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2016 (10) TMI 163 - AT - Income TaxAssessment u/s 153A pursuant to search - abatement of pending assessments - Held that:- making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed under section 143(1) of the Act, thereby resulting in non-abatement of such assessment in terms of the Second Proviso to section 153A(1) of the Act. Trading addition - The addition to the trading results made by the CIT(A) is based on conjectures and surmises, in as much as, the statement of Mrs. Mehrunisa Husseini, relied upon by him is not relevant for the instant year. Secondly, even out of eight creditors, whose maximum balance was considered unexplained, the statement of only one party i.e. M/s. Nisha Enterprises was out of the statement of seven parties recorded by the Assessing Officer. Even on this aspect, we find that the said concern retracted it’s initial statement and in the remand proceedings before the Assessing Officer, the said party admitted transactions with the assessee. The addition made on similar basis in connection with transactions with M/s. Nisha Enterprises in the hands of the sister concern for assessment year 2006-07 has been deleted by the Tribunal. Considered in this light, in our view, so far as trading results for the instant assessment year are concerned, the same cannot be treated as unreliable on the basis of the verification exercise of the creditors carried out by the Assessing Officer. Furthermore, the unsustainability of the addition made by the CIT(A) can be seen from the fact that he has applied adhoc gross profit rate of 6.5% on the entire sales made by the assessee instead of confining it to any particular transactions which were unproved, as per him. In fact, once the CIT(A) did not find the inadequacy brought out by the Assessing Officer with respect to sundry creditors as being justified, he had no plausible evidence, apart from mere doubts, to treat the trading result as unreliable. Therefore, the addition sustained by the CIT(A) is unwarranted and is hereby directed to deleted. In the result, appeal of the assessee allowed.
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