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Income tax Officer, Ward – 1, Bangalore Versus M/s. Sai Bhagawan Traders

2015 (12) TMI 1234 - ITAT BANGALORE

Unaccounted purchase - CIT (A) directed the AO to adopt 6% as the profit arising out of the transactions reflected in the loose sheets, found at the time of survey of assessee’s premises, thereby deleting the balance addition made by the AO - Held that:- If we take a presumption that the items in the loose sheets reflected purchases made by the assessee which were not recorded in its books, then definitely on the date of survey there should have been a stock variation. Items which were purchased .....

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to suggest any place of business for the assessee other than the one which was surveyed. Thus to consider the whole of the purchases as unexplained investment was incorrect. Assessee was continuously purchasing and selling and therefore the preponderance of probability is that successive purchases would have been financed by the sales of the earlier purchases. In such situation at the most what we can consider as unexplained investment is the first purchase. All the purchases were in the month o .....

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e assessee, based on a decision of Third Member bench of Ahmedabad Tribunal in the case of ITO v. Gurubachansingh J. Juneja [1995 (8) TMI 83 - ITAT AHMEDABAD-C ], CIT (A) had taken a higher rate of 6%. We find that in the circumstances of the case, directions of the CIT (A) were fair. We do not find any reason to interfere. - Decided against revenue - I.T.A No.16/Bang/2014 - Dated:- 20-10-2015 - SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI. VIJAYPAL RAO, JUDICIAL MEMBER For The Assessee : .....

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turn declaring a total income of ₹ 2,43,310/- electronically on 30.10.2007 for the impugned assessment year. There was a survey u/s.133A of the Income-tax Act, 1961 ( the Act in short) in the business premises of the assessee on 02.11.2006. During the course of survey proceedings it seems certain loose sheets were found which reflected therein certain cash purchases made by the assessee. AO listed out the cash purchases from the loose sheets. Such purchases pertained to the month of Octobe .....

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planation of the assessee was sought on the alleged cash purchases not recorded in the books as on the date of survey. Assessee stated that the loose sheets did not record any purchases. As per the assessee it was also running a weigh bridge, and the persons whose name appeared in the loose sheets had brought material to the assessee for weighment. They required the assessee to act as a commission agent. As per the assessee it could at the best make only 1% commission on the sale of such goods i .....

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t was doing commission agency on behalf of various parties as per the AO was only an after thought. He held the cash purchases of ₹ 2,15,05,353/- as unexplained investment u/s.69 of the Act and made an addition thereof. 05. Aggrieved assessee moved in appeal before the CIT (A). Argument of the assessee was that thirteen parties had never confirmed any sale of goods to the assessee. As per the assessee such unconfirmed amounts itself came to ₹ 16,54,143/-. Further as per the assessee .....

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onfirmed that one bill of ₹ 5,01,331/- was also a duplicate bill as confirmed by the party concerned. It seems one of the suppliers, Murali Industries had in the cross examination done by the assessee during the course of remand proceedings denied any sale to the assessee. Alleged purchase from Murali Industries came to ₹ 20,18,690/-. 06. CIT (A) after considering the remand report and submissions of the assessee held that out of the total sum of ₹ 2,15,05,353/-, added as unexp .....

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8,163/- which could be considered as unaccounted cash purchases could not be treated as income in its entirety. According to him at the best only a fair and reasonable estimate of the gross profit could be applied for arriving at the income. He held that 6% of the sum of ₹ 1,30,68,163/-, alone could be considered as profit on the alleged unaccounted purchases. He therefore restricted the addition to 6% of ₹ 1,30,68,163/-. 07. Now before us, Ld. DR strongly assailing the order of CIT .....

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he assessee for purchase. Since assessee was not able to show the source for funds used for these purchases, according to Ld. DR, the amount was rightly added u/s.69 of the Act. As per the Ld. DR though the sum of ₹ 42,63,036/- and ₹ 5,01,331/- were duplicate bills as accepted by the AO in the remand report, balance of the sum truly reflected unaccounted purchases. Just because summons were not issued to 12 or 13 of the 37 parties it could not be presumed that notings in the loose sh .....

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d any gross profit and given relief to the assessee. 08. Per contra, Ld. AR strongly supported the order of CIT (A) and submitted that there was no scope for addition on account of any unaccounted purchase. As per the Ld. AR at the time of survey there was no discrepancy in the stock of goods with the assessee. Had there been unrecorded purchases which were not sold, there should have been discrepancy in the stock. Once the stock was found correct, it was wrong to come to a conclusion that loose .....

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it was accepted by the AO that the said amount contained duplication of bills to the extent of ₹ 42,63,036/-. It was also accepted by the AO that bill for ₹ 5,01,331/- was accepted by one supplier to be a duplicate one. One, M/s. Murali Industries who was summoned had denied any transactions with the assessee. The alleged transactions with Murali Industries by itself came to ₹ 20,18,690/-. AO has himself stated that out of 37 parties he had issued summons only to 25 persons. Re .....

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