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2016 (7) TMI 399 - ITAT KOLKATA

2016 (7) TMI 399 - ITAT KOLKATA - TMI - Calculation of Suppression of Purchase; Suppression of gross profit and Suppression of Stock - whether the ld. CIT(A) is justified in restricting the addition to ₹ 16,95,715.00? - Held that:- The withdrawal from the bank can be for several purposes and do not necessary represent the purchase. In this case the base taken by the AO to unearth the unaccounted purchase was not correct in our considered view. The AO has also not brought any defect in the .....

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f Sec. 292C by CIT(A) - presumption - Held that:- We observe that Ld. CIT(A) has passed a speaking order and after considering the submission of assessee and taking the remand report from Assessing Officer. As per Sec.292C of the Act the documents seized at the premises of assessee are presumed belonging to assessee only and assessee has to justify about those documents. In this case, we find that Ld. CIT(A) has duly considered the justification given by assessee and accordingly he passed a spea .....

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ed - Decided against revenue - ITA No. 1735/Kol /2013 & C.O.110/Kol /2013 - Dated:- 5-7-2016 - Shri N. V. Vasudevan, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri K. L. Bhawmick, Advocate For the Revenue : Shri Sallong Yaden, ACIT-SR-DR ORDER Per Waseem Ahmed, Accountant Member This appeal by Revenue and Cross Objection (CO) by assessee are against the order of Commissioner of Income Tax (Appeals)-XXXIII, Kolkata dated 08.03.2013. Assessment was framed by ITO W .....

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AO on account of suppression of purchase, gross profit and stock from ₹ 55,28,442.00 to 16,95,715.00. The relevant ground raised by Revenue is reproduced below:- 1) That on the facts and in circumstances of the case the Ld. CIT(A) erred in reducing the Suppression of Purchase; Suppression of gross profit and Suppression of Stock calculated at ₹ 44,66,817/-; ₹ 5,67,122/- and ₹ 4,94,503/- respectively to ₹ 16,95,715/- only. 4. The facts in brief are that assessee in t .....

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8377; 560882 = ₹ 5,67,122/- 3) Suppression of stock ₹ 1028357 - ₹ 533854 = ₹ 4,94,503 The first addition suppression of purchase was made by Assessing Officer by observing that assessee had issued cheques from its bank account for purchase of goods for an amount of ₹ 1,75,50,167/- to various parties. Accordingly the AO worked out the purchases after giving effect to the opening and closing balance of creditors for the year under consideration which stood as under:- .....

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In addition to above the AO during the course of assessment proceeding observed on the basis of impounded books that assessee has sold the cement of ACC, Lafarge, Rashmi, Crescent and Konark Brand to the tune of ₹ 45,39,436/- but assessee has not shown corresponding purchase of cement of the said companies. Accordingly, AO has drawn the fresh trading account of assessee as under:- Opening stock (as per her books on 01.04.2005) Rs.68,681 Sales (as per return) Rs.1.42,60,625 Purchase (as dis .....

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ess activities hence the same percentage of GP @ 6% is calculated against the sales of ₹ 1,l88,00,061/- for the period from 01.04.2005 to 31.03.2006. From the above trading account the gross profit works out for ₹ 11,28,004/- but assessee has shown the GP at ₹ 5,60,882/-. So the suppressed GP of ₹ 5,67,122/- was added to the total income of assessee. Similarly from the above trading account the closing stock works out at ₹ 10,28,357/- but assessee has shown in its r .....

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ng in the Grasim Cement brand only and she was not selling cement of any other brand. However, assessee before Ld. CIT(A) has taken a new ground that the figure of purchases of ₹ 1,79,50,930/- taken by AO is based on all the debits from the bank statement but the fact is that all the debits entries do not represent purchase. There were debit entries of ₹ 30,82,201/- and ₹ 3,15,000/- which was utilized in giving money to Shri L.N. Bera and Shri Subhash Bera respectively. If thes .....

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Shri L.N.Bera and Shri Subhash Bera. He has also observed that apart from transfer entries there were some cash withdrawals which could not be automatically linked with Shri L.N.Bera and Shri Subhash Bera. However, whether or not the appellant is able to explain purpose of money transfer to Shri L.N.Bera and Shri Subhash Bera, the fact remains that such transfers/withdrawals could not be considered as amounts utilized for purchases as these were not purpose of buying drafts or issuing cheques fo .....

