TMI Blog2014 (12) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned Commissioner of Income-tax (Appeals). Addition on account of initial investment - Held that:- In the instant case the gross profit rate has been applied after rejecting the book result and, therefore, no separate addition of ₹ 5,00,000 is called for in respect of purchase and introduction of cash. Shri Sameer Singh, learned counsel for the assessee also referred to the decision in the case of CIT v. Banwari Lal Banshidhar [1997 (5) TMI 37 - ALLAHABAD High Court] wherein it was observed that (page 232) " when the gross profit rate is applied, that would take care of everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases by the assessee". In view of the above decisions, we are of the view that the addition made by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals) is unwarranted and uncalled for. Accordingly, we delete the addition deposited in the bank account on April 8, 2008. - S. A. No. 4/RPR/2014 in I. T. A. No. 91/RPR/2014 - - - Dated:- 18-12-2014 - H. L. Karwa (President) And Rajendra (Accountant Member) For the Appellant : Sameer Singh, Chartered Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me and the assessee replied in the negative. Thereafter, when he was confronted with the alleged savings bank account detected by the Assessing Officer, the assessee categorically confessed having done some business which was not disclosed to the Revenue. The Assessing Officer recorded statement of the assessee on November 4, 2011. In his statement, the assessee has admitted that he has done business of steel rod for which he has not maintained books of account, purchase or sale bills or details of expenses with bills and vouchers. The Assessing Officer observed that one Shri Krishnadev Dev Singh replied to the query of the Assessing Officer that he had purchased steel rods of ₹ 3,00,000 from the assessee. The Assessing Officer also observed that one Shri Rupeh Lohiya has stated that he had received transportation payment of ₹ 28,800 from the assessee. The Assessing Officer concluded that the assessee was into the trade of purchase and sale of steel rods which was undisclosed and for which no books of account were maintained and the genuineness of purchases was not proved as no bills were submitted and the assessee has not debited transportation charges for sales except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the face of all positive material against him he had no other option but to admit that he had done trading in steel rods during the year under reference. The correctness of the submission was further investigated by the Assessing Officer not from any information given by the appellant but from certain payments made by cheque and certain parties confirmed purchase of steel rods from the appellant and receipt of transportation charges from the appellant. Even after clear acceptance of the alleged bank account and his trading on steel rods as concealed to the Department, the appellant still tried to explain the undisclosed activities and income thereon as disclosed under the head income from other sources being casual in nature. When the appellant himself accepted the credits in the bank account totalling to ₹ 89,58,650 as turnover from sale of steel rods and debits as purchases and other expenses, it cannot be treated as an isolated transaction to be assessed under income from other sources. It is to be taxed under section 28 of the Act and it has no nexus with the income of ₹ 50,000 from other receipts shown under section 56 of the Act. The appellant cannot plead the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and other expenses. There is no material on record to controvert the findings given by the lower authorities. Alternatively ShriSameer Singh, learned counsel for the assessee submitted that the gross profit rate of 8 per cent. applied by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals) is on the higher side because the Assessing Officer has not cited any comparable case before applying ad hoc gross profit rate of 8 per cent. 8. In our opinion, there is substance in the alternative submission of Shri Sameer Singh, learned counsel for the assessee and, therefore, we hold that the gross profit rate of 8 per cent. appears to be on the higher side. Keeping in view the entire facts and circumstances of the present case, ends of justice will meet in this case if the gross profit rate is restricted to 7 per cent. as against gross profit of 8 per cent. confirmed by the learned Commissioner of Income-tax (Appeals). We therefore, direct the Assessing Officer to recompute the income of the assessee accordingly. Thus, these grounds of appeal of the assessee are allowed as indicated above. 9. Vide ground No. 3 of the appeal, the assessee has chall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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