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TMI Blog2022 (10) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... backdrop of the facts involved in the case before us. Admittedly, the payments towards the impugned purchases have been made by the assessee from his bank accounts which were duly disclosed in his books of accounts. In our considered view the concept of peak addition would come into play in a case where the assessee had made certain undisclosed purchases out of his unaccounted money lying in a bank account, wherein, after considering the withdrawals made from the said account the addition in all fairness has to be restricted to the extent of peak credit appearing in the said account. Now when the assessee had admittedly made the payments for making the impugned purchases from his duly disclosed sources i.e. bank accounts, therefore, there could have been no justification for the A.O to have made an addition of the amount of peak purchase - We, thus, concur with the view taken by the CIT(Appeals) and uphold his order to the said extent. Thus, the Ground of appeal No. 2 is dismissed in terms of our aforesaid observations. Addition on account of short yield of rice as in comparison to the percentage of yield as mentioned in contract executed by the assessee with Chhattisgarh S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mself admitted on oath that the aforesaid concern was a bogus concern - On a perusal of the details of the seven parties (supra) purchases from whom have been held to be bogus in the hands of the assessee, we find that the same does not make any reference of the aforementioned concern i.e. M/s. Shyamji Rice Mill. Accordingly, we are unable to concur with the reasons given by the CIT(Appeals) for vacating the impugned addition that was made by the A.O w.r.t the amount shown against the aforesaid party, viz. M/s Shyamji Rice Mills (supra). Unaccounted sales of the assessee that had surfaced in the course of verification of the expenses that were claimed by the assessee to have been incurred on transportation of rice through railway rakes - Admittedly, it is a matter of fact borne from record that the assessee had over the year booked 16 railway rakes through which 405145.50 quintals of rice/broken rice was transported. As the assessee was able to substantiate his claim that the railway rakes booked by him were also used by certain parties for transporting their rice/broken rice only to the extent of 208222 quintals, therefore, the CIT(Appeals) had concluded that the balance 107 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(Appeals). We, thus, fining no infirmity either as regards the quantification of the unaccounted sales of the assessee; or the quantification of the profit element/income therein involved as had been worked out by the CIT(Appeals) @ 2.62% (i.e. the overall GP rate disclosed by the assessee during the year under consideration) on the amount of the unaccounted sales of Rs. 18,26,19,512/- (107127.50 quintals of rice/broken rice), therefore, uphold the same in terms of our aforesaid observations. - ITA No.15/RPR/2019 - - - Dated:- 17-10-2022 - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assessee : S/shri G.S. Agrawal N.C Gupta, AR s For the Revenue : Shri Sanjay Kumar, Sr. DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the department is directed against the order passed by the CIT(Appeals)-I, Raipur dated 04.09.2018, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-Tax Act, 1961 (for short the Act ) dated 31.03.2016 for assessment year 2013-14. Before us the department has assailed the impugned order on the following grounds of appeal: 1. Whether on points of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and payment is made through banking channel and other evidence is lacking? 8. Whether on points of law and on facts circumstances of the case, the ld. CIT(A) was justified in ignoring the ratio of the Hon'ble Bombay High Court in case of Shoreline Hotel(P) Ltd Vs CIT, Central -1 [2018] 98 Taxmann.com 234(Bombay) wherein it has been held it was held that if assessee could not produce any material purchased by it nor it could ensure presence of supplier, the addition under section 69C on the basis of GP ratio is unjustified? 9. Whether on points of law and on facts circumstances of the case, the ld. CIT(A) was justified in ignoring the ratio of Hon'ble Delhi High Court in the case of CIT-II vs. Jansampark Advertising Marketing (P.) Ltd. reported in [2015] 56 taxmann.com 286(Delhi) held that though it is obligation of assessing officer to conduct proper scrutiny of material, in even of assessing officer failing to discharge his functions properly, obligation to conduct proper inquiry shifts to commissioner(Appeals) and Tribunal and they cannot simply delete addition made by assessing office on ground of lack of inquiry. 