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2023 (11) TMI 1141 - ITAT BANGALOREEstimation of income on deficit gold jewellery - in search proceedings AO noted shortage of stock of gold ornaments as compared to the stock register maintained by the assessee - suppressed sales - estimation by applying the gross profit rate of 6.44 % on the value of the alleged deficit stock found in course of search - contention of the ld. A.R. is that same amount of jewellery was found in the residence of Managing Director of assessee during the course of search action and the same was the stock taken from the shop by Managing Director for the purpose of safe custody - HELD THAT:- As stocks have been kept in the MD’s residence before bar coding of the same. It was also admitted that jewellery found at the residence of MD is also having bar code of the shop. Thus it cannot be presumed that excess stock found during the course of search action at the residence of MD is not belong to the present assessee since stock found at the residence of MD is of same quantity and it is the usual practice followed by the assessee and it has to be inferred that there was a movement of stock from assessee’s shop to MD’s house. Hence, there was an impugned shortage of jewellery in the hands of present assessee. It is quite natural to give telescopic benefit to the assessee by observing that the jewellery found at the residence of MD of present assessee is belong to the assessee itself and due telescoping benefit to be given. As such, the finding of lower authorities that there was suppression of sale of jewellery in the hands of assessee have no legs to stand. Accordingly, the addition is deleted and this ground of the assessee is allowed. Unexplained investment in silver articles - excess silver articles to the tune of 1.801 kgs. - HELD THAT:- The contention of the ld. A.R. is that total stock of silver articles was at 1008 kgs. On weighing the same, there was excess of silver articles to the tune of 1.801 kgs., which is very minimal and which is only 0.1786%. It may be due to weighing difference in scale due to wind or due to any other reasons. This minimum difference cannot be considered as excess silver articles found during the course of search action and due margin to be given for such minimal weighing difference. This addition is deleted. This ground of appeal of the assessee is allowed. Unexplained expenditure - additions by the ld. AO on the basis of loose slips found during the course of search action - HELD THAT: -It is an admitted fact that the department has not collected any corroborative material supporting the entries in these loose slips. In our opinion, unless it is substantiated or corroborated by any material evidence in support of such notings in the loose slips or notings in diary, the addition cannot be made by the authorities. The suspicion in the minds of the revenue authorities that the assessee has made certain payments as per the loose slips cannot be reason to make an addition. In the absence of concrete evidence brought on record by the authorities concerned, the addition cannot be made. The suspicion cannot replace the material evidence brought on record. It is also be noted that the authorities have to follow the principles of natural justice and the description of the documents in the form of loose slips are not enough to make an addition without furnishing the copy of these documents to the assessee and also without giving an opportunity of cross examination of the concerned parties, who has written these loose slips. The loose slips having certain jottings are not speaking one and it cannot be basis for any inference to make an addition. Accordingly, the addition made on the basis of unsubstantiated loose slips cannot be sustained. Accordingly, the addition is deleted and this ground of appeal of the assessee is allowed.
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