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TMI Blog2005 (11) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... ld was found. The appellant agreed to disclose the excess stock found during the survey in the return of income. Subsequently, the appellant filed the return of income in which amount of Rs. 2,35,000 was disclosed on this account. During the course of survey, total cash of Rs. 2,70,000 was found and after allowing credit for the cash as per the books of the appellant and as per the books of another sister-concern, cash of Rs. 2,49,261 was held to be excess of cash for which the appellant was asked to furnish the explanation. The explanation of the appellant was rejected for the reasons given in the assessment order which according to the appellant are not correct. As per the assessment order, the appellant explained that cash of Rs. 2,18,80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant stated that the balance gold of Rs. 6,01,030 had also been sold. This is clearly an afterthought on the part of the appellant and cannot be believed. No doubt, the remaining gold stock 01601.031 gms. of gold was not found but there are adverse circumstances to disbelieve the version of the appellant regarding the further cash sales of gold. Apart from what has been mentioned earlier in this order, the fact that the appellant could not explain the deficit of cash of Rs. 33,000 approximately is important. The contention that it is a case of fading memory is only a diversionary tactic as with reference to the books of account, the appellant should have been in a position to explain the deficit of cash of Rs. 33,000. I, therefore, hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival of the survey team. He added that there was no expenditure of cash and hence cash balance as on the date of survey was same, i.e., Rs. 14,362,50. Subsequently, in question No.8, the appellant was told that cash of Rs. 2,70,000 had been found while as per the books of account of the two firms, the cash was approximately Rs. 21,000. At that stage the appellant stated that he had already deposed that there was stock of 601.030 gms. which he had sold in cash and bills for the same were pending to be prepared. Thus, the explanation of the appellant with regard to cash is that remaining stock of 601.030 gms. of gold was sold for Rs. 2,81,938 under bill Nos. 526 to 532 which were to be prepared. On the basis of these submissions, the Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 21st April, 1994 which is Rs. 7,39,082, addition of this amount was made on account of unexplained investment. 8. The CIT(A) confirmed the addition with fallowing observations: "I have considered the facts of the case and the submissions of the appellant. Though the AO has made addition in respect of peak amount of investment in the purchases made from the two parties on the ground that these are not traceable but simultaneously he has not disbelieved the sales made out of purchases made from these two parties. In fact, the addition made by the AO is on the ground that source of peak of the amount used in these purchases has not been explained. If he had done so, the addition would have been of Rs. 35.88 lakhs approximately. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing submissions which were made before CIT(A): "There was no investment made by him and only purchases were made for business purposes which have been recorded in the books of account. As regards the explanation, it has been submitted that the appellant has explained the purchases of goods as the relevant bills are available, the amounts have gone out by account-payee cheques for which certificate from bank is available, the purchases are recorded in the books of account and stock register. It is further submitted that merely because the parties are not available, the addition cannot be made as the purchase bills were produced giving the name, address, sales-tax number, quantity and value of goods purchased, etc. and purchases are entere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were not produced for examination. After considering the facts of the case we are of the view that when purchases are supported with authenticated purchase bills, having sales-tax numbers and payment through cheques, the addition cannot be made under s. 69 or 69A as in this section the addition can be made in following circumstances: "(i) when assessee has made investment which is not recorded in the books of account, or (ii) the assessee offers no explanation or the explanation is not satisfactory." 12. The following decisions cited by the learned Authorised Representative are also in favour of the assessee: (i) CIT vs. M.K. Brothers (1986) 52 CTR (Guj) 228: (1987) 163 ITR 249 (Guj); (ii) Sagar Bose vs. ITO (1996) 56 ITD 561 (Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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