10. Whether on points of law and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase bills. It was also noticed by the A.O that some of the entry providers had in their respective statements, inter alia, stated on oath that they had provided bogus bills in lieu of commission to the assessee concern. It was categorically stated by the aforesaid entry providers that neither they owned any godown or actual stock nor had carried out any genuine purchases/sales of goods. The assessee on being confronted with the aforesaid statements while cross examining of the aforesaid entry operators admitted of having procured bogus entries through them. In the statement recorded in the course of survey proceeding u/s.133A, dated 22.03.2016 the assessee had admitted that though certain purchases were made from various other firms but the same were routed through his books of accounts in the garb of bogus bills of the aforementioned bogus concerns. The assessee on being specifically directed to furnish the details of purchases which were made by him through bogus firms had vide his reply dated 22.03.2016 furnished details of such purchases which were claimed to have been made from seven tainted parties aggregating to an amount of Rs.8,32,72,000/-. However, the aforesaid detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 353/29-05-2-12 3. M/s. ShrikhandAgrotech 30,50,000/- 4,00,000/- 552/29-05-2-12 4. M/s. Eden Rice Mill 1,73,75,000/- 4,72,500/- 589/05-11-2012 5. M/s. Balaji Rice Mill 1,81,41,000/- 4,27,500/- 333/05-10-2012 6. M/s. Balaji Grain Processing Unit 1,10,15,000/- 4,27,500/- 578/07-10-2012 7. M/s. Balaji Rice Industries 1,07,18,700/- 4,55,700/- 490/26-11-2012 Total 30,55,700/- The A.O also taking cognizance of the fact that the yield of rice of the assessee i.e. 65% was lower than that fixed as per the norms of the State Government i.e. 67% (Usna variety : 68%), thus, concluded that the assessee had suppressed 2% of yield of rice during the year under consideration. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to explain as to why the value of goods that were allegedly dispatched by the aforesaid four bogus firms amounting to Rs. 16,10,44,860/- may not be treated as his suppressed sales. In reply it was the claim of the assessee that the possibility of goods being sent through those concerns by some other parties could not be ruled out. The A.O considering the aforesaid facts called upon the railway authorities to furnish details as regards the procedure that was involved in rake booking. Information was thereafter received by the AO from the railway authorities, wherein, it was intimated to him that the rakes were booked in the name of an individual and only his goods were loaded in the booked rake and nobody else s goods were loaded. Also the railway authorities furnished with the A.O the copy of declaration that was given by the assessee in respect of rakes booked by him during the year alongwith full details of goods loaded in each wagon. The complete details of the payments that were made by the assessee were also provided by the railway authorities which revealed that the entire amount of payments were made by the assessee himself. The A.O considering the claim of the assessee tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.03.2016 determined the income of the assessee at Rs.16,04,24,940/-. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). The CIT(Appeals) though principally approved the view taken by the A.O that the assessee had not made any genuine purchases from the parties in question, but after referring to the overall disclosed GP rate of the assessee for the year under consideration i.e. 2.62%, therein, restricted the addition only to the extent of 2.62% of the value of the impugned purchases. 5.1. The CIT(Appeals) on the issue of addition that was made by the AO towards peak credit of purchases was of the view that as it was not a case that the assessee had made any payment for making the bogus/unproved purchases out of his unaccounted money, therefore, the A.O had misconceived the factual position and had wrongly made the addition, thus, vacated the entire addition of Rs.30.50 lacs (approx.). 5.2 The CIT(Appeals) on the issue of the addition on account of impugned low yield of rice that was made by the A.O, referred to the facts in context of the aforesaid issue, and observed, that the A.O had proceeded with on the basis of incorrect facts. