https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=458264 https://www.taxtmi.com/caselaws?id=458264 Addition u/s 68 - difference between the closing balance shown by the assessee in its books of accounts as on 31 March 2009 in the name of KIFL viz a viz the balance shown by the corresponding party - HELD THAT:- Question whether the difference in the balance as discussed above can be made subject to the addition under section 68 stands in negative. It is for the reason that such credit balance was arising out of the purchases which have not been disputed. As such the amount of credit was not reflecting against any loans and advances from the parties. In holding so we draw support and guidance from the judgment of Pancham Das Jain [ 2006 (8) TMI 582 - ALLAHABAD HIGH COURT] Whether the addition can be made on estimated basis on the amount of unaccounted sales as admitted by the assessee during the appellate proceeding? - In this regard we note that assessee itself has admitted that sales were made outside books in order to gain some extra profit besides commission and admitted to have earned profit around 6.6% on such unaccounted sale. Thus, we find no infirmity in the order of CIT-A with respect to such addition made by CIT-A in his appellate order. Hence, the addition made by the learned CIT-A is hereby confirmed. Enhancement of the addition by CIT-A on account of alleged purchases made by the assessee outside the books of accounts - whether the learned CIT-A can make the addition of altogether a new item which was not subject matter of dispute at the assessment stage? - CIT-A has exceeded his jurisdiction by making the addition of an item representing the unaccounted purchases which was not subject matter of dispute before the AO. DR at the time of hearing has also not brought anything on record contrary to the argument advanced by assessee. Accordingly, we set aside the finding of the learned CIT-A, and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is partly allowed whereas the ground of appeal of the Revenue is dismissed. Disallowance of opening stock - HELD THAT:- The opening stock carried forwarded from A.Y. 2009-10 in the year under consideration is also nil. However, we note that the profit declared by the assessee for the A.Y. 2009-10 includes the closing stock of Rs. 2,93,12,514/- but no setoff has been provided by treating the same at nil value, meaning thereby, that the closing stock shown by the assessee was taxed in the previous year i.e. A.Y. 2009-10 and thus again making addition of the same in the year under consideration by disallowing of opening stock will amount to double taxation which is not warranted under the statue. As such, it the Revenue wants to make addition in the year under consideration on account of opening stock, then it has to provide setoff of the same in the previous year which will be tax natural exercise. Thus, in view of the above we are of the opinion that that no addition is require to be made on account of opening stock as the same is tax natural exercise. Therefore we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal raised by the assessee is hereby allowed. Levy of penalty u/s 271(1)(c) - addition made u/s 69C on alleged unaccounted purchases - Where the quantum additions/ disallowances have been deleted, then the manner of quantifying the amount of penalty under explanation 4 to section 271(1)(c) of the Act as discussed above fails. Accordingly, we are of the view that that there cannot be any penalty with respect to the quantum additions which have been deleted. Levy of penalty on the addition being estimated profit on account of alleged unaccounted sale - No penalty under section 271(1)(c) of the Act can be sustained on account of addition based on estimation. Accordingly we hereby set aside the order of the learned CIT(A). Levy of penalty u/s 271(1)(c) on account of disallowances of opening stock - Where the quantum additions/ disallowances have been deleted, then the manner of quantifying the amount of penalty under explanation 4 to section 271(1)(c) of the Act as discussed above fails. Accordingly, we are of the view that that there cannot be any penalty with respect to the quantum additions which have been deleted. Thus, the ground of the assessee s appeal is hereby allowed. Case-Laws Income Tax Wed, 31 Aug 2022 00:00:00 +0530