TMI Blog2016 (4) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished by assessee at paper book page no 13. Therefore the main reason for lower gross profit is also the reasons of the debit of unaccounted purchases by the assessee to the profit and loss account. In the result we confirm the order of ld CIT (A) in confirming the addition of ₹ 3,01,352/- on account of lower gross profit in post survey period on sale made to sister concern - Decided against assessee. Disallowance of depreciation - Unaccounted investment in construction of building - Held that:- During the course of survey the assessee has disclosed ₹ 5 crores out of which the addition to the building was stated to be of ₹ 70 lacs. The moment the disclosure of ₹ 5 crores is accepted then the investment in the building is also required to be accepted. The principle is that the statement of any person should be accepted or rejected in toto. In this statement the assessee has offered income of ₹ 5 crore which has been taxed by the AO. Further the application of this income has not been accepted. Because of the reason that provision of section 69B does not contain identical provision as contained in section 69C of the act. For the purposes of allowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner : Sh. MP. Rastogi, Adv Sh. P. N. Shastry, CA For the Respondent : Sh. Shravan Gotra, Sr. DR ORDER Per Prashant Maharishi, A. M. 1. This appeal is filed by the assessee against the order dated 10.01.2014 of ld CIT (A), Faridabad for the Assessment Year 2009-10. The following grounds of appeal are taken by the assessee before us:- 1. That the learned CIT (A) has erred in not deleting the whole of ₹ 12,05,150/- added by AO on account of reduction in GP by 6% during the period from 24-2-09 to 31-3-09 ignoring the explanations given regarding as well as the fact that fabric sale without and value addition cannot result in the same GP as for garments. 2. That the learned CIT (A) has erred in confirming the disallowance of depreciation of ₹ 3,50,000/- on ₹ 70,00,000/- voluntarily admitted as income on account of additions made to building during the year during Survey operations. 3. That the learned CIT (A) has erred in confirming the disallowance out of Repairs renovation of ₹ 40,00,000 which was voluntarily admitted as income on account of Repairs renovation of showroom made during the year during Survey operations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in turn deleted the addition to whole of the turnover to restrict it to sales made to sister concern of ₹ 5022546/- and applied ratio 6% confirming the addition of ₹ 301352/- . Against this the assessee is in appeal before us. 4. The ld AR reiterated the submission made before the lower authorities and the ld DR supported the orders of the AO and ld CIT(A). 5. We have carefully considered the rival contentions. The ld CIT(A) has dealt with this issue at Para 3.2 to 3.4 of his appellant order as under:- 3.2 I have considered the facts of the case and gone through the submissions of the appellant. The Issue to be decided relates to the fall in profitability, more precisely, the drop In, GP rate from 30.29% in the pre-survey period to 24.29% during the post survey period. When the post survey transactions are analyzed in detail, it is found that the fall in GP is primarily on account of the fact that the appellant hardly earned any gross profit in the sale of plain cloth made to its sister concern amounting to ₹ 50,00,000/- in the post survey period. If this transaction is excluded, the GP rate in the pre and post survey period comes to almost the same, i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich a certain variety of cloth was sold to sister concern was 20% to 30% lower than the prices at which the same cloth was sold to un-related parties. Thus, this clearly shows that even in pre survey period there is a 20% to. 30% price differential between sister concern and un-related parties. Even after substantiating this point, the appellant has not ruled out a slightly higher price differential in the post survey period between sister concerns and unrelated parties by submitting that 4% higher price differential can be considered on the sale of plain cloth in the post survey period amounting to ₹ 2,00,000/-. 3.4 Thus, by way of these arguments, backed up statistics/supports, the appellant has been able to substantiate the price differential between pre and post survey period, as regards sale of cloth to its sister concern. However, since the appellant has not been able to explain the entire price differential, and did not rule out the possibility of the price differential being higher in post survey period, J hold that if during the post survey period the appellant had continued getting the same GP from its sister concern as it was getting pre survey period, the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever same was disallowed by the ld AO applying provision of section 69C of the Act stating that any unexplained expenses which are deemed to be the income of the assessee shall not be allowed as deduction under any head of income. On appeal before the ld CIT(A) he also confirmed the decision of ld. AO holding that provision of section 69C are clear and relying upon the decision of the Hon. Gujarat High Court in case of Fakir Mohmed Haji Hsasan Vs. CIT (2001) 247 ITR 290 (Gujarat). Against this the assessee is in appeal before us. 8. The ld AR of the appellant claimed that provision of section 69C have wrongly been applied to the facts of the case and decision of Hon ble Gujarat High Court is also not applicable for the reasons that that it is a case of survey and assessee has owned income during the course of survey proceedings. Therefore there is no applicability section 69C of the Act. Further the addition on account of unaccounted building shall be on account of section 69B and not section 69C of the act. Against this ld DR relied on the orders of lower authorities. 9. We have considered the rival contentions. The fact is that during the course of survey the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and also applying the decision of Hon ble Gujarat High Court. The ld DR relied on the orders of lower authorities and submitted that the disclosure has been made by the assessee on account of repair and maintenance explained u/s 69C of the Act and therefore deduction cannot be allowed. 12. We have carefully considered the disclosure made by the assessee. In fact assessee has offered income of ₹ 5 crore by crediting this sum as other income and showed in schedule 12 of the profit and loss account. Simultaneously the assessee has debited ₹ 40 lacs in the profit and loss account under the head repair and maintenance expenditure at schedule 16. According to this assessee has agreed the income to credit of profit and loss account and simultaneously debited the expenditure to the profit and loss account and thus nullifying the amount of disclosure made by the assessee. Obviously the disclosure made by the assessee is on account of repairs of show room amounting to ₹ 40 lacs. That means the assessee has incurred an expenditure however it did not offer any explanation about the source of such expenditure then same is required to be added under the provision of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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