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TMI Blog2021 (10) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... ,11,00/- and Rs. 13,45,750/- made by AO on account of unexplained investment 4. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition or Rs. 12,49,000/- made by the AO on account or cash sale of agricultural implement 5. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 15,08,644/- made by me AO on account of lifting the goods from custom authorities. 6. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting me addition or Rs. 1,50,000 made by the AO on account of cash speculative profit earned from sale of shares. 7. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,50,000/- made by the AO on account of cash deposited in the bank. 8. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 2,39,000/-made by the AO on account of unexplained cash deposit. 9. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 44,85,420/- made by the AO on account of closing stock. 10. On the facts and circumstances of the case the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant materials available on record including the remand reports forming part of the paper book at page nos. 10 to 18. Deletion of addition of Rs. 5,69,500/- being 10% of profit on goods directly lifted by the other parties is the issue before us. In fact these goods were directly lifted by the parties from the Custom Authorities. The Ld. AO made addition of Rs. 5,69,500/- and 10% profit on it at Rs. 5,69,500/-. The Ld. CIT(A) deleted both the additions. However, it appears from the order passed by the Ld. AO that the concerned parties have made affidavit and no adverse evidence was brought on record to disbelieve the statement made in those affidavits. Further that, upon perusal the copies of agreements between the assessee and the three parties clearly show that no margin or profit was to be charged by the assessee in respect of the goods lifted by these three parties. The agreement with the parties, the affidavits, confirmation and appellant letter filed before the AO the appellant's letter for personal presence of the parties lifted goods are part of the records lying before us. The Ld. AO observed that these documents were not produced before us though the same was in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 20,11,00,000/- from Hong Kong Bank there were several credit entries. The assessee's explanation in this regard was not found sufficient and, therefore, Rs. 13,45,750/- was added to the total income of the assessee. However, there was an arithmetic mistake in calculating Rs. 1800000/- which should have been 1702500/- (2102500 - 400000). The Ld. CIT(A) during the appellate proceeding went through the cash flow statement prepared on the basis of the copies of seized material taking into account the opening cash balance, bank withdrawals which is also made available before us being part of the Paper Book. Apart from that in the remand report dated 27.10.2010 available at page 10 to 15 of the PB so filed before us. The Ld. AO admitted such facts and the documentary evidences filed in its explanation of the sources of funds by the assessee and hence, the Ld. CIT(A) deleted both the additions. According to us, there is no ambiguity in making such decision made by the Ld. CIT(A). Hence, the said is hereby confirmed. This ground of appeal preferred by Revenue fails. The deletion of addition of Rs. 12490000/- on account of cash sale of agricultural equipment has been challenged before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his ground of appeal filed by the Revenue is found to be devoid of any merit and hence, dismissed. 7. The addition of Rs. 1852910/- made by the AO on account of specularity profit earned from sale of shares is the issue before us. The said speculation profit on forward transactions which were carried forward in these assessment years and completed in the AY 1993-94 without actual profit/loss was granted for. In fact the Ld. AO rejected the contention of appellant that these were factually forward transactions in shares of Reliance Industries Ltd., during the year under appeal, the same were carried forward and the broker M/s Pradeep Bhall & Co. has calculated the notional profit on these transactions. The AO only considered the date of bill which was of this year showing notional sale value at Rs. 1960000/- and 3650000/- and notional profit of Rs. 162910/- carried forward on 28.03.1992 and Rs. 1690000/- carried forward on 19.04.1992. 8. The case of the assessee is this that these were forwarded transactions, profit and loss is determined when the transaction gets finality otherwise carried forward with notional profit/loss and charges are debited by broker as badlaThe bills and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and to the Income Tax Department. 