TMI Blog2019 (4) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... h available and recorded in books of accounts - HELD THAT:- Ld.CIT(A) while granting relief has noted that it was not the case of excess cash found or there was unexplained cash found recorded in the cash books. He further held that in case of shortage of cash, no addition was justified as assessee has withdrawn the money and might have spent the same without claiming any expenditure. He accordingly deleted the addition. Before us, Revenue has not pointed out any fallacy in the findings of Ld.CIT(A) - ground of Revenue is dismissed. Addition alleged shortage of physical stock of goods - HELD THAT:- The issue in the present ground is with respect to addition on account of alleged shortage of physical stock of goods. AO made addition by working out the G.P. at 22% being the G.P. rate upto the date of survey. Ld.CIT(A) has noted that for working out cost of the spare parts, AO had adopted the GP rate of 22% as found at the time of survey on the basis of GP period upto the date of survey. Ld.CIT(A) observed that in case of shortage of stock, the gross profit ratio on the stock sold outside the books has to be taxed. He worked out the unrecorded profits at ₹ 1,47,964/- and uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dt.25.02.2016 (in appeal No.PN/CIT(A)-12/790,791/2014-15) granted substantial relief to the assessee. Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before us and has raised the following grounds : 1. On the facts and circumstances of the case , w hether the Ld.CIT ( A ) is justified in deleting the ad d it io n of ₹ 67,903 / - made by the AO on account of Reconciliation of Difference in cash balance. 2. On the facts and circumstances of the case , whether the Ld.CIT ( A ) i s justified in deleting the additi o n amounting to ₹ 25,00,000/- made on account of seized material found an d ' fai l ed to j ustify the transaction. 3. On the facts and circumstances of the case, whether the Ld. CIT(A) is ju s tified in deleting the addition amounting to ₹ 3,05 , 060/- made on account o f difference in cash avai l able and recorded in books of accounts. 4. On the facts and circumstances of the case , w hether the Ld. CIT(A) i s justified in restricting the addition of ₹ 6 , 71 , 338 / - to ₹ 1 , 47 , 964 / - b y allo w ing r e li ef to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance as on 01.04 . 2011 does not call for any addition during the year under consideration as no unexplained cash was introduced in the books of accounts. Therefore, addition made by the AO of ₹ 67, 903/- is deleted and ground ra i sed by the appellant is allowed. Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before us. 4. Before us, Ld.D.R. supported the order of AO. Ld.A.R. on the other hand, reiterated the submissions made before AO and Ld.CIT(A). He further submitted that assessee had maintained two cash books one main cash book and another cash book for Workshop. He pointed to the balance of the cash books for main and work-shop which were placed at page 99 and 100 of the paper book. He submitted that in next year though there was difference in the balance between main cash book and work-shop cash book but over-all there was no difference in cash balance and in support of which, he pointed to the summary of cash book placed in Paper Book. He therefore submitted that the assessee has explained the discrepancies and thus no interference to the order of Ld.CIT(A) is called for. 5. We have heard the rival submissions and perused the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of assessee, remand report received from the AO has noted that credit of ₹ 25 lakh from M/s. Pavitra Traders was received by B.N. Chaudhary and assessee has nothing to do with and similarly the cash was withdrawn from the bank account. AO has not carried out any verification from M/s. Pavitra Traders to disprove the contention of the assessee. We further find that while deciding the issue, Ld.CIT(A) has given a finding that assessee has received ₹ 25 lakh by way of bank transfer of B.N. Chaudhary on 16.07.2011 which was returned in two installments through banks. He therefore held that addition made by the AO on account of cash paid to Mr. Palai was not called for in the case of assessee. Before us, Revenue has not pointed out any fallacy in the findings of Ld.CIT(A). We therefore find no reason to interfere with the order of Ld.CIT(A) and thus, the ground No.2 of Revenue is dismissed. 9. Ground No.3 is with respect to deletion of addition of ₹ 3,05,060/-. 