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails were in the nature of additional documentary evidence which were filed by the assessee before him for the very first time under Rule 46A of the Income-tax Rules, 1962, therefore, the CIT(Appeals) after affording an opportunity to the A.O, who raised a general objection to the admission of the said documents, thus, taking cognizance of the fact that the assessee in the course of the assessment proceeding was not given any opportunity to file the aforesaid documentary evidence admitted the same. 7. Adverting to the explanation of the assessee as regards the bifurcated details of 405145.50 quintals of rice that was transported/dispatched through 16 railway rakes that were booked by him during the year, it was observed by the CIT(Appeals) that though the assessee had filed confirmations of the parties who had transported 208221 quintals (worth Rs.33,39,70,241/-) in the aforesaid railway rakes but had failed to file confirmations in respect of balance 107127.50 quintals of rice/broken rice (worth Rs.18,26,19,512/-), which though were also claimed by him to have been loaded and transported/dispatched by the other parties. The CIT(Appeals) considering the aforesaid facts was of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,91,733/- (out of the total addition of Rs.1,59,41,676/-) that was made by the A.O on account of bogus sundry creditors. 12. As the order of the CIT(Appeals) has been assailed by the department on the basis of multi-facet contentions before us, therefore, we shall deal with the same in a chronological manner, as under:- (A). Re : Bogus purchases :- 13. Before proceeding any further, we may herein observe that the order passed by the CIT(Appeals), wherein he had principally concurred with the view taken by the AO that the assessee had not made any genuine purchases from the aforesaid seven parties (supra) had not been carried any further in appeal by the assessee before us, and thus, on the said count had attained finality. Accordingly, it can safely be concluded that the assessee had admitted of not having made any genuine purchases from the aforementioned seven parties and had only procured bogus purchase bills aggregating to Rs. 9,42,87,200/- from them. 14. Controversy involved in the present appeal as regards the aforesaid issue in hand hinges around the quantification of the profit which the assessee would have made by procuring the goods in question not from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be available in the organized sector. As our indulgence in the present case is confined to the quantification of the profit which the assessee would have made by procuring the goods in question at a discounted value from the open/grey market, therefore, we restrict our adjudication to the said aspect alone. 16. We find that on issue of quantification of the profit which the assessee would have made by procuring the goods in question from the open/grey market, the Hon ble High Court of Bombay in the case of Pr. Commissioner of Income Tax-17 Vs. M/s. Mohhomad Haji Adam Company, ITA No. 1004 of 2016, dated 11.02.2019, while upholding the order of the Tribunal, had observed, that the addition in the hands of the assessee as regards the bogus/unproved purchases was to be made to the extent of bringing the G.P rate of such purchases at the same rate of other genuine purchases. The Hon ble High Court while concluding as hereinabove had observed as under: 8. In the present case, as noted above, the assessee was a trader of brics. The A.O found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gus purchases at the same rate as that of other genuine purchases. We, thus, on the basis of the aforesaid observation of the Hon ble High Court, are of the considered view that on the same lines the profit which the present assessee before us would have made by procuring the goods at a discounted value from the open/grey market can safely be determined by bringing the G.P rate of such bogus purchases at the same rate as that of the other genuine purchases. 17. Our attention was drawn by the ld. AR towards the bifurcated details of bogus purchases in question aggregating to Rs.9,42,87,200/-, viz. (i) purchase of 51585 quintals of rice: Rs.8,86,87,200/-; and (ii) purchase of 4000 quintals of broken rice : Rs.56,00,000/-, which reads as under:- Particulars Total purchases Purchases as reduced by impugned Bogus purchases Impugned Bogus purchases Qty. in Qtls. Value Average rate per Qtls Qty. in Qtls Value Average rate per Qtls Qty. in Qtls Value Average rate pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuine rice that was made by him @ 1729.86 per quintal (average rate). On the basis of the aforesaid facts, now when the purchase rate of the bogus purchase of rice (average rate) is of a lower value than that at which he had made genuine purchases of rice (average rate), therefore, as per the ratio of the judgment of the Hon ble High Court of Bombay in the case of M/s. Mohhomad Haji Adam Company (supra) there could be no justification for making any addition on the said count in the hands of the assessee. We, say so, for the reason that the Hon ble High Court in the case of M/s. Mohhomad Haji Adam Company (supra), had held, that for the purpose of quantifying the profit which the assessee would have made by carrying out bogus/unproved purchases the addition is to be made to the extent that the GP rate of the bogus/unproved purchases is