TMI Blog2015 (10) TMI 1885X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee purchased machinery from M/s Dellantechica Ltd. and the payments were made through banking channel besides being partly financed by SBI. In absence of supporting documents as regards bank loan, hypothecation etc., the CIT(A) confirmed addition of ₹ 4,86,000 made by the AO in this regard. We further note that the CIT(A) allowed telescoping of the other investment in the fixed assets/capital and concluded that no further and separate addition is required to be made on this count since the assessee purchased this machine on 2.8.2006 in the fifth month of financial period, therefore, it can easily be inferred that sufficient amount of profit was earned by the assessee from unaccounted turnover to make investment in the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arefully perused the relevant material placed on record. Supporting the action of the AO, ld. DR pointed out that the AO was correct in making the addition of ₹ 29,94,740 on the ground that entries in seized documents were unaccounted. Ld. DR vehemently contended that the CIT(A) has grossly erred in allowing relief to the assessee without considering the fact that the assessee in order to make such turnover would require investment in stocks. Ld. DR further submitted that the CIT(A) should have made addition of fixed percentaage of turnover as unaccounted investment in stock. Ld. DR strenuously contended that the CIT(A) was not justified in permitting telescopic view to the extent of ₹ 4,86,007/- invested in purchase of fixed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made on account of alleged purchase of machine by the assessee during the relevant financial period, therefore, the view taken by the first appellate authority deserves to be upheld. 4. On careful consideration of above submissions and vigilant perusal of the relevant material, inter alia, assessment order and impugned order of the CIT(A), we note that the CIT(A) granted relief to the assessee with following observations and conclusion:- 4. The assessee has taken 4 grounds of appeal. Ground no. 1 and 4 are general in nature while ground No. 3 pertains to charging of interest u/s 2348 though mandatory is consequential in nature. In ground of appeal no. 2 the assessee has agitated against the addition of ₹ 29,94,740/- on the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the correct figure of undisclosed sales. These notings were in the shape of rough pads. It is also undisputed that the Ld. AO had rejected the books of accounts. In appeal it was put forth that these alleged unaccounted entries reflected in the rough pads, other than the investment in Plant and machinery, could be at the most considered as sale receipts, and the benefit of telescoping be given. The Ld. AO in the assessment order has accounted for these entries as cash receipts. Hence after carefully considering the facts and circumstances of the case, the amount of ₹ 25,08,740/- (i.e. ₹ 29,94,740/-less ₹ 4,86,000/-) is treated as unaccounted receipts on account of sale on which the GP rate of 29.01 % is applied to work ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be applied on the transactions not reflected in the books. Ld. Counsel has also placed reliance on the decision of Hon ble Gujarat High Court in the case of DCIT vs Panna Corporation dated 16.6.2012 and tax appeal no. 323/2000 and submitted that entire amount of unaccounted turnover cannot be added to the returned income of the assessee only and addition in accordance with GP rate could be made. 6. The main contention of the assessee with regard to alleged unaccounted investment in plant and machinery is that the same could only have been expended out of undisclosed income as determined by the AO, therefore no separate addition can be made on this count. 7. On careful consideration of above noted facts and circumstances in the lig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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