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2021 (10) TMI 617 - AT - Income TaxUndisclosed income - addition on the basis of amount reflected in Form No.26AS - difference in the gross receipts declared by the assessee in its P&L A/c and as reflected in Form No.26AS - HELD THAT:- AO has clearly brought out that there was difference in the gross receipts declared by the assessee in its P&L A/c and as reflected in Form No.26AS. AO was justified in re-opening of the assessment. Regarding merit of the addition, the contention of the assessee is that the receipt pertained to one of the partners namely, Shri Harjot Singh Anand, who confirmed this fact on duly sworn affidavit. Without prejudice to other contention, it is also stated that the entire receipts as reflected in Form 26AS only profit element embedded in such receipt could be taxed. No dispute with regard to the fact that the AO taxed the entire difference of receipts - undisputedly, there is no finding by the AO or any material placed on record, suggesting that the assessee had made investment out of undisclosed source for earning of gross receipts. AO simply added the difference of receipts as recorded in Form 26AS and as disclosed by the assessee firm in its P&L A/c. This action of the Assessing Officer is contrary to the settled principle of law. Therefore, such action could not be sustained. AO ought to have taxed the only profit element embedded into such receipts. As by any stretch of imagination, the gross receipt would not partake the character of income. Respectfully following the reasoning of the Co-ordinate Bench of this Tribunal rendered in the case of Raghubir Singh [2019 (11) TMI 706 - ITAT DELHI] we hereby direct the Assessing Officer to apply net profit @ 8% on the difference of receipts that comes to ₹ 4,31,510/-. Hence, addition is sustained to the extent of ₹ 4,31,510/- and rest of the addition is, hereby deleted. Thus, grounds raised by the assessee are partly allowed.
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