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TMI Blog2016 (2) TMI 1371X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO on account of low gross profit." 3. Facts in brief as emerged from the corresponding assessment order passed by the Assessing Officer u/s. 143(3) of the I.T. Act, 1961 dated 27.12.2010 were that the assessee firm is in the business of trading in oil, veg ghee, sugar, biscuits, washing power, etc. The return was filed declaring an income of Rs. 13,82,270/-. A survey under section 133A was conducted on 8.8.2007/ 9.8.2007, both in the business premises of the head office and branch office of the assessee firm. The observation of the AO was that the survey party had found excessive stock of Rs. 27,85,455/- and excess cash of Rs. 5,53,030/- totaling to Rs. 33,38,485/-. Statement of one of the partners was recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to nullify and adjust the undisclosed income surrendered during survey and to escape from taxation of real income. It is unbelievable in the absence of corroborative evidence brought on record, that the GP of Rs. 14.99 lacs on turnover of Rs. 5.40 crores prior to survey, suddenly stepped down to loss of s.8,67,181/- on turnover of Rs. 6.86 crores for the post survey period in head office. Similarly, the GP shown at Rs. 13.25 lacs on turnover of Rs. 2.25 crores in branch office for the pre-survey period was unreasonably suppressed to Rs. 5,34,640/- on sales of Rs. 3.58 crores in branch office for the post survey period. In the oil account, washing powder and washing soap account, the G.P. in terms of percen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, a remand report was also called for by the ld CIT(A). On that basis, ld CIT(A) has held that no discrepancy in the books of account or the bills produced were noted by the AO. The AO has not objected the manner in which the accounts are maintained. There was no rejection of books of account u/s. 145 of the I.T. Act. On these facts, it was pleaded that the assessee was in trading business and in respect of trading results of oil, washing powder and washing soap, it was not correct to hold that gross profit had gone down in the post survey period. The assessee has furnished the pre-survey and post survey percentage of profit of the three commodities as under: Particulars Oil Washing powder Soap Pre- Survey post-surve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness was closed. Further, he has mentioned that the AO had not considered the GP rate of all the commodities of the entire period. Our attention was drawn on three accounts, namely, oil account, washing power account and washing soap account. He has further pleaded that the assessment for A.Y. 2007-08 i.e. preceding assessment year, the order was passed u/s.143(3) of the Income tax Act and in that order, the GP rate as disclosed by the assessee was not disturbed. The GP. rate for the period ending on 31.3.2007 was 1.05% which was accepted in the past. In support of the contention that without rejection of books of account, the profit rate should have not been disturbed, reliance was placed on few decisions, keeping brevity in mind, need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t survey profit rate was higher than the rate of profit already assessed in the past years. Therefore, we hereby confirm the findings of the ld CIT(A) and reject this ground of appeal taken by the revenue. 11. Ground No. 2 is as under: "Whether in law and on facts & circumstances of the case the ld CIT(A) has erred in deleting the disallowance of Rs. 11,60,165/- made by the AO in respect of remuneration and interest paid to partners. 12. As per the AO, the income surrendered was assessable u/s. 69C of I.T. Act, 1961 i.e. "income from other sources". Therefore, deduction claimed u/s.40(b) was not an admissible expenditure. As a result, the claim of payment of interest and remuneration to partners amounting to Rs. 11,60,16 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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