TMI Blog2024 (4) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... ise to the income to the assessee until it is sold out. Though the assessee has claimed before us that such unaccounted stock has either been sold in the year under consideration or has shown as part of closing stock or the same has been sold in the subsequent assessment year. AR appearing before us has not brought anything on record demonstrating from the financial statements that such unaccounted purchases have either been shown as part of the closing stock or sold out in the current/ subsequent year. Thus, in the absence of such details and to render equitable justice to the assessee and the revenue, we are of the view that some percentage of profit on such unaccounted purchases/stock is required to be added. The assessee before us has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the survey operation. 3. The necessary facts are that the assessee in the present case, a partnership firm, is engaged in the business of manufacturing trading of cotton, cotton seeds and cotton seeds oil. There was survey operation at the business premises of the assessee under section 133A of the Act wherein unaccounted stock of 2119 quintal having value of ₹ 65,68,900/- was found and therefore, the same being unaccounted stock was added to the total income of the assessee. 4. On appeal, the ld. CIT(A) was pleased to confirm the order of the AO. 5. Being aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 6. The learned AR before us filed a paper book running into pages 1 to 69 and raised limited contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the authorities below. In other words, had there been any investment by the assessee in such an unaccounted investment, the same needs to be brought to tax under the provisions of section 69A of the Act. Coming back to the question whether the entire amount of excess stock found during survey shall be subject to tax or only the profit element embedded in such unaccounted stock shall be brought to tax. As it is an undisputed fact that the stock arises from the purchases and if such purchases are not found accounted for or from explained sources then, can the entire purchase amount be brought tax? This question has been answered by the Hon ble Gujarat High court in the case of CIT vs. Snita P Sheth reported in 38 taxmann.com 385 where i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate will be much higher. In essence, the Tribunal only estimated the possible profit out of purchases made through non-genuine parties. No question of law in such estimation would arise. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick can be adopted. 8.1 Identical view was also taken by the Hon ble Gujarat High Court in the case of President industry reported in 258 ITR 654 where it was held as under: The amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represent the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer vide our submission dated 18/12/ 2012 8.3 However, the ld. AR appearing before us has not brought anything on record demonstrating from the financial statements that such unaccounted purchases have either been shown as part of the closing stock or sold out in the current/ subsequent year. Thus, in the absence of such details and to render equitable justice to the assessee and the revenue, we are of the view that some percentage of profit on such unaccounted purchases/stock is required to be added. The assessee before us has suggested vide letter dated 10-01-2022, such percentage of profit at the rate of 2% of the value of unaccounted stock. The submission of the assessee is reproduced as under: Without prejudice and in the alte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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