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2023 (11) TMI 1230 - AT - Income TaxUnexplained cash credit - Addition based on cherry picking certain figures - addition calculated on the basis of sundry creditors and closing work in progress of preceding year and purchase, labour charges, bank withdrawals during the year - HELD THAT:- AO has on his own construed that total withdrawal from the bank are towards purchase of materials and services and then at the next step, he finds that the assessee has transferred a sum from one of his concern S. Paik & Co. to Anil Kumar Paik and then he revised his calculations and then observed that the assessee has claimed excess liability on account of sundry creditors for raw material service charges and to arrive at this figure, the ld. Assessing Officer firstly arrived at a figure by way of deducting the amount transferred from S. Paik & Co to Anil Kumar Paik from the figure of total withdrawals made from the bank account and then the resultant figure was reduced from the total of purchases + sundry creditors as on 31/03/2015 + labour charges + opening work in progress. We are surprised to observe such kind of working by the AO which is dumb founded and has merely picked up certain figures from the financial statements on the closing dates to arrive at such irrelevant workings. He has failed to understand that when the assessee has consistently and regularly followed a method of accounting and proper documents are kept for each and every entry then without rejecting the book results and without finding any discrepancy in the books can an AO carry out such an exercise which is not meaningful and is purely a guess work. We thus, are of the considered view that the impugned addition for unexplained credit is based on surmises and conjectures. Ground No. 1 raised by the assessee is allowed. Addition invoking Section 43CA - HELD THAT:- As considering the fact that flats appearing in the list from Serial No. 5 to 15, agreement to sale was prior to 01/04/2013 and part of the consideration was received through account payee cheques, therefore, Section 43CA of the Act will not be applicable and the difference between the amount of sale consideration appearing in the conveyance deed and the value adopted by the stamp valuation authority cannot be added in the hands of the assessee and the same is hereby deleted. For remaining four flats assessee has claimed that the details of payments have not been examined by the ld. Assessing Officer. Considering the location of the flats, the market valuation cannot be adopted from the stamp valuation authority and matter may be referred to Department valuation officer. Further since no such opportunity was granted during the course of hearing, prayer has been made for restoring the examination of these three transactions carried out with Shri P. Chatterjee, Shri Shibnath Das and Shri Paras Keinth, to the file of the Assessing Officer for examining it afresh - Ground No. 2 raised by the assessee is partly allowed for statistical purposes. Addition made by applying GP rate of 4.65% on the suppressed sales - non rejection of books of accounts - HELD THAT:- AO has himself not worked out the deposit figure properly. What he intended to mention is the cash deposits but then he referred to the total deposits in the bank account which can be on other account also and not only the sales. While taking this course, the ld. AO has nowhere disputed the book results as the same has not be rejected and even considering the finding of the AO, it indicates that the total cash deposits in the bank account is less than the total sales shown in the profit and loss account. It is not a case of suppressed sales and working made by the AO is purely on surmises and conjectures and, therefore, the action of the AO, applying gross profit rate on the alleged suppressed sales tis uncalled for. Ground No. 3 raised by the assessee is allowed. Average gross profit ratio on unexplained sales - non rejection of books of accounts - HELD THAT:- Assessing Officer has not rejected the book results u/s 145(3) of the Act, nor any discrepancy has been noticed in the purchase and sales and expenses claimed and just certain figures have been jumbled up but the conclusion drawn by the Assessing Officer reaches nowhere and thus the impugned addition is purely based on a guess work and surmises and conjectures and deserves to be deleted. Ground No. 4 raised by the assessee is allowed.
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