TMI Blog2004 (8) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... rch operation. The AO made this addition on substantive basis in the case of M/s M.M. Sales Agencies and on protective basis in the case of M/s M.M. Enterprises. 3. The brief facts of the case are that in this group, search was conducted on 24th Feb., 1999. On the basis of the inventory prepared of the stock found during the course of search, the AO worked out the excess stock of Rs. 9,82,741 on the basis of the trading account prepared by him. He worked out closing stock of M/s M.M. Sales Agencies at Rs. 39,34,119 and closing stock of M/s M.M. Enterprises at Rs. 73,120, totalling to Rs. 40,07,239, whereas actual stock found in both the concerns was of Rs. 49,89,980 as per details given in the assessment order. Thus, the addition of Rs. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rate difference, goods in transit, stock replacement was filed. 6. The learned CIT(A), on the basis of above arguments and evidence, has rightly held that the AO was not justified in not taking into account the purchases of Rs. 12,36,021. If the purchases are taken into account, there would be a shortage of Rs. 4,10,574 and assessee's sister-concern, M/s M.M. Enterprises, had already declared and disclosed profit @ 6 per cent on shortage of stock of Rs. 4,10,574. Therefore, the learned CIT(A) has rightly deleted the addition made in the hands of both the concerns after appreciation of the facts of the case and evidence on record. Therefore, we do not find any infirmity in the order of the learned CIT(A). 7. Ground Nos. 3, 4 and 5 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the learned CIT(A) that the sales are to be taken on the basis of the seized documents and the sales are to be estimated only for the year for which the information or document had been found and seized for a part period of the accounting period. No sales can be estimated where no information at all had been obtained during the course of search and no information is available on the basis of the seized record that the assessee had indulged in out of the books transaction for a part of the year. For these years, the sales cannot be estimated. Thus, we find no infirmity in the order of the learned CIT(A) in both the cases. 9. The second issue is regarding application of GP rate for both the cases. The learned CIT(A) has concluded that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by the assessee-firm and no investment for purchase of goods was made by the assessee-firm. Similarly, page Nos. 139 and 140 of Annex. 'A' which contain summary transaction of page Nos. 133 to 139 also show that goods worth Rs. 4,99,000 have been purchased on credit in the month of November, 1997, and payments against such purchases commenced from December, 1997, to June, 1998, in petty amount of Rs. 20,000 to Rs. 40,000 in cash. In this case also, there is no investment made by the assessee-firm for the purchase of goods during financial years 1997-98 and 1998-99. In the same way transaction of goods purchased as appearing on page Nos. 152 to 154, 162 to 165 of Annex. A' and page Nos. 91, 72 and 73 of Annex. AC shows that such goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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