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TMI Blog2024 (5) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 dated 08.07.2016 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') dated 07.03.2013 by the Assessing Officer, JCIT, Range-19, New Delhi (hereinafter referred to as 'ld. AO'). 2. As these are cross appeals therefore, they are taken up together and disposed of by this common order for the sake of convenience. 3. The assessee has raised the following grounds of appeal:- "1. In the facts and circumstances of the case, the learned CIT (A) has erred in law while upholding arbitrary action of AO which is bad in law and against the tenets of natural justice. 2. Learned CIT(A) has miserably failed to substantiate plausible reasons and logical grounds in upholding the actions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at former addition includes only trading expenses and did not cover non trading expenses. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the AO cannot rely on the same trading results that he had rejected earlier, while ignoring the fact that AO has not rejected the books as a whole and after removing discrepancy by making addition Rs. 1,08,51,505/-, has rightly made disallowance of Rs. 53,08,650/- on account of unreasonable expenses. 4. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in failing to appreciate that both the additions are not mutually inclusive since the first addition on account of suppression of sales affects only GP, while the second ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the provisions of section 40A(2) of the Act by the ld. AO. The return of income for AY 2010-11 was filed by the assessee firm on 26.09.2010 declaring total income of Rs. 4,36,31,310/-. During the financial year 2009-10, a survey action u/s 133A of the Act was carried out on the business premises of the assessee on 21.01.2010 wherein, pursuant to the discrepancy found by the survey team, a declaration of additional income was made by the assessee towards the following:- a. on account of excess cash found Rs. 1,15,16,100/- b. on account of excess stock found Rs. 1,75,98,542/- c. on account of undisclosed investment in furniture and fixtures Rs. 2,27,29,200/- 9. The main grievance of the revenue was that the total additional incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/- 10. The ld AO observed that the additional income offered by the assessee on account of excess stock of Rs. 1,75,98,542/- surrendered by the assessee during the course of survey was not shown by the assessee in the trading account by including it in the closing stock and that same was offered to income tax only as other income. Hence, the said surrender is not included in the closing stock as on 31.03.2010 at Rs. 4,50,31,614/-. The assessee furnished details of closing stock of Rs. 4,50,31,614/-. The ld. AO observed that what the assessee had surrendered at the time of survey was the value of inventories found during survey in excess over stock as per books of account as on 21.01.2010 and not the value of particular item of stock. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had reported gross profit of more than 10%; in respect of 84 items, the assessee has reported gross profit of more than 11%; in respect of 41 items, the assessee had reported gross profit less than 6.9%. Though the assessee had stated that there was heavy competition prevailing in the last quarter of the financial year which led the assessee to sell the products at a much lesser rate when compared to other quarters which had evidently contributed to the reduction of gross profit during the last quarter, we find that the same is not supported with any documentary evidence by the assessee. It is pertinent to note that there was excess stock of Rs. 1,75,98,542/- was found during the survey which was accepted by the assessee by way of a dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e differential gross profit. In the instant case, the ld AO had not resorted to estimation of the gross profit rather he had retained the gross profit earned by the assessee in the immediately preceding year and made addition for the difference amount in the sum of Rs. 1,08,51,505/-. 11. Considering the totality of the peculiar facts and circumstances of the instant case, the behavior of the assessee, deficiencies in the gross profit margins by having varying percentages as explained supra, we hold that addition has been rightly made by the ld AO in the sum of Rs. 1,08,51,505/- and the same has been rightly confirmed by the ld CIT(A) and hence the same does not require any interference. Accordingly, grounds raised by the assessee are dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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