. The net profit rate shall be that which the assessee had disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. During the course of survey done u/s 131 of the Act, for the Assessment Year 2009-10, the survey team found difference between the physical stock and the book stock. The physical stock was more than the stock recorded in the books. The difference was assessed as income. The ld. Counsel for the assessee relied on the judgment of the Hon'ble Jurisdictional High Court in the case of Principal Commissioner Of Income vs M/S. Subarna Rice Mill in ITAT 196 of 2015, GA 4047 of 2015, judgment dt. 20/06/2018 and argued that in such a situation, only the gross profit on such stock can be taxed. This judgment was followed by the ITAT Kolkata Bench in the case of DCIT vs. Smt. Madhu Chhanda Sirkar reported in 2018 (9) TMI 1775 -ITAT Kolkat, wherein t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as appear to have been interfered with by the Appellate Tribunal; and, the direction given for taking sales of rice and bran into account before arriving at the additional income which could be said to have escaped assessment. Before the Commissioner (Appeals), the assessee had relied on a document signed by an official of the Food Corporation of India that evidenced the stock figures at the relevant point of time. The Commissioner (Appeals) dealt with such aspect of the matter in great detail and by referring to the admitted statements of the representatives of the assessee, which were not sought to be controverted at any point of time on behalf of the assessee, concluded that it was the physical verification of the stocks undertaken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of additional stocks that were discovered in course of the survey operation could not be regarded as the additional income of the assessee and amenable to tax. There was a specific ground taken before the Appellate Tribunal which was a legal question, as to whether the undisclosed purchase could be taken as the additional income without reference to the possible sale of the paddy when converted. The assessee refers to a judgment of the Gujarat High Court reported at 388 ITR 377. The principle enunciated in such judgment is that when undisclosed purchases of such nature are discovered, it is only the profit embedded in the transaction which can be added to the total income. The Gujarat High Court relied on some of its previous judgments to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 GA NoA047 of 2015. We therefore conclude that the impugned former addition of the entire discrepancy in stock deserves to be deleted. We accordingly accept assessee's former substantive ground challenging correctness thereof. Its latter substantive ground stands declined in view of our foregoing discussion. We confirm the gross profit addition of Rs. 6,94,832/- in these peculiar facts and circumstances." 17. Respectfully relying upon these judgments we observe that only the gross profit can be added to the income of the assessee and not the entire undisclosed stock. We thus delete the addition made by the authorities below." 9. Consistent with the view taken therein, and as no contrary judgment is brought to our notice by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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