9911796707
TMI Blog2024 (12) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival submissions and perused the materials available on record. The assessee is a partnership firm. A search and seizure operation under section 132 of the Act was carried out in the case of the assessee along with other cases of Punihani group of cases at various residential and business premises on 04.01.2019. The return of income for the assessment year 2019- 20 was filed by the assessee on 31-10-2019 declaring total income of Rs 14,86,54,400/- in response to notice issued under section 153 A of the Act. The assessee firm is engaged in the business of manufacturing and export of leather goods and is running a hotel under the name and style of Dia Park Premiere in Gurgaon. At the time of search, the search party valued the inventory of finished goods, raw materials and accessories found physically at the premises of the assessee firm at Rs 11,12,45,367/-. During the course of assessment proceedings, the Learned AO calculated the recorded value of closing stock at Rs 5,67,92,915/- by making reverse calculation on the basis of gross profit at the rate of 19.67 percent which was the gross profit rate of earlier year and arrived at the closing stock as on 4-1-2019 on the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page 59) - 3,00,86,0177- Unit B (P. B. Page 58) - 1,48,63,618/- Gurgaon Premise (P. B. Page 98) - 5,99,400/- 4,55,49,035 Profit embedded in the Sale value of Finished Goods computed after making Reverse calculation [Rs. 4,55,49,035 / 128.10% * 28.10%] 99,91,631 ♦ 7. We find that the learned CIT(A) by applying the gross profit rate of the current year at the rate of 28.10% had arrived at the closing stock figure of Rs 10,20,91,121/- as on the date of search by working as under:- Particulars Amount (Rs.) Particulars Amount (Rs.) Opening stock 1,05,72,330/- Export sales 53,63,87,279/- Purchases 33,61,82,881/- Local sales 9,57,874/- Estimates unbooks purchases 7,00,00,000/- Closing stock 10,20,91,121/- Fabrication charge 3,47,61,635/- Labour charge 3,11,73,139/- Job work 56,47,746/- Finishing charge 1,04,555/- Gross profit 28.1% of sales 15,09,93,988/- 8. Taking the closing stock figure of Rs 10,20,91,121/- on the date of search as worked out above, the Learned CIT(A) concluded that the excess stock works out to Rs 91,08,879/- only (11,12,00,000 - 10,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f car running and maintenance expenses as against the disallowance of Rs 5,23,103/- made by the learned AO. With regard to car depreciation, the learned CIT(A) held that it is statutorily allowable allowance to the assessee and hence the same cannot be disturbed with on account of personal usage. Accordingly, he deleted the disallowance made on account of car depreciation in the sum of Rs 6,86,796/-. Against this order, both assessee as well as the revenue are in appeal before us. 12. At the outset, we find that the Learned CIT(A) had indeed accepted the fact that the car has been used for the purpose of business by the assessee firm. It is pertinent to note that the books of accounts of the assessee firm were not rejected by the Learned AO or by the Learned CIT(A). Hence, the book results declared cannot be disturbed unless certain deficiencies are found thereon and there is no need to make any ad hoc disallowance thereon. The partners have their own personal vehicles for their personal usage, which fact was brought to the knowledge of Learned CIT(A) and the same had not been disputed by the revenue. Hence the action of the Learned CIT(A) in restricting the disallowance on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments on account of their bills. It was also clarified that in the case of B L leather, against the so-called bills mentioned in the seized document, neither any supplies were received nor any transactions were made after 31-03-2017. Consequently, there was neither any payment due nor any cash or other payments were receivable by the said party from the assessee. Similarly, neither any amount due nor receivable existed in the case of some 'Vinod' mentioned in the said loose slip. Neither any purchase nor any supply/ service has either been received or availed by the assessee. Similarly, in the case of Malhotra leather export, it was stated that payment against bill no. 121 and 123 has been made to the extent of Rs 12,84,800/-, whereas full payment of such invoices amounting to Rs 13,47,110 was duly made on 21-12-2018. The assessee produced the copy of ledger accounts of the said parties in the books of the assessee firm to substantiate the contentions of the assessee. The Learned AO however disregarded these contentions of the assessee and proceeded to make an addition of Rs 29,56,800/-as unexplained money under section 69A of the Act in the assessment. 18. The Learned CIT(A) obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in estimating only the gross profit portion to tax in the case of the assessee. Moreover, he argued that assessee had accepted the said order of Learned CIT(A) and had not contested further since the Learned CIT(A) had estimated the gross profit applying 28.10% (being the gross profit earned during the year) on the unaccounted sales portion found in the seized document. He also placed reliance on the decision of Hon'ble Gujarat High Court in the case of PCIT vs Rameshwar Textile Mills Limited in Tax Appeal Numbers 527 and 528 of 2015 dated 7-9-2015 in support of this contention. 20. We find that the arguments advanced by the Learned AR has lot of force in view of the fact that the quantitative tally of stocks were duly available at the time of search which enabled the search team to value the closing stock on the date of search, taking into account the physical stocks available on the date of search. When there are unaccounted sales mentioned in the seized document, there should be obviously unaccounted purchases, as without purchases there cannot be any sales. Hence, only the profit element needs to be brought to tax. In the instant case, the Learned CIT(A) had estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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