TMI Blog2016 (9) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... s based on the subsequent years’ figures. In our opinion, the information gathered subsequent to the assessment year under consideration cannot be basis for estimation of inflation of purchases for the earlier assessment year. De horse, without prejudice to the fact that even the statement recorded during the course of survey have no evidentiary value. Any admission during such statement cannot by itself be basis for addition. Being so, in our opinion, the addition on the basis of statement collected during survey cannot be basis for addition. There is a decline in gross profit rate as compared to assessment year 2010-11, 2011-12. The assessee is not able to explain decline on the gross profit at 14.03% as compared to earlier assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear in respect of the creditors details found at the time of survey in the subsequent assessment year i.e., FY 2013-14, to arrive at a belief that the same modus operandi has been followed in the earlier year in generation of unaccounted cash is not warranted. 03. The Commissioner of Income Tax (Appeals) erred in upholding the disallowance by the learned Assessing officer that, despite the huge volume of transactions, the appellant would be able to give all the details called for in short notice. However, the additions based on the statements during the Survey in subsequent year cannot be the basis of addition on surmises. 04. The Commissioner of Income Tax (Appeals) ought to have appreciated the fact that a statement given at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the actual creditors were not filed. The Assessing Officer after going through the above statement assessed the overstated purchase price of the milk at Rs. 2/- per litre. In other words, the assessee purchased total milk worth Rs. 1,17,41,76,667/- and the increase in creditors works out to 5.61% of the purchases. In other words, according to the Assessing Officer, the assessee has inflated the purchase cost of milk at around 5% of the total purchase. Thus, he estimated the inflated purchases by the assessee at Rs. 5,87,08,833/- against which the assessee went in appeal before the CIT(A). The CIT(A) observed that subsequent survey during the financial year 2013-14 reveals the modus operandi of generation of unaccounted cash by infla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 300 ITR 157 wherein held that sec. 133A does not empower any income tax authority to examine any person on oath, hence, such statement has no evidentiary value and any admission made during such statement given by itself be made the basis for addition. He also submitted that the said judgment was also confirmed by the Supreme Court in 352 ITR 480. According to him when the survey conducted during the financial year 2011-12 cannot be relied upon for the purpose of assessment made The survey statement collected after the close of the assessment year could not be relied upon for the purpose of earlier assessment. De horse to the above, he submitted that even if one compare the gross profit rate of the assessee for the earlier assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittedly, survey u/s 133A of the Act was carried out by the Department on 6.11.2013. The previous year relevant to the assessment year was ended on 31.3.2012. In other words, the relevant financial year for this assessment year is 2011-12. The survey conducted u/s 133A was not resulted in unearthing any evidence relating to inflation of purchase cost of milk for the relevant assessment year. Further, the Assessing Officer made estimation of inflated purchase on the reason that the assessee has not furnished the confirmation letters from the creditors. The assessee pleaded before the Assessing Officer that there are large number of milk vendors who were form villages and they exactly not maintained any books of account to show that what exact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03 8. As seen from the above, there is a decline in gross profit rate as compared to assessment year 2010-11, 2011-12. The assessee is not able to explain decline on the gross profit at 14.03% as compared to earlier assessment years. In our opinion, to settle the dispute, it is appropriate to take average gross profit rate of assessment years 2010-11, 2011-12 and 2012-13 and to estimate the income of the assessee on the basis of average gross profit rate of last two assessment years since the past history is the best yardstick to estimate the income. Accordingly, we direct the Assessing Officer to recompute the income of the assessee by applying the average gross profit rate of immediate earlier two assessment years a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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