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of <h1>Assessee wins appeal against unexplained cash credit and suppressed sales additions based on cherry-picked calculations</h1> <h3>Anil Kumar Paik C/o S.N. Ghosh & Associates Versus ACIT, Circle-8 (1), Kolkata.</h3> Anil Kumar Paik C/o S.N. Ghosh & Associates Versus ACIT, Circle-8 (1), Kolkata. - TMI Issues Involved:1. Addition of Rs. 2,02,56,909/- towards unexplained cash credit.2. Addition of Rs. 1,71,18,489/- invoking Section 43CA of the Income Tax Act, 1961.3. Addition of Rs. 4,52,731/- by applying GP rate on alleged suppressed sales.4. Addition of Rs. 3,76,28,573/- based on unaccounted sales and application of average GP ratio.Summary:1. Addition of Rs. 2,02,56,909/- towards unexplained cash credit:The Assessing Officer (AO) made an addition for unexplained cash credit based on sundry creditors and closing work in progress of the preceding year, purchase, labor charges, and bank withdrawals during the year. The Tribunal observed that the AO disregarded the regular books of account, which were duly audited and maintained under the mercantile system of accounting. The AO's calculations were found to be based on surmises and conjectures without rejecting the book results. The Tribunal allowed the assessee's ground, finding the addition unsubstantiated.2. Addition of Rs. 1,71,18,489/- invoking Section 43CA of the Income Tax Act, 1961:The AO made an addition based on the difference between the market value adopted by the stamp valuation authority and the sales declared in the books. The Tribunal noted that for flats booked prior to 01/04/2013, Section 43CA was not applicable as part of the consideration was received through account payee cheques before the financial year 2013-14. The Tribunal referred to the decision in M/s. Reegal Construction vs. ITO and deleted the addition for these flats. For the remaining flats, the matter was remanded to the AO for fresh examination. The ground was partly allowed for statistical purposes.3. Addition of Rs. 4,52,731/- by applying GP rate on alleged suppressed sales:The AO applied a GP rate of 4.65% on alleged suppressed sales based on discrepancies in cash deposits and sales figures. The Tribunal found that the AO did not dispute the book results and the total cash deposits were less than the total sales shown in the profit and loss account. The addition was based on surmises and conjectures, and the Tribunal deleted it, allowing the assessee's ground.4. Addition of Rs. 3,76,28,573/- based on unaccounted sales and application of average GP ratio:The AO made an addition by applying an average GP ratio of 38.22% on unaccounted sales. The Tribunal observed that the AO did not reject the books of account u/s 145(3) of the Act and the addition was based on guesswork without proper facts. The Tribunal found the AO's working unsupportable and deleted the addition, allowing the assessee's ground.Conclusion:The appeal was partly allowed for statistical purposes, with significant deletions of additions made by the AO based on unsubstantiated calculations and without proper rejection of the books of account. The Tribunal emphasized the importance of maintaining consistency in accounting practices and the necessity of rejecting books of account with cogent reasons before making estimations.
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