Tribunal upholds 7% profit addition on unaccounted sales, rejects Revenue's grounds.

The Tribunal upheld the addition of profit at 7% on unaccounted sales, amounting to Rs. 80,948. No adverse material supported revising the declared GP rate of 6.19%. The Tribunal rejected Revenue's grounds and partly allowed Assessee's cross objection, resulting in the dismissal of the revenue's appeal and partial allowance of the assessee's cross objection.

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Issues involved: Appeal against order of Ld. CIT(A) for assessment year 2003-04 - Revenue's appeal on addition of GP and unaccounted investments - Assessee's cross objection on retained additions for unrecorded sales and expenses.

Revenue's Grounds:
- Revenue challenged deletion of addition of Rs. 2,88,544 on account of GP and relief of Rs. 9,22,400 out of total addition of Rs. 11,56,400 for unaccounted investments in sales transactions.
- Revenue contended that CIT(A) should have upheld AO's order.
- Ld. A.R. argued that addition should only be for GP on unaccounted sales, citing judicial pronouncements.

Assessee's Cross Objection:
- Assessee objected to retention of Rs. 2,34,000 out of total addition of Rs. 11,56,200 for alleged unrecorded sales and Rs. 10,000 disallowance on expenses.
- Ld. A.R. submitted that cross objection ground 1 is general and ground 3 is not pressed.

The Tribunal considered submissions and evidence. CIT(A) confirmed addition of Rs. 2.34 lakhs as peak sales amount. Assessee's explanation of unaccounted sales being a small percentage of accounted sales was deemed reasonable. No adverse material showed unaccounted investment in purchases. Therefore, only addition of profit at 7% on unaccounted sales was upheld, amounting to Rs. 80,948.

Regarding cash found of Rs. 4.52 lakhs, no addition was made by AO. Thus, Tribunal confirmed 7% addition on unaccounted sales and deleted the balance. For GP on accounted sales of Rs. 257.45 lakhs, no further addition was warranted as no adverse material on record supported revising the declared GP rate of 6.19%. Ld. CIT(A) found no evidence of incorrect GP in the books, hence no justification for additional Rs. 2,88,544 addition. Therefore, Tribunal rejected Revenue's grounds 1 & 2, and partly allowed Assessee's cross objection ground 2.

In conclusion, the cross objection of the assessee was partly allowed, and the appeal of the revenue was dismissed. The order was pronounced on 15th July, 2011.

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