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2016 (5) TMI 526 - ITAT AHMEDABADAddition on unaccounted profit - Held that:- Assessing Officer has relied on the provisional P&L A/c. for a part of the year to make such large addition. He has not brought any materials on record to prove that why the contention of the assessee was not acceptable. He has accepted the year ending P&L a/c and not doubted any expenditures whatsoever claimed by the assessee, but made such huge addition. It does not appeal to the common sense about such huge net profit at 46.43%, especially for the type of assessee’s business. The Assessing Officer should have drawn the P&L a/c as on the survey date after considering all income and expenditures. In this case no such attempt was made by the Assessing Officer before making such addition. Therefore, looking to the nature of the business of the assessee, which is spread over different geographical area, it requires time to record accounting entries and the assessee could not record all the transactions as on 13.09.2008. Considering these facts and circumstances of the case, CIT(A) has rightly deleted the addition in question - Decided against revenue Unexplained investment in land - Held that:- CIT(A) observed that the land was acquired by a different entity other than the assessee-firm. Also the statement of the Partner was not categorical that the assessee-firm had paid on behalf of the purchaser from unaccounted source; however, the statement recorded under section 131(1) of the Act referred to a figure of ₹ 70 lacs as affirmed by the Partner of the assessee-firm as the consideration and the books of account recorded a sum of ₹ 60.62 lacs. This was the basis for addition to the differential amount in the appropriate hand. Thus, CIT(A) correctly observed that the addition made in the hands of the assessee-firm was not justifiable and, if at all any addition should be made, it could be to the extent of the unexplained and not beyond. Further, he rightly held that the addition made in the A.Y.2009-10 was not the relevant year considering the transactions which pertained to the A.Y. 2006- 07. It was found possible such overlapping in case where the Managing Partners manages affairs of various entities and in such eases the Assessing Officer was duty bound to take appropriate action so that such unexplained transactions do not escape the rigor of taxation. The CIT(A) in the concluding lines rightly observed that the Assessing Officer may take corrective measures legally to assess the admitted amount of ₹ 21 lacs paid from outside the books of account in the appropriate hand and in the relevant assessment year. These reasoned and factual findings of the CIT(A) need no interference - Decided against revenue Cash payment made for purchase of second-hand crane through a proprietary concern of the Managing Partner - Held that:- Although the Assessing Officer had ample time to verify and to reconcile the purchases of crane and source thereof, it was not done by him. It is also pertinent to note that the care has not taken by the Assessing Officer regarding the assessment year, i.e., in which year such unaccounted money should be added. The so called transactions related to A.Y. 2007-08 and the addition made in the A.Y. 2009-10. Under these facts and circumstances, the CIT(A) rightly held that there were no documentary evidence on the basis of which the addition can sustain. Considering these peculiar facts of the case, we are also of the opinion that this addition cannot sustain as there was no addition of cranes in the hands of the assessee during the relevant assessment year. - Decided against revenue Unaccounted investment in stock - Held that:- AO was not justified in neglecting the transactions in between the period and he even did not consider the difference between the stock found and opening stock as. unexplained investment in stock. The CIT(A) rightly observed that when the audited accounts were available, the right thing was to consider the figures as per audited records instead of impounded materials. However, as per the reconciliation of stock statement, the stock difference arrived at ₹ 63,597/- which was admitted by ld. Authorized Representative on behalf of the assessee. Hence, the CIT(A) has rightly directed the Assessing Officer to restrict the addition to the extent of differential amount, i.e., ₹ 63,597/- and rest was deleted. These reasoned and factual findings of the ld. CIT(A) do not require any interference - Decided against revenue Unexplained salary and wages - Held that:- Theoretically, the assessee can derive benefit when the corresponding sales are suppressed. The Assessing Officer has not indicated anywhere in the assessment order that the assessee had suppressed sales thereby in the assessee gained benefit. The survey was conducted in the month of September 2008 and how can the Assessing Officer assume that after September 2008 the assessee would pay salary & wages from outside the books of account. The Assessing Officer obviously has not rightly appreciated the submissions made by the assessee in this regard. As rightly observed by the CIT(A), the Assessing Officer completely ignored the basic records and audited books of accounts of the assessee submitted before him. His reliance on the statement has been the sole basis for such addition. In this circumstances, the Assessing Officer was not justified in making such addition and the same has been rightly deleted by the CIT(A). - Decided against revenue Unexplained expenditure - Held that:- The assessee has furnished the ledger account of TDS while crediting to these parties and also furnished proof of filing of TDS return incorporating these credits. On perusal of the same, the CIT(A) inferred that there was no reason to believe that the said transactions appeared in trial balance and the ledger accounts were not inclusive of these amount. Unlike in the manual system, in a computerized environment, if it is appearing in the tally accounting package in trial balance, invariably it will appear in the ledger accounts also. The assessee established that such credits are supported by deducting and paying tax at source on those credits/payments. The ledger account placed on record also substantiated the assessee’s stand. The assessee also furnished a list of parties in whose case the credit balances were written off at ₹ 36,56,109/- which was entirely different from these three parties. Therefore, under these facts and circumstances of the case, the Assessing Officer was not justified in making this addition in question and the same has rightly been deleted by the CIT(A) - Decided against revenue
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