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oney transfer to Shri L.N.Bera and Shri Subhash Bera are excluded, the amount of debits entries would not be much question from the purchases and expenses shown in the regular accounts. Therefore I hold that debits in bank account are not to be taken as basis for computing purchases of the appellant. 3.9 The question that arises next is that, what should be the basis for computing unaccounted purchase / sale, in place of the debits in the bank account. In this regard, it is observed that the una .....

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ntative of the appellant contended that total of the list was much less than the figure of ₹ 45,39,436/-. In this regard, it may be mentioned that the list in the report was only an illustrated list and not an exhaustive one. Therefore, undisclosed sales of brands other than Grasim has to be taken at ₹ 45,39,436/- as mentioned in the assessment order. It may also be mentioned here that section 292C provides that any books of account or other documents are found in possession of any p .....

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r husband. However, all these claims were, as discussed above, found to be incorrect. (b) The assessing officer has also mentioned that as per enquires conducted under section 133(6), as well impounded books, total purchases were amounting to ₹ 1,46,20,354/-. On the other hand, the purchases in regular books of account were of ₹ 1,34,84,113/-. Thus there were undisclosed purchases amounting to ₹ 11,36,241/- as per the impounded material. As there is no material to suggest that .....

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ccounted sale and investment in unaccounted purchase. At the GP rate of 6% adopted by the assessing officer, gross profit on undisclosed sale would come to ₹ 3,44,892/-. Also, the purchase corresponding to unaccounted sale would be ₹ 54,03,311/-. In oral discussion, it was claimed that even if unaccounted transactions were made, since the entire purchase would not have been made at one point of time and proceeds from cash sale would be available for further purchases, actual investme .....

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unaccounted transactions in this impounded material pertain to that period only. On applying this ratio, investment in unaccounted purchase of ₹ 54,03,311/- would be ₹ 13,50,823/-. Total addition on profit earned on unaccounted sales and investment in the corresponding purchase would accordingly come to ₹ 16,95,715/-. The three additions namely suppression of purchase and suppression of gross profit are accordingly being reduced to ₹ 16,95,715/-. No separate addition is .....

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leted not on the basis of assessee s books of account but considering all debits entries of the bank account of the assessee which has no base for making the addition of accounted purchase. Ld. AR further stated that Ld. CIT(A) is fully justified to exclude the debit entries where the transfer of money was made to Shri L.N. Bera and Shri Subhash Bera respectively for ₹ 33,97,201.00 only. 7. We have heard rival contentions of both the parties and perused the materials available on record. I .....

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e. The AO has drawn the fresh trading account of the assessee after considering the unaccounted purchase, sales and applied the GP ratio @ 6% and treated the balancing figure as closing stock. Accordingly there arose difference between the figures of gross profit and closing stock with the figures declared by the assessee which was added to the total income of the assessee. However the ld. CIT(A) deleted the addition arising on account of suppressed purchases by observing that all the debit entr .....

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lue is of ₹ 12,08,767.00 (11,36,241.00/94*100). This unaccounted sale i.e. 12,08,767.00 was added to the undisclosed sale of ₹ 45,39,436.00 as discovered during survey and accordingly the unaccounted GP was worked out for ₹ 3,44,892.00 (57,48,203.00 @ 6%) which was added to the total income of the assessee. Besides this the ld. CIT(A) worked out the undisclosed investment in the undisclosed purchases of ₹ 54,03,311.00 ( ₹ 57,48,203- ₹ 3,44,892) by holding that .....

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case the base taken by the AO to unearth the unaccounted purchase was not correct in our considered view. The AO has also not brought any defect in the stock register of the assessee but has relied on the balancing figure of the stock. Accordingly in our view the AO has made the addition without applying his mind for unearthing the disclosed income of the assessee. In view of the above, we find that the base adopted by AO for working out the suppressed purchase, gross profit and closing stock wa .....

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assessee are presumed belonging to assessee only and assessee has to justify about those documents. In this case, we find that Ld. CIT(A) has duly considered the justification given by assessee and accordingly he passed a speaking order. Hence, we find no infirmity in the order of Ld. CIT(A). Hence, this ground of Revenue is dismissed. 10. In the result, Revenue s appeal is dismissed. Coming to assessee s CO No.110/Kol/2013. 11. Assessee has raised following grounds:- I. The Ld. CIT(A) was not j .....

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the husband is on record of both the authorities which have been disregarded by both the authorities; IV. The computation of extra capital required to effect unrecorded purchase (not admitted) is unreasonably high inasmuch as the usual number of rotations in a year is much more than four and as such the amount is liable to be modified accordingly; V. The Respondent raising the cross objections craves the leave of the Ld. Bench to add to or modify any of the objections before or at the time of a .....

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