9911796707
TMI Blog2010 (12) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... said note books far exceeded the sales recorded in his regular books of account. The assessing officer worked out the difference of Rs.8,21,242 between sales recorded in the said note book and the sales recorded in the regular books of accounts which is tabulated in the assessment order on pages 6 & 7. On that basis the assessing officer worked out the average unaccounted sale for a day at Rs.18,665 (Rs.8,21,242/44 days) and proposed to calculate unaccounted sales for the period from April 2003 to November 2003 (216 days i.e. after excluding one day per week on account of holiday). During the assessing proceedings, the assessee furnished a chart showing detailed working of sales as per the impounded note book and as per book of account, according to which the sales comes to Rs.4,55,956 as against Rs.8,21,242 worked out by the assessing officer. The difference was attributed the following: • The AO has treated the advances received as cash sales • The AO has treated he amounts received on account of credit sales made earlier which was duly accounted for in the books of account. The said receipts have been accounted for in the books of account. • The cash taken a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 497 wherein it has been held that merely because there were some discrepancies in the pre-search period, it could not lead to any presumption that the discrepancies would have continued in the post search period particularly when there was factually no evidence at all as found by both the authorities below to support such a view. The assessee submitted before CIT(A) that no estimate can be made for post survey period as it cannot be assumed that any such practice was continued even after the date of survey without any corroborative evidence to prove the same. The assumption for post survey period is quite illogical. Initially, the A.O. proposed to assume and add undisclosed sales upto the date of survey as is evident from show cause notice reproduced on page 7 of assessment order. Later on, the assessing officer with a view to inflate the figure changed his mind and estimated the figures for the whole year. The decision relied upon by the assessing officer on the judgment of the Apex Court in the case of CST vs HM Esufali H.M. Abdulali (supra) was sought to be distinguished as according to the assessee, the decision is in respect of search carried out by the sales tax department an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the figure of cash sales is inflated. The advance receipts and receipts against credit sales are clearly apparent from the diary. I have carefully considered the contentions of the appellant but the same is not convincing. In respect of the credit sales, it is not verifiable as to against which credit sales, the receipts have come. The name of customer is also absent. In the absence of possibility of verification of these important details, it is difficult to accept that credit sales pertaining to these receipts are recorded in books of accounts. Similarly, in respect of advance, it is not verifiable as to on what account the advance is received and what is the further treatment of this in the books of accounts. In the absence of this, its correlation with the books of accounts cannot be established. It is therefore not acceptable that these amounts form part of books of accounts. This argument of the appellant therefore fails. 7.4 The appellant has further submitted that he A.O. has included the cash arising from the cash sales taken at home previously and brought back on a particular day into the figure of cash sales of that day. The AR of the appellant drew my attention to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the survey and therefore the unrecorded sale should be determined only to the extent of what is mentioned in the diary. There is no evidence found during the course of survey which can suggest that prior to 19.10.2003, the sales was not recorded in the books f accounts. The appellant submitted that it is quite illogical to estimate the sales for post survey period. The appellant relied on recent decision of Delhi High Court in the case of CT vs. Anand Kumar Deepak Kumar (294 ITR 497) wherein it is held that merely on the presumption, continuance of discrepancy for the post search period cannot be assumed. On the other hand the A.O. has relied upon the Apex Court decision in the case of H.M. Esufali H.M. Abdulali (90 ITR 271) wherein it was held that department can estimate income for whole year on the basis of material for part of the year. The appellant submitted that the Apex Court decision relied upon by the A.O. is distinguishable on facts. That case is connected with the proceedings under the Sales Tax Act. During the course of search, a bill book was found and the assessee denied that the said bill book was his bill book and the entries therein related to his dealing. La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific period is found, the discrepancy on the basis of that material should be confined to that period only unless the material itself or any other evidence or the circumstances giving rise to a finding indicate discrepancy for the other period. The enlargement of the material found by presunmption and guess cannot lead to a logical conclusion of existence of discrepancy in other period. Further, it is not logical to assume any such discrepancy after the period of survey. In no case, the estimate can run for post survey period. The Delhi High Court judgment relied upon the appellant also lay down the same principle. The Apex Court decision relied upon by the A.O. is distinguishable on facts and it is directly not applicable to appellant's case. I therefore hold that the unrecorded sale should be taken at Rs.5,40,246/-. 9.0 The next issue is to determine profit on such unrecorded sales. The A.O. has added entire sale consideration which is apparently incorrect. The object is to tax profit embedded in such sales. The sales by itself cannot represent the income but the realization in excess of cost incurred for masking such sales is the income of the assessee. The jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- is confirmed and the appellant gets relief of Rs.57,63,078/- out of addition of Rs.58,98,140/-." 9. We have heard Shri JM Sahay, the ld.DR, who relied on the order of the assessing officer and Shri MP Sarda, the ld.AR of the assessee, who relied on the order of CIT(A). 10. We have considered the rival submissions and perused the material placed before us. We find that the CIT(A), on the basis of material placed before him, which are also placed before us, has found that the objection of the assessee that the following amounts are to be excluded from the undisclosed cash sales worked out by the assessing officer was acceptable to the following extent and therefore the undisclosed sales worked out to Rs.5,40,246 instead of Rs. 455,956 claimed by the assessee as against Rs.8,21,242 worked out by the assessing officer for the pre survey period from 19-10- 2003 to 05-12-2003 i.e. for 44 days, for the detailed reasons discussed by him on pages 7 & 8 of his order: (a) For unverifiability, to exclude the credit sales claimed by the assessee cannot be accepted; (b) Amount of Rs.2,68,226 claimed to be cash taken at home earlier and brought back on subsequent date should be exclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d gross profit of around 15% on the recorded sales. Thus, the total addition was worked out at Rs.1,35,062 by the CIT(A) as against Rs. 58,98,140. The ld.CIT(A) also considered another aspect of the matter as to whether the investment in the unrecorded sales so worked out by him at Rs,.5,40,246 could be considered for addition or not. To this, drawing support from the judgment of the jurisdictional High Court in the case of President Industries supra and the Third Member decision of the Tribunal in the case of ITO vs Guru Bachchan Singh J Juneja, the CIT(A) found that there was no material found during the course of survey that the assessee had made any undisclosed investment in the unrecorded sales. 12. The learned AR before has relied upon the judgment of The Hon'ble Allahabad High Court in the case of Ashok Kumar Rastogi vs CIT 100 CTR (All) 204 in support of the finding of the CIT(A) that in the absence of any corroborating evidence no addition u/s 69 could be made as unexplained investment in the sales estimated on discovery of certain documents. Another judgment relied upon by the ld.AR for the assessee is in the case of Anjaneya Brick Works vs ACIT (Inv) 74 TTJ (Bang) 921 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
