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2022 (10) TMI 1034 - AT - Income TaxUnexplained expenditure u/s. 69C - addition on account of variation in the valuation made by the customs authorities in the assessable value of goods imported - HELD THAT:- As in the case of the assessee, there is no evidence on record to suggest that assessee, has paid any amount over and above the purchase consideration shown in the purchase bills. It may also be noted that the excise duty payable on each bill on the difference in valuation made by the customs authorities @ 16% works out to be in a few hundreds and there is a force in the contention of the assessee that, the cost of filing of further appeal is higher than additional custom duty paid and it was not economical to contest the variations. Moreover, if an assessee opts to contest the variations, it delays the clearance of the goods and result into higher cost. Therefore, only on the fact that the assessee had paid custom duty on the enhancement made by the custom authorities cannot be regarded has a valid basis to suggest that there was unaccounted purchases made by the assessee. CIT(A) held that the AO was not justified in assuming that the assessee had made unaccounted purchases solitary on the basis that the customs authorities had enhanced the value of goods imported for the purpose of payment of custom, duty. In the absence of any evidence/material on record that the assessee has paid anything extra over and above the transaction value shown in import invoices, no addition on account of unexplained expenditure on purchases can be made and deleted the addition of Rs. 31,07,529/- made by the AO. As gone through the entire factum and without any hesitation, we hold that the Assessing Officer has made addition on a deeming fiction and the CIT(A) has succinctly analyzed every aspect of the business and transactions and gave a surefire decision. Hence, we decline to interfere with the order of the Ld. CIT(A) on this issue. Addition in gross profit - AO has rejected the books of account holding that the purchases as well as sales have not been fully accounted for - The books cannot be rejected on the solitary basis that sales were shown to be made in cash specially when there is no difference in the rate charged on sale of same product booked either in cash or on credit. Therefore, we are of the opinion that there was no material in possession of the AO to conclude that books of account for the A.Y. 2003-04 maintained by the assessee were either incorrect or incomplete. Since there is no basis of rejection of books of account, provisions of section 145 cannot be attracted and no addition in the gross profit can be made on estimated basis, when the assessee has cogently explained the reasons for fall in the gross profit rate being on account of change in the pattern of business and increase in the total turnover. Hence, addition made on account of gross profit has been fittingly deleted by the Ld. CIT(A). The appeal of the revenue on this ground is dismissed.
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