TMI Blog2016 (10) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... averi And Banwari Lal Sharma, JJ. For the Appellant : Prakul Khurana For the Respondent : Anuroop Singhi JUDGMENT 1. By way of this appeal, the assessee has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal preferred by the assessee and dismissed the appeal preferred by the Department. 2. This court while admitting the matter, has framed the following questions of law : Whether trading additions by rejecting the whole books of account as well as the addition by rejecting some of the purchases can be made simultaneously and whether this would not tantamount to double addition ? 3. Counsel for the appellant has contended that the assessee's books of account were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. exp. a sum of ₹ 3,194 is added as discussed above (under section 37(2A) 2,194 Out of misc. exp. which includes exp. on deewali gifts, etc. as discussed above 1,000 Out of car and scooter exp. a sum of ₹ 2,000 is disallowed as discussed above 2,000 1,17,885 4,19,165 Less : Depreciation as claimed 52,633 Deduction under section 80HHC as per claim 46,553 99,186 Total income 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right in treating the unexplained cash credit entries to the extent of ₹ 16,950 as covered by added gross profit in the sum of ₹ 18,117 on the basis of the estimate. 5. The Allahabad High Court in the case of CIT v. Babban Pandey [1970] 77 ITR 601 (All) has held as under (page 606) : The word 'undisclosed source' means a source which has not been disclosed by the assessee. It may refer to any of the sources mentioned in section 6 of 1922 Act, not excluding 'profits and gains of business, profession, or vocation'. The mere fact that the explanation of the assessee as to the source of the amount in question was rejected and that he did not set up the plea in his grounds of appeal that it formed part of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the accounts could not be relied upon. The contention that the Tribunal having adopted as the basis of assessment a gross profit of 9.5 per cent. instead of 5.1 per cent. had computed the figure ₹ 1,37,189 wrongly is valid. Having computed the gross profit at 9.5 per cent. the Appellate Assistant Commissioner further added a sum of ₹ 56,345 on account of unaccounted for profit on sale of permits restricted to the unproved cash credits. This addition is obviously wrong when a flat rate of 9.5 per cent. on the total turnover is being adopted in computing the gross profits. The assessee had recourse to the several entries of cash credits only for the purposes of balancing the accounts with a view to reducing the rate of gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are referred to under section 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in section 40 is also taken into account. No doubt there is a big difference between profit earned with own capital and profit earned with borrowed capital and such a difference could have been taken into account by the Income-tax Officer while making an estimate. If the Commissioner of Income-tax had set aside the estimate on the ground that the vital fact that the business was carried on with own capital and not with borrowed capital has been ignored by the Income-tax Officer, there may not have been any difficulty in upholding that order. But, when he proposes to add back an exact i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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