brought to the same rate as that of other genuine purchases. Accordingly, now when in the case of the present assessee before us as the rate of bogus purchases of rice i.e Rs. 1,719.24 per quintal (average rate) is already lower than the rate of genuine purchase of rice i.e Rs. 1,729.86 per quintal (average rate), thus, as a consequence th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us purchases of broken rice, the same, thus, brings the purchase price (average rate) of the bogus purchase of broken rice to an amount of Rs.1363.32 (average rate), i.e., lower than the purchase value (average rate) of the genuine purchase of broken rice of Rs.1370.80 per quintal (supra). Although the addition sustained by the CIT(Appeals) i.e @2.62% as regards 4000 quintals of broken rice (valued at Rs.56 lacs) in the backdrop of our aforesaid deliberations is found to be pitched on the higher side by an amount of Rs. 7.42 per quintal [Rs. 1370.80 per quintal (-) Rs. 1363.32 per quintal], but then considering the fact that the assessee has not assailed the order of the CIT(Appeals) any further in appeal before us, therefore, we refrain from dislodging the addition to the extent the same had been so sustained i.e @2.62% of the value of bogus purchases of broken rice. We, thus, in terms of our aforesaid observations uphold the order of the CIT(Appeals) as regards the addition of the impugned bogus purchases of both rice and broken rice as had been sustained by him i.e @ 2.62% of the value of the impugned purchases in question. Before parting, we may herein observe that the support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances would either manage to show some bogus liability or some advance payments suiting to his need. On the basis of his aforesaid deliberations the A.O had made an addition of the peak credit running through the accounts of all the seven parties aggregating to an amount of Rs.30,55,700/-. 24. On appeal, the CIT(Appeals) after deliberating on the issue in hand did not concur with the view taken by the A.O. It was observed by the CIT(Appeals) that it was not a case where the assessee has made certain purchases out of unaccounted cash which would justify the addition of peak of purchases. Accordingly, the CIT(Appeals) treating the addition as devoid and bereft of any merit vacated the same. 25. After hearing the Ld. Authorized Representatives of both the parties, we find substance in the claim of the Ld. AR that as it is not a case that the assessee had made any purchases from his unaccounted money, therefore, the very basis for making the impugned addition of peak purchases cannot be sustained and had rightly been struck down. As observed by the CIT(Appeals) and, rightly so, the aforesaid addition has no legs to stand upon in the backdrop of the facts involved in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (kanka)], but the same had wrongly been taken by the A.O at 65%. The CIT(Appeals) after considering the aforesaid issue had held as under: 4.3 Addition has been made stating that yield of the assessee's business is 65 percent of rice, whereas as per the Government norms the yield should be 67%. On going through the assessee's submission and quantitative details it is seen that yield shown by the assessee is sufficient. As per agreement with state govt the yield of rice should be 67% and if it is usna variety of paddy then the yield should be 68%. AO has found that whereas the yield of assessee should be 67%, it has shown lesser yield. Assessee's yield is 65% of rice and 3% of kanka (broken rice). Appellant has furnished copy of agreement entered with Chhattisgarh Rajya SahakariVipanan Sangh Maryadit. This agreement is executed every season between the custom millers and Vipanan Sangh on behalf of state government. As per the agreement the quality of rice should be such that the yield will be 67% and if the rice is usna the yield should be 68%. If government of India makes any changes in the yield, both the parties will agree to comply the same. As per governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the yield criteria. As the yield of rice alongwith yield of broken rice (kanka) works out at 68%, therefore, in our considered view the CIT(Appeals) had rightly vacated the adverse inferences drawn by the A.O. 30. Apart from that, we find that a perusal of the yield of rice of the assessee during the year under consideration as in comparison to that of the immediately preceding two years which had been accepted by the department in the course of respective scrutiny assessments for the said years, further fortifies its claim that no adverse inferences as regards its yield of rice for the year under consideration was liable to be drawn. For the sake of clarity the comparative yield position for the year under consideration as also of those for the immediately preceding two years is culled out as under: Comparative yield position is as below: