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TMI Blog2019 (11) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of Rs. 29,44,676/- by estimating gross profits in post survey period at 12.69%. Since, the above grounds of appeal are in connected hence same are being considered together. 3. Brief facts of the cases are that the survey u/s.133A of the Act was carried out on 02.09.2008, wherein unaccounted stock of yarn of Rs. 18,95,000/- and unexplained cash deposits in bank account of Rs. 11,05,000/- were detected which were accepted by the assessee as his undisclosed income. However, in the return of income, the assessee has shown taxable income of Rs. 4,20,430/-. The AO re-casted the trading account of the appellant in pre survey and post survey periods at Page no. 4 & 5 of the assessment order. The AO was of the view that gross profit and pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was Rs. 65,41,670/- of the turn over of Rs. 6,54,16,705/-. The AO also made addition on account of unexplained cash deposit of Rs. 11,05,000/- admitted during survey and unexplained stock of Rs. 18,95,000/- admitted during the course of survey. 5. Being aggrieved, the assessee carried the matter before ld. CIT(A). During the course of appellate proceedings, the matter was remanded to the AO for his comments on remand's report. The AO vide remand report dated 21.09.2012 submitted that the assessee has submitted confirmation of fourteen purchase parties and no adverse influence is drawn. However, the then AO never specifically ask for production of stock register day to day and stock register. With regard to non-production of bills/voucher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand proceedings which leads the situation where the consumption and production cannot be verified. The Ld. CIT(A) by placing reliance on the decision of ITAT in the case of M/s. Whiteline Chemicals Vs. ITO, Ward- 2(1), Surat in ITA No.3509/AHD/2004 for A.Y. 2001-02 in order dated 30.08.2005 upheld books result of the appellant that books are not reliable. Further, with regard to estimate of profit at Rs. 65,41,670/-. The CIT(A) observed that the said addition is on a higher side, considering the nature of business of the appellant, which is manufacturing of texturized yarn and there is substantial increase in financial charges as compared to A.Y. 2008- 09. As pointed out by the AO the sales in post survey period are Rs. 3,25,72,550/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 11.05 lacs have duly entered in the books of accounts which have been reflected at page 25 of paper book and in the P&L Account at page 13. The AO has rejected the books of accounts on the ground that stock register was not maintained, production register was not maintained and the confirmation sought by the AO came back as not served from 10 out of 14 parties and bills, vouchers were not producedfor verification. Further, before the remand proceedings, it was submitted that the AO never sought stock/production register nor never informed the assessee that confirmations were being sought from 10 out of 14 parties. Therefore, the premises of rejection itself diminishes and thus no estimation can sustain. The ld. CIT(A) confirmed reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Anand Kumar Deepak Kumar [2007] 160 TAXMAN 206 (DELHI) and wherein it was held that merely because there were some discrepancies in pre-search period, it could not lead to any presumption that discrepancies would have continued in post-search period, particularly when AO could not find any defect in books of account relevant to post-search period. Therefore, the rejection of books of account by the AO for post-search period was not warranted. The ld. counsel further placing reliance in the case of CIT vs. Bindals Apparels [2011] 332 ITR 410 (DELHI), wherein it was observed that non-maintenance of day-to-day stock register is not a reason to reject books as no adverse comment regarding books produced before AO, therefore the lower gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail to provide stock register and production of day-to-day stock register. Further, the disclosure amount is excluded than there was a loss of Rs. 26.53 lacs as against which there was sales increase of financial charges whereas the consumption of raw material was reduced to 30% but corresponding manufacturing expenses does not increase in the same proportion. Therefore, ld. CIT(A) relying on the decision of the ITAT in the case of M/s. Whitelines Chemicals vs. ITO (supra) has confirmed the rejection of books of account. In view of these facts, we are in agreement with CIT(A) that the rejection of books of account is justified, as in spite of specifically requirement made during the course of remand proceedings, the assessee could not prod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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