TMI Blog2014 (5) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... een disputed by the assessee - The excess weight was found at 9935.264 gms on which the value adopted by the AO at Rs.7780/- which was found by CIT(A) as excessive and in contradiction of the average cost method consistently adopted by the assessee – the order of the CIT(A) is upheld – Decided against Revenue. Deletion of bogus purchases – Held that:- A chart has been placed according to which the physical stock of gold was found at the time of survey weighing 11481.390 gms - as against that the weight of the gold as per books was only 1540.126 gms, there was a difference of 9941.264 gms - to cover up the difference in weight the assessee has tried to procure the purchase bills from those parties - that attempt had failed because after survey it was detected that those purchase bills were bogus bills and there was no actual delivery of gold ornaments - the assessee had thought proper to reverse the entry in the trading account and simultaneously offered the value of the weight difference in the income tax return - Once, the assessee has accepted the mistake and paid the tax on the difference amount then it is not reasonable on the part of the Revenue to tax the assessee - CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and silver articles were given to the assessee. Keeping in view of this fact, the Assessing Officer made the addition on account of bogus purchases. 2. At the outset, we have been informed that the grounds as reproduced above are interconnected. We have noted that an order under Section 143(3) was passed dated 05.12.2008 according to which the assessee in individual capacity is stated to be engaged in the business of trading of Gold and Silver Jewellery/ Ornaments. A survey u/s.133A was carried out at the premises of the assessee on 24th of January, 2006. Thereafter, on 29th of December, 2006 assessee has filed the return of income for A.Y.2006-07 declaring gross income at Rs.97,87,407/-. It was noted by the AO that at the time of survey following stocks as well as undisclosed income was found. i) Unexplained excess stock of gold jewellery Rs.87,18,500/- ii) Unexplained excess stock of silver articles Rs.16,26,266/- iii) Unexplained investment in renovation of shop Rs. 2,00,000/- Rs.1,05,44,766/- 2.1 The AO s main objection was that at the time of survey it was admitted that there was undisclosed income of Rs.1,05,44,766/-, however, at the time of filing of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue, learned DR s vehement contention was that the AO had not been granted due opportunity to submit remand report to learned CIT(A). According to him, since learned CIT(A) has not granted adequate opportunity to AO to examine the additional evidence; hence, infringed the provisions of Rule 46A of IT Act. He has pleaded that the comments of the AO were called for by 8th of March, 2010 but the said letter was communicated to the AO on 10th of March, 2010. The AO was therefore prevented in not filing the remand report within the time given by learned CIT(A). Learned DR has also placed reliance on the statement of facts placed in the compilation. 5. From the side of the respondent-assessee, learned AR has informed that the AO was asked on number of occasions by learned CIT(A) to file the remand report but he has failed to do so; hence, learned CIT(A) had no option but to finalize the assessment accordingly as per law. On merits he has pleaded that any statement made at the time of survey was not conclusive evidence against the assessee. As far as the declaration was concerned, it was noted that the rate adopted by the AO was not as per the assessee s regular records; hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f those purchases, a survey was conducted u/s.133A on those parties. On survey of those parties, it was noted that only bills were procured and there was no actual sales or delivery of the gold/silver ornaments. Due to that reason, AO has held that the assessee was indulged in bogus purchases. The bills were procured only to explain unaccounted stock of the assessee. He has held that the existence of the bogus purchase bills were detected after the survey operation, therefore, the said amount of Rs.72,01,360/- was taxed in the hands of the assessee. 8. Before learned CIT(A), it was contested that in the books of account there was a contra entry of the said amount; hence, there should not be any addition in the hands of the assessee. It was argued before learned CIT(A) that as per the gold trading account on debit side there was an entry of purchase of the gold ornaments but simultaneously there was a credit entry of purchase return of the same amount and weight of gold ornament. In this manner, the purchase was nullified and there was no effect on the trading account. After considering the argument, learned CIT(A) has deleted the addition in the following manner: I have conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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