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2010 (11) TMI 713 - ITAT, AGRASurvey - value of unaccounted stock of scrap - No speaking order - asessee derives income from manufacturing and trading of ADB Hubs, Crank Shafts and Ingots - In the statement recorded at the time of survey the assessee surrendered an amount of Rs. 22,00,000 as his additional income on the date of survey due to discrepancy in the stock - assessee has submitted all the purchase bills in respect of the scrap from 1-4-2000 to 25-9-2000 - Assessing Officer supported the rate of Rs. 7,000 per M.T., but did not make any adverse comment on the evidences filed by the assessee before the CIT(A) - Appeal is allowed by way of remand to CIT(A) whether the amount surrendered by the assessee in respect of excess stock found during the course of survey be assessed under the head "income from business" or as "income from other sources" - It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act - it is apparent that the Hon’ble Gujarat High Court has categorically held that the undisclosed investments which are deemed to be the income of assessee in accordance with the provisions of sections 69, 69A, 69B and 69C, cannot be assessed under the head "Income from business or profession - Appeal is allowed br way of remand. Computation of profit on sale of scrap - held that:- Since no separate addition was ever made by the Assessing Officer and even the CIT(A) has not also enhanced the assessment in this regard, the department cannot raise this ground of appeal at this stage before the Tribunal. Telescoping of profit - estimated addition - held that:- Once the higher wastage are recorded, the natural inference will be that there will be excess production, which not being accounted for, would have been sold outside the books of account by the assessee. To the extent there is production on account of excess wastage, in my opinion, the sale consideration worked out on such excess production has to be added separately since the assessee has surrendered the excess scrap stock. There is nothing wrong in telescoping the trading addition so allowed to the extent of the additions made on account of investment in excess stock as on the date of survey.
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