12. The Ld. AO ultimately made addition on the basis of Auditor's Report; according to the AO the report did not give quantitative details and Annexure A7 of seized documents. The assessee has not taken into account the closing stock of tin plate at 224.271 ton. The assessee's case is this that the details of closing stock as furnished by the assessee was not taken into consideration by the AO while making valuing the closing stock. Further that this quantity of 224.271 ton empty was already taken into account for calculating value of closing stock as per consistently followed policy of valuation, lower of cost or market value. The Ld CIT(A) while deleting the addition observed as follows: - "the assessee had shown an outstanding loan to Plaza Panchsheel properties at Rs. 4405455/- as on 31.03.92 whereas in the previous year it was Rs. 10405455/-. Assessee filed confirmation from Plaza Panchsheel Properties that the sum of Rs. 60 lacs had been returned to the assessee and the Panchsheel Properties in the earlier years but no interest had been shown in the copy of accounts of Plaza Panchsheel Properties for this year. Assessee further stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s like agricultural implements, export sales. The Assessing Officer despite this logical explanation, proceeded to apply a GP rate of 20% on an estimated turnover of Rs. 4,50,00,000/- without bringing on record any sound reasoning for doing the same. There is no reason why the turnover at Rs. 4,40,11,886/- and GP rate as declared by the assessee should be rejected to estimate the turnover at Rs. 4,50,00,000/- and apply any other GP rate say 20%. The addition so made, therefore, deserves to be deleted." 15. Thus, it appears from the above that the Ld. CIT(A) deleted the addition on the basis that the sales as per audited profit and loss account is much more than the sales as per Sales Tax Department because the exempted sales are not included in sales tax returns. Therefore, the estimation is not correct. Regarding GP of 20%, the Ld. CIT(A) mentioned that despite logical explanation the estimation of turnover at 4.50 crore and 20% GP without bringing on record any sound reasoning for doing the same. There was no reason to reject the actual sale of Rs. 44011886/- and GP of 11.15% as of against the Ld. CIT(A) which according to us is without any ambiguity so us to warrant interferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) while deleted notional addition took into consideration this particular aspect of the matter that the Ld. AO has not given any weightage to the circumstances detailed by the assessee that the interest had to be weived to secure the principle. No document was further found during the search to suggest that the assessee had received the interest amount outside the books of account as of the observation made by the Ld. CIT(A) while deleting such addition is according to us just and proper and we hereby confirm the same. The ground of appeal filed by the Revenue fails. 20. The addition of Rs. 1 lakh made on estimate basis is the subject matter before us. This is nothing but on the basis of the voucher containing payment of Visa charges by Vandana Goyal from whose residence the same has been seized. The Ld. CIT(A) while deleting such addition observed as follows: - {55} The appellant in his submissions has given the following explanation: - "The addition represents interest amounting to Rs. 74256/- only. This is taken from our 2 seized documents which were mere account statement of the parties in rough form. There is no signature of any person on the sheets. We never earned any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of record that the bills evidencing sales in cash had been seized by the Department during search operation and the assessee had only relied on the photocopies taken to make the cash flow statement to explain the deposit of cash in the bank account. Thus, the Assessing Officer's observation in this regard is erroneous as the same ignores the fact of cash sales which is part of the turnover as per books of accounts. As such, addition of Rs. 6 lacs is deleted. 26. Thus, it appears that the Ld. CIT(A) while deleting the addition mentioned that the appellant has shown total sales of Rs. 11935611/- of agricultural equipment during the year 1992 and the AO cannot reject the cash flow on the basis of cash sale of agricultural equipments at Rs. 813000/- in the month of February, 1992. The reasons so recorded while deleting the addition by the Ld. CIT(A) seems to be adequate and hence, the same is confirmed. This ground of appeal preferred by Revenue is found to be devoid of any merit and thus, dismissed. 27. The addition of Rs. 295000/- is a subject matter before us. The AO rejected the contention of the assessee that the said amount was deposited out of cash balance available wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etailed transaction of purchases, part payment made to the tune of Rs. 40 lacs has been recorded. The above said amount therefore, cannot be treated as advance free of interest. Further, an amount of Rs. 33,88,250/- in respect of M/s. Goyal Estate & Promoter has been submitted to be in respect of the advance for purchase of property. It is further seen that the loan borrowed from the bank has roughly remained at the same level, as the loan from bank as on 31.3.91 was Rs. 2,89,84,981/- and as on 31.3.92 it was Rs. 3,02,63,140/-. In view of the above, the observation of the Assessing Officer is erroneous on facts and therefore, no disallowance of interest paid to the bank is called for. The same is therefore, deleted. 29. Thus, we do not find any reasons to interfere with the order passed by the Ld. CIT(A) in the absence of any changed circumstances. The same is hereby confirmed. The ground of appeal preferred by Revenue is, thus, found to be devoid of any merit and hence dismissed. 30. The deletion of addition of Rs. 2826860/- has been challenged before us by the Revenue. The fact culled out from the assessment order is this that the assessee had shown debit of Rs. 2157795/- with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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