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2018 (1) TMI 727 - AT - Income TaxUnaccounted purchases - Profit determination - Held that:- Adoption of average over four years may not result in assessment of correct incomes in respect of that year. Either CIT(A) should have directed to adopt the same ratio or should have adopted a higher rate than what was declared by assessee. Since AO was not given any opportunity, the reduction by CIT(A) seems to be arbitrary. Therefore, we are unable to uphold the order of CIT(A) in adopting average rate of profit. As informed that the issue before the Central Excise Authorities is pending adjudication in the appellate tribunal therein. Assessee has no objection for adopting the turnovers in income tax proceedings. Therefore, accepting the turnovers as quantified by the Excise Authorities, AO is directed to adopt the same profit ratio as offered by assessee on the disclosed turnovers to the undisclosed turnover as well, in each of the assessment years. Accordingly, modifying the order of CIT(A), we direct the AO to verify the profit ratio in each of the assessment years and adopt the same ratio on the undisclosed turnover as well. The order of CIT(A) is modified to that extent. Entire unexplained turnover brought to tax - Held that:- Bringing to tax the entire turnover is not correct. Even the case law relied on by assessee before the Ld.CIT(A) supports the view that only profit/income can be brought to tax, not the entire turnover. Keeping that in mind, we agree with the findings of CIT(A) to the extent that the accrued turnover cannot be brought to tax. Revenue grounds are accordingly considered partly allowed Addition of amount paid in cash - Held that:- Why AO brought this amount to tax in all the assessment years is not understandable. We have perused the show cause notice. There is only one payment determined by the Excise Authorities and accordingly, we are of the opinion that addition of ₹ 10 Lakhs in each of the assessment years is not correct. Therefore, assessee’s grounds on this issue are allowed
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