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2014 (7) TMI 1273 - AT - Income TaxUnexplained investment in stock - Search proceedings - under recording the purchase value of the goods as well as sale value of the goods - whether separate additions can be made for such unrecorded purchases and sales? - Held that:- Almost 50% purchases have been made outside the books of account because in the books of account only purchases of ₹ 34,26,938/- have been made whereas the purchases outside the books are ₹ 16,35,009/-. This in turn means that assessee would require some investment to hold such stock and also some sundry debtors wherever credit sales have been made. Since the amount of ₹ 16,35,009/- pertains to full year, in our opinion, an addition of ₹ 3 lakhs would meet the ends of justice because that would mean inventory for almost two months plus some credit sales. Addition on account of alleged profit earned on alleged unaccounted sales - Held that:- As discussed in detail the aspect relating to unrecorded purchases and sales and practically deleted whole of that addition except for the sum of ₹ 3 lakhs which was required as investment in the form of inventory. It was also observed that at best only profit could be estimated on such undisclosed sales. The undisclosed sales was clearly admitted during the survey/search operation by the assessee himself and therefore, the same cannot be denied now. At least profits on all such transactions have to be assessed to tax. The Assessing Officer has been more then reasonable to assess the profit at the GP rate declared by the assessee in various years and the same has been confirmed by Ld. CIT(A), therefore, we find nothing wrong with the order of Ld. CIT(A) and confirm the same. Addition on account of alleged capital gains short disclosed - Held that:- The year a sum of ₹ 1,60,000/- has been shown towards construction and further a sum of ₹ 44,333/- is shown for transfer charges and ₹ 28,550/- for purchase of wood etc. Therefore, it can be said that assessee has incurred some expenditure for cost of improvement. However, at the same time no documentary evidence has been placed and since admittedly the assessee is holding many properties, therefore, it cannot be said that all the expenses have been incurred for improvement of this property. In these circumstances, in the interest of justice we are of the opinion that if a sum of ₹ 1 lakhs is estimated towards cost of improvement, then the same would meet the ends of justice. Unexplained investment in stocks under section 69B - Held that:- The assessee is regularly carrying on the business of sanitary and hardware items and, therefore, must be carrying on some stock . Before CIT(A) list of inventory was furnished showing stock of ₹ 18,47,600/-. Though inventory list was not furnished before Assessing Officer but this can be said to have be accepted by the Revenue because investment in undisclosed sale was calculated on the basis of these details. Further, we have already held while adjudicating the issue regarding undisclosed stock i.e sum of ₹ 3 lakhs should be added towards inventory and sundry debtors. Considering this fact and the fact that some of the items have been valued at retail price we are of the opinion that addition of ₹ 5 lakhs towards cost would meet the ends of justice. Unaccounted cash found at the time of search - Held that:- A married women coming to her parents house may bring cash and considering the overall circumstances we are of the opinion that a credit for ₹ 1 lakh can be given for cash belonging to Smt. Jyoti Khajuria. As far as cash belonging to Shri Vijay Kishan Sharma is concerned, no credit can be given, firstly a father-in-law normally would not keep his cash in the house of son-in-law. Secondly there was no such occasion to keep the cash with the son-in-law. In any case this cash was withdrawn from Vijay Bank on 19.8.2010 and why that cash was withdrawn and kept at son-in-law’s house, has not been explained. Therefore we decline to give any credit for the cash to Shri Vijay Kishan Sharma. To sum up a credit for ₹ 1,60,000/- (i.e. ₹ 1 lakh for cash belonging to Smt. Jyoti Khajuria and ₹ 60,000/- belonging to the business should be given and balance addition is confirmed). Therefore we set aside the order of the CIT(A) and allow this ground partly. Addition on account of alleged investment in jewellery substantive in the case of assessee appellant - Held that:- Atleast benefit of the instructions issued by CBDT in Instruction No. F.286/63/93-IT(inv)-11 dated 11.5.1994 should be allowed for jewellery. As per these instructions jewellery to the extent of 500 gms in case of a married lady and 100 gms in case of a married male should be accepted, therefore out of jewellery of 735.20 gms, jewellery of 600 gms should be accepted. Similarly diamond items had been valued at ₹ 65150/- and silver items had been valued at ₹ 21780/-. These are small amounts and considering the overall status of the family, in our opinion, these amounts should be accepted as explained. Therefore we set aside the order of the CIT(A) and direct the Assessing Officer to make addition of jewellery for 135.20 gms. Addition on account of alleged undisclosed capital gains - cost of improvement - Held that:- No force in the submissions because no evidence has been filed for the source of the cash for so called improvement. Therefore we set aside the order of the CIT(A) and confirm AO order.
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