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2020 (6) TMI 408 - AT - Income TaxAddition of difference in total sales made during the year and total cash deposits u/s 68 - assessee has failed to explain the source of cash deposits in the bank account - plea taken by the appellant that purchases in the individual capacity were also routed through the HUF and accepted by CIT(A) - HELD THAT:- A.O. in the assessment order has also mentioned the same details of the purchases as per the Trading A/c of the assessee and again compared with the bank statement and ultimately on the difference with regard to purchases, applied the G.P. rate of 0.80% for making the addition. Thus, the crux of the matter had been that the A.O. accepted the sales and purchases disclosed by the assessee in the Trading A/c. A.O. has also accepted profit declared by the assessee. A.O. with regard to the unexplained purchases applied the G.P. rate for the purpose of making the addition, but, with regard to sales without comparing with the bank statement made the addition of the entire amount in question. Thus, there is a difference in the opinion of the A.O. with regard to the same matter in issue as regards sales and purchases. CIT(A) on examination of the record, accepted the explanation of assessee that purchases and sales made by assessee of other connected parties since routed through the bank account of the assessee, therefore, could not be treated as sales and purchases of the assessee. Even if there was some excess sales declared by the assessee, the entire sales could not have been treated as unaccounted income of the assessee. As against the undisclosed or unaccounted sales, only profit rate should have been applied to make the addition. We are fortified in our view by Judgment of Hon’ble Gujarat High Court in the case of CIT vs., President Industries [1999 (4) TMI 8 - GUJARAT HIGH COURT] and in the case of CIT vs., Bal Chand Ajit Kumar [2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT]. No material is produced before us to rebut the finding of fact recorded by the Ld. CIT(A) that the transaction in the individual capacity were also routed through assessee HUF and are recorded in the books of account and sales and purchases have not been disputed by the A.O. Therefore, no interference is called for in the matter. Addition on account of applying G.P. Rate - difference in the purchases as the assessee has failed to explain the source of cash deposits in his bank account during the assessment proceedings and no such proof was filed - HELD THAT:- Since the purchases recorded in the books of account have not been disputed by the A.O, therefore, there is no question of making such addition against the assessee. The explanation of assessee that other purchases were also routed through the account of the assessee, have not been disputed by the Revenue. Therefore, no interference is called for in the matter. Accordingly, Ground No.2 of the appeal of the Revenue is dismissed. Ad-hoc disallowance of expenses - assessee has claimed shop expenses, labour charges, printing and stationary, and travelling expenses - assessee did not produce complete vouchers - HELD THAT:- A.O. has not pointed out as to which of the vouchers of the expenditure have not been produced by the assessee. No details of the amount has also been mentioned. Therefore, disallowing 1/5th of the expenditure claimed of the assessee would amounts to adhoc addition which cannot be sustained in law.
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