Particular A.Y.2013-14 A.Y.2012-13 A.Y.2011-12 (Qty. In quintals)(Qty. In quintals)(Qty. In quintals) Paddy consumed- 28,080 84,985 1,12,598 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unexplained income of the assessee, as under:- (a) M/s. Amira Pure Foods Pvt. Ltd. : Rs.16,60,633/-:- 35. On a perusal of the records, it transpires that the amount of Rs.16,60,633/- (credit) was on 31.03.2013 shown as payable by the assessee company to the aforementioned party, viz. M/s. Amira Pure Foods Pvt. Ltd., New Delhi, Page 117 of APB. In the immediately succeeding year, i.e., during the period relevant to A.Y.2014-15 goods were supplied by the assessee i.e. broken rice to the aforesaid party and on 31.03.2014, an amount of Rs.42 lacs (Cr.) was payable by the assessee to the aforementioned party ( as per running account). As observed by the CIT(Appeals) that due to certain dispute which had surfaced between the assessee and the aforementioned party the matter was referred for arbitration and the same was finally settled by the Arbitrator, New Delhi, vide his order dated 12.12.2017, and pursuant thereto the assessee had finally handed over a cheque for Rs.11 lac as per the terms of a settlement agreement. On a perusal of the account of the aforementioned party (as appearing in the books of account of the assessee) we find that the entire account of the said par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid observations are found to be factually incorrect. On a perusal of the details of the seven parties (supra) purchases from whom have been held to be bogus in the hands of the assessee, we find that the same does not make any reference of the aforementioned concern i.e. M/s. Shyamji Rice Mill. Accordingly, we are unable to concur with the reasons given by the CIT(Appeals) for vacating the impugned addition that was made by the A.O w.r.t the amount shown against the aforesaid party, viz. M/s Shyamji Rice Mills (supra). For the sake of clarity the observations of the CIT(Appeals) as regards the aforementioned party, viz. M/s. Shyamji Rice Mill are culled out as under: Regarding Shyamji Rice Mill, its proprietor Mohanlal Agrawal has given statement that he did not actually sold goods and has only provided bills. Part of the addition made in the assessment on the basis of the statement has been sustained by me hereinabove, because the purchases by the assessee are not above suspicion. However the amount of trade with this party has already been included in the amount of suspicious purchases which has been dealt with earlier. Our attention in the course of the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.5 is partly allowed for statistical purposes in terms of our aforesaid observation. 40. We shall now advert to the grievance of the department that the CIT(Appeals) had erred in law and facts of the case in vacating the addition of Rs.11,07,64,618/- ( out of total addition of Rs.11,55,49,250/-) that was made by the A.O on account of unaccounted sales, which was based on the details which were gathered in the course of the assessment proceedings from the railway authorities. Also, the department has assailed before us the admission of certain documents as additional documentary evidence by the CIT(Appeals) under Rule 46A of the Income Tax Rules, 1962. 41. Controversy involved qua the issue in hand pertains to the addition that was made by the A.O as regards the unaccounted sales of the assessee that had surfaced in the course of verification of the expenses that were claimed by the assessee to have been incurred on transportation of rice through railway rakes. On a perusal of the records, it transpires that the assessee had debited an amount of Rs.38,81,114/- under the head rack expenses in his Profit Loss account for the year under consideration. On being queried, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Riddhi Siddhi Foods; (iii) M/s. Jayshree Traders; and (iv) M/s. Saraswati Paddy. On the basis of the aforesaid fact the A.O called upon the assessee to explain as to why dispatch of rice valued at Rs.16,10,44,860/- that was claimed to have been loaded by the aforementioned four bogus parties may not be treated as his out of books sales. The assessee controverting the aforesaid observation of the A.O, submitted that the fact that the railway rakes might have been used by some other parties in the garb of the aforesaid four concerns could not be ruled out. 43. The A.O for the sake of clarity, thereafter, called upon the railway authorities to furnish the details about the process of rake booking. In reply, it was intimated by the railway authorities that the rake is booked in the name of an individual and only his goods were loaded in the booked rake and nobody else s goods would be loaded. In fact, the railway authorities had also filed a copy of declaration that was given by the assessee in respect of rakes that were booked by him during the year alongwith full details of goods loaded in each wagon. Also complete payment details were provided by the railway authorities which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a consequential addition of Rs.11,55,49,250/- ( Rs.46,21,97,000 X 25%). 