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TMI Blog2013 (12) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income-tax Appeals (Central), Jaipur, in the case of the assessee for the assessment year 2008-09, is bad in law and on facts. 2. That the learned Commissioner of Income Tax - Appeals (Central), Jaipur, on the facts and in the circumstances of the case, erred in sustaining / confirming the trading addition of Rs. 4,29,031/- made by the learned assessing officer for alleged fall in GP rate even if the same was satisfactorily explained. The said addition which has been held by him as covered by addition of Rs. 18,49,946.00 for unaccounted purchases deserves to be deleted in its entirety. 3. That the learned Commissioner of Income Tax - Appeals (Central), Jaipur, on the facts and in the circumstances of the case, erred in confirming addition of Rs. 18,49,946.00 on account of unexplained purchases in cash U/s 69 even if it was explained that the said income is covered by the surrender o undisclosed income in the case of Nand Kishore Malani. The said addition deserves to be deleted. 4. That the learned Commissioner of Income Tax - Appeals (Central), Jaipur, on the facts and in the circumstances of the case, erred in sustaining / confirming addition of Rs. 11,43,975.00 on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-08. During search and survey operations conducted in the Malani Group on 12.09.2007 certain incriminating evidence were found. The assessee-firm is also related to the Malani Group. During the search/survey documents evidencing purchases and sales outside the books of accounts were found. A shortage in stock was also noticed during the survey proceedings. On the basis of these evidence the A.O. is of the opinion that true and correct income cannot be assessed from the books of accounts regularly maintained during the course of business by the assessee, therefore, he has invoked provisions of section 145(3) and after applying g.p. rate of 5.59% made a trading addition of Rs. 4,29,031/-. The A.O. has also estimated the sales at Rs. 1,53,47,22/- which gave a gross profit of Rs. 8,57,911/- since the assessee has already declared gross-profit of Rs. 4,28,880/-, a trading addition of Rs. 4,29,031/- has been further made. During the survey proceeding in this case short stock of Rs. 1,31,002/- was found. The A.O. has included this short stock in the estimated sales. The ld. CIT(A) has approved the enhanced estimated sales and the application of G.P. rate of 5.59% and has sustained the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applied at two places as it would lead to double addition. 9. In our considered opinion, even if the books are not treated as reliable and can be rejected in the given scenario, keeping in view the separate addition having been made on account of undisclosed purchases/sales, which is likely to tilt the declared g.p. rate on the right side, the declared gross-profit has to be accepted. Accordingly, we order to delete the addition of Rs. 4,29,031/- in view of our foregoing discussion. With the above conclusion, assessee's ground No. (2) is allowed and revenue's ground No. (2) is dismissed. 10. The facts of ground No. (3) of assessee's appeal which relates to unexplained purchases in cash out of books and addition of Rs. 18,49,916/- are that from page No. 31 of Exhibit 3 of Annexure-A seized during search from the house of Shri N.K. Malani relating to this assessee and to M/s D.C. Trading and is the purchase account of M/s. Malani Ram Jeewan Jagannath [this assessee]. For the period 31.07.2007 to 31.08.2007 towards purchases of gambier katha, a debit balance of Rs. 9,89,946/- and a credit amount of Rs. 8,60,000/- are found recorded on this page. The A.O. has opined from this page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Shri N.K. Malani had made admission qua this amount that it is out of books and pertains to this assessee. But it is also a fact that Shri N.K. Malani has already surrendered this income in his hand and has paid taxes thereon and the department has accepted the same. So, legally one income cannot be taxed twice or in two hands. It is also a fact that Shri N.K. Malani is a partner in the assessee firm and also in the firm M/s D.C. Trading. The A.O. can make the addition of this income in one hand only. If the A.O. has accepted this income in the hands of N.K. Malani and has also accepted the tax thereon, the same income cannot be substantially considered in the hands of this assessee. This can be treated as a bonafide mistake of the deponent as the group is one and having different entities and he is a common partner in them. The honest surrender must be given due credit to show tax-friendly attitude. Shri N.K. Malani has a legal right to explain away any anamolous statement made by him and with the help of evidence he is entitled to ask for taxing an income in the correct hands. In our considered opinion, the A.O. cannot go by the statement alone. When Shri Malani has improved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments pertains to period prior to 01.09.2007 and as per the cash sheet of 31.08.2007 found from the possession of Nand Kishore Malani there was an opening cash balance of Rs. 6301819.00, the surrender with respect to which has already been made in the case of Nand Kishore Malani, which already includes the outcome of above sales in the said opening balance. Hence, there was rather no need of making a separate surrender in respect of same income as the same income cannot be taxed twice. It is thus submitted that there will be no effect of said unrecorded sales as on the date of search in the income the assessee as the same is already covered by the surrender on the basis of other documents. Notwithstanding above explanations and surrender of income in respect of these documents, it is submitted that in the cases of unrecorded sale sit is only gross profit of which an addition can be made and not of entire sales." 13. The ld. CIT(A) has taken the following view in this regard :- "I have considered the submission of ld. A.R and have perused the material on record. Undisputedly, the transaction for unaccounted purchase of Rs. 18,49,946/- made by the appellant firm was noticed from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparately considered. 15. After analyzing the contrary stands in the light of the obtaining facts of the case, we are convinced that Shri N.K. Malani, being the main operator in this group, all the documents were found from his possession. These documents verily can belong to intergroup and intra-group transactions, including those of D.C. Trading and Malani Ramjiwan Jagannath. During search, many unaccounted cash sheets relating to this group were found from the possession of Shri N.K. Malani and as per the cash sheet of 31.8.2007 an opening balance of cash was Rs. 63,01,819/-. The plausible and reasonable conclusion can be drawn from any man of ordinary prudence that the outcome of all cash transactions between the inter-group concerns may be comprised therein and the income as per that document having been already considered in the individual assessment of Shri N.K. Malani, who happens to be a partner in both the firms, it would be unjust to make separate addition of Rs. 18,94,946/- as it would tantamount to a double addition which is not contemplated by the Act. The balance cash of Rs. 63,01,819/- can possibly be a result of all tupes of unaccounted transaction unless it is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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