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2010 (10) TMI 1130 - ITAT AHMEDABAD

2010 (10) TMI 1130 - ITAT AHMEDABAD - TMI - ITA No.2659/Ahd/2005 - Dated:- 15-10-2010 - S/Shri Bhavnesh Saini, JM and D.C.Agrawal, AM Appellant by :- Shri Aseem L. Thakkar, AR Respondent by:- Shri S. K. Gupta, CIT, DR O R D E R Per D.C. Agrawal, Accountant Member. These are two appeals filed by the assessee for Asst. Year 2002-03. 2. ITA NO.842/Ahd/2006 Asst. Year 2002-03 is the appeal against the order passed by the ld. CIT under section 263 wherein he has directed the AO to make the addition o .....

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. ITA No.2659/Ahd/2005 Asst. Year 2002-03 is the appeal filed by the assessee against the order of ld. CIT(A) dated 23.9.2005 in respect of various quantum additions confirmed by him made by the AO in the assessment order dated 30.3.2005. The assessee has raised following grounds:- 1. The teamed C.I.T. (Appeals) - IV, Baroda erred in law and on facts in confirming disallowance of bricks exps. of ₹ 1,00,000/- by ITO Ward -1, Anand. 2. The teamed CLT (Appeals) - IV, Baroda erred in law and o .....

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als)- IV, Baroda erred in law and on facts in confirming disallowance of ₹ 32,801/- out of glass exps. And ₹ 80,839/- out of wood exp. made by ITO Ward-1, Anand. ITA No.842/Ahd/2006 Asst. Year 2002-03 4. The facts of the case are that the AO passed the order on 30.3.2005 determining total income of ₹ 14,88,640/-. A survey under section 133A was carried out at the business premises of the assessee on 25th July, 2002 wherein unrecorded cash receipts or expenditure amounting to &# .....

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loss account. The assessee had shown total contract receipts of ₹ 41,58,726/- with gross profit of ₹ 3,97,055/- as against total contract receipts of ₹ 83,62,502/- with gross profit of ₹ 4,16,326/- giving GP rate of 4.97%. When the AO examined the impounded papers and books of account he found that there are discrepancies in the notings as per loose papers and entries made in the cash book as under :- Notices as per loose papers Entry made in the case book Date Amount Da .....

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2001 17,000/- Haribhai 30,000/- 31.7.2001 15,000/- Haribhai 31.7.2001 15,000/- Govindbhai 2,47,000/- 2,03,000/- Since several of entries in the loose paper did not tally with the entries in cash book, the AO rejected the books under section 145. He thereafter proceeded to make specific additions as against applying GP rate. He examined expenditure under various heads such as steel expenses, bricks expenses, octroi/transportation expenses, various payments in the contract work, cash payments, etc .....

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ve 44,000/- 6. Disallowance of cement expenses as discussed in para 7 above 1,61,119/- 7. Disallowance of wood expenses as discussed in para 8 above 80,839/- 8. Disallowance of glass expenses as discussed in para 9 above 32,801/- Rs.14,18,759/- The ld. CIT in proceedings under section 263 considered that AO has not specifically made the addition of ₹ 8 lacs. It was explained to the ld. CIT that this issue has been considered by the AO while examining the books of account but the ld. CIT di .....

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of addition of ₹ 8 lacs, who chose to make specific addition after rejecting the books. In fact assessee had declared the sum of ₹ 8 lacs in the profit and loss account. He drew our attention to page 14 of the paper book which shows undisclosed income of ₹ 8 lacs. Thus according to the ld. AR ld. CIT could not have substituted his opinion and direct the AO to make addition of ₹ 8 lacs separately when the AO has decided not to do so. 6. The ld. DR on the other hand suppor .....

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losure was made on the basis of documents impounded during the course of survey. Such documents indicate that assessee had undisclosed receipts as well as payments and net thereon had been worked out at ₹ 8 lacs. Merely because this undisclosed income of ₹ 8 lacs has been shown as a part of profit and loss account it does not lose its separate identity and has to be taken out from the profit and loss account for separate consideration. This would be notwithstanding the trading result .....

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discussed while disposing of ITA No.842/Ahd/2006 Asst. Year 2002-03. In survey operation assessee declared a sum of ₹ 8 lacs as his undisclosed income but in the return only net income of ₹ 69,880/- was declared. The AO rejected the books under section 145 after pointing out the discrepancies in entries recorded in the loose papers and regular cash book. The AO made specific disallowances which have been described by us in our order in ITA No.842/Ahd/2006. The ld. CIT(A) confirmed th .....

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