9.1. During the course of search action at the assessee s premises at Jalgaon, cash of ₹ 1,810/- was found against which cash as per cash book was ₹ 2,81,543/- resulting in difference of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions made before AO and Ld.CIT(A) and further submitted that on the date of search, books of accounts were not completed and many vouchers were still to be entered in cash book and the remaining cash was taken by M.D. Mr. Mahesh Chaudhary. He further submitted that it was not the case of excess cash found physically or unexplained cash found. He thus supported the order of Ld.CIT(A). 11. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to addition of ₹ 3,05,060/-. Ld.CIT(A) while granting relief has noted that it was not the case of excess cash found or there was unexplained cash found recorded in the cash books. He further held that in case of shortage of cash, no addition was justified as assessee has withdrawn the money and might have spent the same without claiming any expenditure. He accordingly deleted the addition. Before us, Revenue has not pointed out any fallacy in the findings of Ld.CIT(A). Thus, the ground No.3 of the Revenue is dismissed. 12. Ground No.4 is with respect to restricting the addition of ₹ 6,71,338/- to ₹ 1,47,964/-. 12.1. During the course of survey, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 948/ - can be sustained . I find content i on of the appellant partly acceptable. The AO had adopted GP rate of 22% as found at the time of survey on the basis of GP of period upto date of . survey. The GP of preceding year as well as for the period 01 . 04.2011 to the date of survey was re l evant for working out cost of stock whereas appellant is c ons i der i ng GP of period subsequent to date of survey. Therefore , GP of 22 % adopted by the AO i s j ustified . However , I agree with the appellant tha t i n case of shortage of stock , cost of shortage of stock has to be replaced with sa l e proceeds wh i ch was not booked by the appellant meaning thereby that only gross profit rate on stock sold outside the books has to be taxed. Accordingly , unrecorded profit would work out at ₹ 1 , 47,694/ - ( 6 , 71 , 338/ - x 0 . 22 ) . Add i tion to the extent of ₹ 1 , 47 , 694/ - is upheld and appellant gets re li ef of ₹ 5 , 23 , 644/ -. Ground raised by the appellant is partly allowed . Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before us. 13. Before us, L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that since assessee did not held the beneficial shares in the lending company, provisions of Sec.2(22)(e) of the Act were not applicable. He accordingly deleted the addition made by the AO. Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before us. 16. Before us, Ld.D.R. supported the order of AO. Ld.A.R. on the other hand, reiterated the submissions made before AO and Ld.CIT(A) and further submitted that since assessee did not held any beneficial shares in BNC Power Projects Ltd., provisions of Sec.2(22)(e) of the Act are not applicable. He thus supported the order of Ld.CIT(A). 17. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to addition of ₹ 1,06,00,000/- u/s 2(22)(e) of the Act. AO held that since B.N. Chaudhary was the beneficial share holder of the lending company i.e., BNC Power Projects Ltd., and had subsequently share holding in the assessee s company, provisions of Sec.2(22)(e) of the Act are applicable. We find that Ld.CIT(A) after relying on the decision of Hon ble Bombay High Court in the case of Universal Medicare (supra) has held that the payment cannot be taxed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the facts of the ground no.3 of appeal for AY 2011-12. Hence, in view of detailed discussion at para 5.5 therein, the addition made by the AO of ₹ 2,45,388/- is deleted and ground raised by the appellant is allowed. Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before us. 19. Before us, Ld.D.R. supported the order of AO. Ld.A.R. on the other hand, reiterated the submissions made before AO and Ld.CIT(A). 20. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to addition of ₹ 2,45,388/- on account of unproved sundry creditors. We find that Ld.CIT(A) after considering the submissions has given a finding that during the year there were transactions with the aforesaid parties. AO had not doubted the purchases made and consultancy given and the payments made were also not disputed and that AO had accepted all other transactions but held closing balance as unproved. He has further given a finding that Revenue has not proved that the parties were not in existence or material or services were not supplied. He therefore deleted the addition. Before us, Revenue has not pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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