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2016 (2) TMI 1371 - AT - Income TaxAddition of low gross profit - survey conducted - as per revenue surrendered amount was nullified by claiming loss within the accounting period after the survey - correctness of gross profit disclosed by the assessee in the post survey accounting period - HELD THAT:- Even after the survey operation conducted u/s. 133A on 8.8.2007, no specific defect was referred by the AO pertaining to books of account of the assessee. There was no such allegation that there was suppression of sales or inflated purchases were accounted for in the books of account. Although there was an allegation of suppression of stock and excess cash were found but that was not made the basis of the impugned addition by the AO. AO had proceeded to compare the trading results of pre survey and post survey period but contention before us is that the AO should have examined the profit of the entire financial year. That profit should have been compared with the profit disclosed and accepted in the immediately preceding year i.e. A.Y. 2007-08. This fact has also not been challenged by the Revenue side that addition in question was made without rejection of books of account. On this issue, there are several decisions, wherein, it was consistently opined that there should be some defects to be pointed out by the revenue department so as to disturb the percentage of profit disclosed. In the absence of such discrepancy, the action of the AO remained un-substantiated. One more reason assigned by the ld CIT(A) before granting relief was that there was no uniform decrease in trading results of all the commodities. Rather in some of the commodities, the post survey profit rate was higher than the rate of profit already assessed in the past years. Therefore, we hereby confirm the findings of the ld CIT(A) and reject this ground of appeal taken by the revenue. Disallowance of remuneration and interest paid to partners - As per the AO, the income surrendered was assessable u/s. 69C i.e. “income from other sources”, therefore, deduction claimed u/s.40(b) was not an admissible expenditure - CIT(A) deleted the addition - HELD THAT:- As we came to know that in a number of decisions, a consistent view has been taken that if the amount is surrendered pertaining to stock or business receipts, during the course of survey, then such surrender was nothing but income generated from the business activities of the assessee. Few case laws cited are S.K. Srigiri & Bros [2007 (11) TMI 72 - KARNATAKA HIGH COURT], Jamnadas Muljibhai [2005 (1) TMI 366 - ITAT RAJKOT] and Deepa Agro Agencies [2005 (8) TMI 288 - ITAT BANGALORE-B] - thus we find no reason to interfere with the finding of ld CIT(A) and the same is hereby confirmed. This ground is accordingly rejected.
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