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2017 (11) TMI 1672 - AT - Income TaxUnaccounted sales - treatment of entire unaccounted sales as income especially when the said unaccounted sales itself is quantified before the end of the previous year relevant f or the asst. year under consideration - Held that:- Assessee’s action in not only accepting the excess stock on the day of survey, but also offering the excess profits on unaccounted sales itself is double addition. Be that as it may, assessee has agreed to the statement during the course of survey and admitted the incomes of regular profit, excess stock and the profit on unaccounted sales, as well at the time of filing return itself. It is trite law that unaccounted sales found out during the course of survey or search cannot be added as such and only profit can be brought to tax. What is to be taxed is only unaccounted income and not unaccounted receipts, unless the receipts are proved to the income. Here A.O himself quantified the unaccounted sales in survey. Assessee offering of profit @ 24.91% cannot be faulted on the facts of the case. Various case law relied upon by assessee also support the view that only profit margin can be brought to tax but not entire sales. Action of the A.O in bringing to tax entire unaccounted sales on the reason that purchases are not produced cannot be accepted. When both sales and purchases are unaccounted a reasonable profit can only be estimated. Since, assessee has already included the excess stock as well as the profit on unaccounted sales, no further addition is received. The action of the A.O cannot be supported either on facts or on law.
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