44. On appeal, the CIT(Appeals) after deliberating at length on the explanation of the assessee as regards the 303080 quintals of rice that was transported through 16 railway rakes that were allotted in the name of the assessee during the year, therein, found favor with his claim that in his trade line it was a trade practice that if a trader to whom a railway rake is allotted is unable to load the entire wagon, then, the unused wagon in the normal course would be loaded by third parties. In order to fortify his aforesaid observation it was noticed by the CIT(Appeals) that during the year the assessee had himself transported/dispatched 56876.75 quintals of rice valued at Rs.10.09 crore through the railway wagons which were over the year booked by a total of 18 third parties. Also, it was observed by him that the assessee had during the year transported 80131 quintals of broken rice valued at Rs.11.52 crore through railway wagons which were booked by other parties as per the details which were filed before him. Although, the aforesaid details were not filed by the assessee in the course of the assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed by the assessee to have been transported by third parties was in fact his unaccounted sales. 47. Apropos the scaling down of the unaccounted sales to 107127.50 quintals of rice/broken rice by the CIT(Appeals), as against that taken by the A.O at 303080 quintals of rice/broken rice, the same in our considered view being based on the confirmations provided by third parties who had clearly admitted on the basis of supporting documentary evidence/details that they had transported their rice/broken rice through railway rakes booked by the assessee merits acceptance. The complete details of the rice/broken rice loaded in 16 rakes booked in the name of the assessee during the year are culled out as under: Particulars Quantity (MT) Amount (Rs.) Total quantity in 16 rakes4,05,144.50Rs. 66,65,57,581 Quantity loaded by Appellant -89,795.50 Rs.14,99,67,828 Quantity loaded by others: 1. Where confirmations and invoices filed before A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear the transportation charges for the same. 50. As regards the reliance drawn by the A.O on the statement of Shri. Manjesh Kumar, Chief Goods Clerk, SECR, Tilda, Raipur, we may herein observe that as the said statement was recorded by the A.O u/s.131 of the Act on 30.03.2016 i.e. at the back of the assessee, therefore, the using of the same for drawing of adverse inferences in the hands of the assessee is clearly a flagrant violation of the basic tenements of the principles of natural justice. Be that as it may, it transpires that as observed by the CIT(Appeals) and, rightly so, though the aforementioned person viz. Shri Manjesh Kumar (supra) had in his reply to Question No.7 of his statement claimed that the goods belonging to the person who had booked the rake is loaded in the wagon, but we cannot remain oblivion of the fact that he had categorically stated that the railway authorities are only concerned that the wagons are properly loaded and locked, doors of the wagons are duly secured, and that the documents containing the complete details of the goods that are being transported are signed by the person to whom the rake is allotted; while for the loading of the goods is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genesis of the controversy in hand does not lie any beyond but the quantification of the addition which was confined by the A.O to 25% of the value of the unaccounted sales. In fact there is a categorical observation of the A.O that no adverse inferences are to be drawn as regards the purchases corresponding to the unaccounted sales. As the revenue by preferring the present appeal, as regards the issue in hand is only aggrieved with the scaling down of the addition of Rs.11,55,49,250/- (made by the A.O @25% of the value of unaccounted sales) to an amount of Rs.47,84,632/- (@2.26% of the value of the unaccounted sales) by the CIT(Appeals), therefore, we confine our adjudication to the said extent. 53. Controversy as regards the quantification of the profit which the assessee would have made by carrying out unaccounted sales hinges around the aspect, i.e., as to whether or not the CIT(Appeals) was right in law and the facts of the case in substituting the ad-hoc rate of 25% as was adopted by the A.O by the assessee s overall disclosed GP rate of 2.62%? In our considered view there appears to be no logical reasoning for the A.O to have quantified the profit element involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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