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2022 (9) TMI 403 - AT - Income TaxUnexplained stock - difference in stock found at the time of physical verification on the date of search - HELD THAT:- CIT(A) has duly considered the entirety of facts and circumstances of the case and has rightly worked out the profits, applying the gross profit rate as declared by the assessee, on the stock which after proper reconciliation has been found excess in the books of accounts as compared to physical stock and thereby lending credence to the finding that the said stock has been sold outside the books of accounts. Nothing has been brought on record to rebut the said findings of the CIT(A) and therefore, we do not see any justifiable basis to interfere with the finding of the CIT(A) and the same is hereby confirmed and the ground of appeal taken by the assessee is dismissed. Addition u/s. 36(1)(iii) - disallowance was restricted to 12% of the cash found short after updating the books of account - HELD THAT:- CIT(A) has accepted the working of cash shortage as submitted by the assessee. The explanation of the assessee that the cash has been handed over to the staff members remain uncorroborated and therefore, as a necessary corollary, we agree with the finding of the AO that the cash so found short has been utilized for non-business purposes. Further, where the taxing authorities have applied average rate of 12% on such funds being utilized for non-business purposes, we do not find any infirmity in the said finding of the CIT(A) and the same is hereby confirmed and the ground of appeal taken by the assessee is dismissed. Addition u/s. 40(a)(ia) - whether Shri Shah Nawaz who besides being an employee of the assessee company has worked as a contractor and got paid for such services or not? - HELD THAT:- Basis the said statement, the AO has held that no tax has been deducted at source on amount of Rs. 30 lacs paid by the assessee company during the year to Shri Shah Nawaz, accordingly, 30% of the amount was disallowed invoking provisions of section 40(a)(ia) - The assessee is challenging the said statement of Shri Shaw Nawaz and has raised various contentions before the lower authorities and which have again been reiterated before us. The contentions so advanced are however not backed by any corroborative evidence to dislodge the statement so recorded during the course of search. Passing of entries in the books of accounts which is well within the control of the assessee and not even supported by any receipts signed by the individual workers confirming the receipt of money directly from the assessee company is not sufficient enough to dislodge the findings of the AO that the payment has been made directly to Shri Shah Nawaz who in turn distributes to the workers. There are no statements of any of the workers employed at the assessee's premises which contradict the statement of Shri Shah Nawaz and support the version of the assessee that they were hired directly by the assessee and also paid directly by the assessee. Taking into consideration the entirety of facts and circumstances of the case, we do not find any infirmity in the finding of the CIT(A) and the same is hereby confirmed and the ground of appeal taken by the assessee is dismissed.
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