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2022 (5) TMI 1175 - AT - Income TaxAssessment u/s 153A - unrecorded payments to the employees - HELD THAT:- As quantum of salary paid to employees in a trading concern cannot be directly proportional to the profits earned. There cannot be a proportionate and direct co-relation between the salary paid and the profits earned in the case of a trading concern. We also note that during the course of survey, the Department could not unearth any incriminating material which would point out towards any out of book profits having been earned by the assessee firm. Therefore, it is our considered view that even if there had to be an addition on account of some concealed profit, the AO would have to lead evidence to establish earning of such concealed profit and this kind of addition cannot be made on mere surmises - AO has not adopted a correct approach in tabulating such alleged concealed profit and such approach cannot be approved by us - no case for addition on account of concealed net profit is made out and we are not inclined to agree with the findings recorded by the Ld. CIT (A) on this issue and, therefore, we set aside the order of the CIT (A) on the issue of concealed net profits and direct the AO to delete the same. The grounds of appeals on this issue under all the three captioned years are, therefore, allowed. Addition in respect of concealed net profit - HELD THAT:- As we have already deleted this addition on account of alleged concealed profits in all the three years and have decided the issue in favour of the assessee in preceding paragraph 14.2.2 of this order and in view of our such adjudication in favour of the assessee, the ground raised by the Department stands dismissed. Estimated undisclosed investment for earning the concealed net profit - HELD THAT:- In this regard, it is seen that the Ld. CIT (A) had deleted this addition by noting that the assessee had sufficient closing stock which ran into crores of rupees and, therefore, no additional investment was required by the assessee to have been made for undertaking any concealed turnover. Anyway, since we have completely deleted the addition pertaining to alleged concealed net profit in preceding paragraph 14.2.2 of this order, therefore, this addition does not have any feet to stand on. Accordingly, while upholding the order of the Ld. CIT (A) on the issue we dismiss the ground raised by the Revenue. Undisclosed investment in the property ‘Kothi Tehal Singh’ - HELD THAT:- It would also be worth-mentioning that this issue had also arisen before us in Department’s appeal for assessment year 2012-13 wherein this Bench had dismissed the Department’s challenge to the deletion made by the Ld.CIT(A) in respect of the property ‘Kothi Tehal Singh’ by observing that “categorical finding given by the Ld. CIT (A) on the issue make it amply clear that the impugned investment had been made by different co-owners in their individual names, beyond the block period and there was no link or connection with the investment made by the partnership concern i.e. the assessee”. This Bench also noted that “there is no dispute about the fact that the impugned investment related to the property purchased by individuals acting in their individual capacity and that the assessee firm had no connection with the same. Therefore, we find ourselves in agreement with the findings of the Ld. CIT (A) as reproduced above, that no addition could be made in the hands of the assessee firm u/s 69 of the Act as unaccounted investment during assessment year under consideration”. Therefore, on the same logic and reasoning, we deem it appropriate to dismiss this ground of appeal of the Department Unaccounted purchases - Assessee arguments have been that the alleged unrecorded purchases were recorded on a paper which carried the title “Estimate” and were, therefore, not purchases but were only goods received on approval - HELD THAT:- As it is seen that the Ld. CIT (A) has negated this contention of the assessee by noting that this contention of the assessee cannot be accepted as a perusal of the account shows that the account of the party has been credited by the bills’ amount, meaning thereby that it was the purchase by the assessee - We find the above conclusion arrived at by the Ld. CIT (A) to be correct on the factual matrix of the issue. The arguments of the Ld. AR on the issue do not have feet to stand on in the face of the categorical finding recorded by the Ld. CIT (A) and we uphold the same. The ground stands dismissed.
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