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2016 (9) TMI 640 - AT - Income TaxSale of gold and silver ornaments - G.P. determination - Held that:- The appellant has not taken any grounds before us relating to rejection of books of accounts under section 145(3) and hence, the contention of the ld AR regarding invalid application of section 145 cannot be accepted. Regarding estimation of sales at ₹ 8 lacs as against declared sales of ₹ 7.73 lacs by the assessee in its return of income, no basis or justification has been given by the AO. Further, the basis of estimation of G.P @ 20% as against declared G.P of 13.11% is also not clear from the assessment order. Inspite of the fact that the books of accounts have been rejected, the estimation of sales and G.P need to necessarily have some rational and reasonable basis which is absent in the instant case. Hence, the trading addition of ₹ 56,223 is deleted and the ground of the assessee is allowed. Addition on account of outstanding debtors - Held that:- Additions made by the AO flow from the same set of documents namely the Katuria note book as well as Annex. A -12 to A-17 found during the course of survey. Given that the AO has verified the entries and worked out the outstanding debtors for the year under consideration as well as for the previous years, we do not see a basis to hold that the surrender made by the assessee of ₹ 3,06,080/- is in addition to ₹ 5,52,740/- worked out by the AO. In light of that, we agree with the contentions of the ld. AR that there is double addition which has happened to the extent of ₹ 3,06,080/- hence we restrict the subject addition on account of outstanding debtors to the extent of Rs., 2,46,060/-. Addition towards outstanding debtors of ₹ 2,46,060 shall be covered by the unexplained assets surrendered and disclosed by the assessee amounting to ₹ 36,16,140/-. Hence, the same has to be telescoped and cannot be brought to tax separately. In light of that, we delete the whole of additions towards the outstanding trade debtors - Decided in favour of assessee. Addition of shop expenses - Held that:- The addition confirmed by the ld, CIT(A) is purely on adhoc basis hence the same is deleted. Undisclosed income in the shape of outstanding debts - Held that:- The surrender of ₹ 36,13,140 during AY 2002-2003 relates to stock accumulated out of income earned from sale/purchase of gold and job work charges of ₹ 26,50,000, cash found during survey of ₹ 63,140, investment in house of ₹ 5,00,000, trade debtors outstanding of ₹ 3,00,000 and loan and interest of ₹ 1,00,000. In the statement of Shri Suresh Soni, son of the assessee and which is subsequently confirmed by the assessee in his own statement, it has been mentioned that investments made in stock, cash found during survey, etc are out of the same business receipts and trade debtors. Nothing has been brought on record by the Revenue in terms of any tangible evidence to prove otherwise. The surrender of ₹ 36,13,140 and additions of trade debtors over all these years amounting to ₹ 9,19,191 have their origin in terms of statements recorded of Shri Suresh Soni, the assessee as well as same set of documents in terms of katuria note book and loose papers found during the course of survey which have to be read and considered in entirety and which prove that the quality of trade debtors in all these years and surrender of stock and cash and even investment in house is not different. In the entirety of facts and circumstances of the case, where the realisation from sales for the year and previous years have been invested in the stock of gold and house property and which have already been brought to tax as surrendered income, the same trade debtors cannot be brought to tax again in the hands of the assessee.
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