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TMI Blog2017 (1) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer) in making a disallowance of a sum of Rs. 1,78,00,000/- on account of bogus purchases. The appellants contend that on the facts and in the circumstances of the case and in law, the ClT{A} ought not to have upheld the impugned disallowance in as much as there are no bogus purchases made by the appellants and the Assessing Officer has not brought any material on record in respect of the same and hence, the impugned disallowance needs to be deleted. 2. The ClT(A) erred in upholding the addition of Rs. 86,82,488/- on account of suppressed profit on unexplained sales. The appellants contend that on the facts and in the circumstances of the case and in law, the ClT{A) ought not to have upheld the impugned addition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the 1st paragraph on page 2 of his assessment order that the "assessee surrendered Rs. 4.5 crores during the course of survey and agreed to pay the differential amount of tax of Rs. 1.35 crores," It was contention of assessee that it is an incorrect observation made by the Assessing Officer inasmuch as the assessees have not surrendered any additional income during the course of survey. From the Q no 16 of the statement on oath and the response thereto, it is crystal clear that the net profit of Rs. 4.99 crores referred to therein is as per the provisional trading and profit and loss account as at 22.2.2011 obtained from the accounts. The tax payable on the profit Rs. 4.99 crores per provisional profit and loss account on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases are recorded. The unsold purchases as per books only forms part of closing stocks. Therefore the claim of the assessee while sales corresponding to these purchases are recorded but purchases are not recorded devoid of merit and against the general principle of method of accounting. The closing stock as per books will not be increased unless purchases are recorded. Therefore, the explanation of the assessee appears to be an afterthought to reduce the tax liability, He further stated on page 7 of his order that In view of the above, it is crystal clear that value of closing stock as per books was Rs. 4.26 crores which could not happen without recording the purchases of Rs. 1.78 crore which assessee claims to have recorded subsequent to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of accommodation entry and reduction of tax liability from the record, we also found that if the purchases of Rs. 1.78 crores in the pre-survey period is recorded as such then the gross profit ratio for the pre-survey and post-survey becomes comparable which further gives credence to the fact that the purchases of Rs. 1.78 crores though recorded in post-survey period were unrecorded on the date of survey. 6. With regard to addition of Rs. 86.82 lacs made by AO by estimating G.P. at 4%, we found that assessee by their letter dated 10th March 2014 filed before AO had furnished the details of sales post survey and also furnished columnar profit and loss account for the pre and post-survey period. The Assessing Officer observed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et profit rate during year under consideration is much better than the net profit rate shown in earlier and subsequent years. Keeping in view the nature of trade, assessee was involved the net profit rate of 11% and gross profit of 27%, can be considered to be the best rate. In view of these facts, we do not find any merit for the addition made by AO by disallowing purchases and estimating profit on unexplained sales. 10. In the result, Ground No. 1 & 2 raised by the assessee is allowed. 11. Next grievance of assessee relates to addition made u/s.50C amounting to Rs. 16,50,000/- by estimating the stamp duty valuation of an immovable property, being R.No 304, 3rd Floor, Building No 9, Rajgad Co-operative Housing Society, Lady Ratan Complex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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