2013 (7) TMI 855
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....unt, Rs.16,14,200/- was seized. Jewellery worth Rs. 20,40,688/- was also found, but no seizure of jewellery was made. 4. In response to the notice under Section 158BC, the respondent filed his return declaring undisclosed income of Rs.18,00,000/-. The Assessing Officer in the assessment order dated 28th November, 2003 made several additions and assessed the total income of the respondent-assessee at Rs.9,91,63,790/-. The aforesaid addition included additions on the basis of a document mentioning undisclosed sales of Rs.9,73,63,789/- between the period 1st April, 2001 to 6th November, 2001. This document was accepted by the respondent-assessee in their letter dated 6th June, 2000 as a record of their unaccounted sales. The Assessing Officer made addition on account of unrecorded purchases of Rs.4,50,17,616/- on the basis of the said paper. The Assessing Officer held that the difference between unrecorded purchases (Rs.450,17,616/-) and unrecorded sales figures (Rs.9,73,63,789/-) i.e. Rs.5,23,46,173/- should be treated as undeclared profit earned during the block period. Thus two additions of Rs.4,50,17,616/- and Rs.5,23,46,173/- were made. 5. Respondent substantially succeeded in ....
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....see on day to day basis. The argument of the Ld. AR that as the assessee was dealing in same items for making the recorded and unrecorded sales and the regular stock sold outside the books used to be replenished out of sales proceeds of unrecorded sales as some merit in it because no excess stock was found during the course of search operation. Also, no evidence or material has been referred to or relied upon for adopting the figure of Rs.4,50,17,616/- for making investment. Thus, there was no material before the AO to hold that the assessee made an undisclosed investment to that extent. For any addition to be made in the block assessment it has to be based on material found during the course of search or in the course of post search proceeding. The addition in the block assessment cannot be made only on guess work basis or surmises. For the proposition that investment in stock has to be based on material found during the course of search or post search enquiries or any other positive material pointing to the factum of investment in stock, the following case law are relied upon:- i) Ashok Kumar Rastogi Vs. Gotan Lal Khanji Udyog CIT 100 CTR 204 (All) ii) CIT Vs. Bal Chand Ajit Ku....
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....ld be disallowed for working out the income. Tribunal accordingly affirmed the view taken by the CIT (Appeals) directing the Assessing Officer to adopt gross profit rate of 2.25% and thus upheld and maintained the addition to the extent of Rs.21,90,685/- as against Rs.5,23,46,173/- made by the Assessing Officer. 10. On reading the reasoning given by the tribunal, we are not inclined to interfere with the said part of the order on the ground that it is perverse. We may have some reservations, but the basic facts have been noticed and form the core and foundation of the order. These include the GP rate of the respondent-assessee as recorded in the books of accounts for this year and the earlier years. We have some reservations on the observation made by the tribunal that as it was a case of unrecorded sales, benefit of tax was passed on the third parties. Further, observation of the tribunal that the Assessing Officer had not analyzed the item-wise purchase and sale price though the documents seized reflect the item-wise sales and purchases is debatable. Nevertheless, there are substantial and good reasons for adopting the GP rate of 2.25%, as it is apparent that GP rate of 53.76% a....
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....as other apparent evidence to the contrary. Onus, in such cases, is on the assessee to show that unaccounted investment was made out of accounted stock. There cannot be any assumption or presumption that unaccounted sales must be from accounted purchases. Unaccounted sales may result and can contribute towards the investment, but there has to be initial investment. Profits and income earned are also used for personal needs and are taken out of business. 12. On the question whether the peak credit should be added and brought to tax, tribunal has held as under:- "6.1 Coming to the alternative submission that at least peak of unaccounted investment, worked out on the basis of unrecorded purchases should have been brought to tax, we have only to mention that the same could be taxed only if there is some evidence on record regarding undisclosed income in the seized material or otherwise. There is no such evidence and, therefore, in view of arguments in paragraph 6 (supra), the stand of the learned DR cannot be accepted. Notwithstanding this argument, the working of peak submitted by the ld. DR at Rs.17,03,546/- is lower than the unaccounted income brought to tax by the ld. CIT(Appeals....
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....ing into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then the finding is rendered infirm in the eye of the law. If the findings of the Court are based on no evidence or evidence which is thoroughly unreliable or evidence that suffers from the vice of procedural irregularity or the findings are such that no reasonable person would have arrived at those findings, then the findings may be said to be perverse. Further if the findings are either ipse dixit of the Court or based on conjecture and surmises, the judgment suffers from the additional infirmity of non-application of mind and thus, stands vitiated. (Vide Bharatha Matha v. R. Vijaya Renganathan [(2010) 11 SCC 483 : AIR 2010 SC 2685] .)" 15. Earlier in Dhirajlal Girdharilal v. CIT (1954) 26 ITR 736 (SC) it was observed:- "....if the court of fact, whose decision on a question of fact is final, arrives at this decision by considering material which is irrelevant to the enquiry, or by considering material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and s....