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2015 (7) TMI 571 - HC - Income TaxUnaccounted transaction - AO made the addition on this issue on the basis of loose papers found during course of the search which are not included in the documents BS-1 to BS-8 - ITAT deleted the addition - Held that:- the assessee made detailed submission before the ld. CIT(A) noted above explaining each and every loose paper which are found recorded in BS-1 to BS-8. The papers and tabulations of the assessee were forwarded to the AO for his comments in which AO has not pointed out any mistake. The ld CIT(A) also verified the facts himself and gave a categorical finding that most of the transactions on documents/loose papers discussed by the AO in para 10 of the assessment order are found recorded in the documents BS-1 to BS-8. The assessee himself admitted few transactions not entered into BS-1 to BS-8. Working of the same is also given and the basis of the same. No justification to interfere in the order of the ld. CIT(A) as regards the transaction entered into the documents BS-1 to BS-8. It is settled law that in the block assessment, addition could be made on the basis of evidence recorded and found during course of the search. The submission of the ld. DR shows that even if some loose papers are recovered during course of the search, the computation of undisclosed income should be computed for whole of the block period. Such a submission itself would prove and support the findings of the fact recorded by ld. CIT(A) that there is no basis whatsoever in making huge addition against the assessee. No material is also found during course of the search if assessee made any investment in making those unrecorded sales. If the sales are there, there are bound to be purchases. The income however could be computed on the basis of unrecorded sales made outside the books of account for which evidence is recovered. The ld. CIT(A) on going through the submission of the assessee and material on record noted that the transactions relating to the sale of gold ornaments weighing 1587.472 grams and unrecorded sales of ₹ 60,790/- are not recorded in the books of account as well as in BS-1 to BS-8. The ld. CIT(A) took the value of the same as 6,98,488 and applied n.p rate of 13% and make the addition of ₹ 90,903/- and further addition of ₹ 34,000/- being investment in the aforesaid sales. We have applied n.p rate of 3% in the case of the assessee being wholesale dealer. The same rate is applicable on this issue also therefore for unrecorded sale of gold ornaments, the entire sale receipts cannot be profit of the assessee. On both the figures of ₹ 6,98,488/- and ₹ 60,970/- as is confirmed by ld. CIT(A), if n.p rate of 3% is applied, it would give approximate profit of ₹ 21,000/- + ₹ 1830/- (Rs,22,830/-). Since no evidence of undisclosed investment is found, the addition of ₹ 34,000/- is deleted. We accordingly set aside the orders of the authorities below to the above extent and direct the authorities below to take the profit on undisclosed sales at ₹ 22,830/- as against ₹ 1,85,593/- sustained by the ld. CIT(A) - Decided in favour of assessee.
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