TaxTMI 
TaxTMI 
2007 (9) TMI 317
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....,75,205 made on account of excess cash found during the course of survey under s. 133A. 3. Deleting the addition of Rs. 2,20,000 made on account of unexplained advance. 4. Deleting the addition of Rs. 11,000 made under s. 40A(3) of IT Act. 5. Deleting the disallowance of Rs. 50,000 out of vehicle hire charges." 3. Briefly stated, the facts of this case are that the assessee deals in the purchase and sale of footwears in the name of M/s Vinod Foot Wear. A survey under s. 133A of the IT Act, 1961 (hereinafter referred to as 'the Act' for short) was carried out on 15th Oct., 2003 in this case. During the course of survey, the assessee surrendered the following amounts against item Nos. 1 to 4, as under: 1. Excess/unexplained cash Rs. 5,70....
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.... 15,93,054 on total sales of Rs. 1,43,72,895 giving a GP rate of 11.08 per cent as against rate of 10.20 per cent on sales of Rs. 1,37,91,045 shown in the last year. The learned AO is of the opinion that the assessee has shown huge expenses to nullity the amount surrendered during survey. The assessee further stated that the rate shown to the survey team was on estimate only. The AO further stated that the profit rate of the assessee was much higher than what has been shown in the trading account. He has further noted that in the tax audit report the auditor has observed that the assessee has not maintained day-to-day quantitative details. He was, therefore, of the opinion that the valuation of closing stock was not verifiable. It was furth....
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....that the GP rate of the immediately preceding assessment year also cannot be taken as a basis as the same was not subjected to any verification. The AO has further noted that it was evident from the purchase bills that the rate stated to the survey team has been reduced drastically. This means that the profit element to the assessee is not 11.8 per cent shown in the trading account. He has also noted that the assessee had received discounts against purchases, meaning thereby that the assessee has inflated the purchase to that extent. In view of the above discussion and discrepancies, the AO made a trading addition of Rs. 3,57,861 which was equal to the excess stock found and surrendered during the course of survey but excluding Rs. 12,290 d....
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.... income. The learned CIT(A), in turn, deleted this addition. 8. We have heard rival submissions and have perused the available materials on record carefully. 9. After hearing both sides in the light of the available facts, there is nothing wrong in the finding of the learned CIT(A) because the regular books of accounts of M/s Siddhi Plastics also reflected cash balance of Rs. 2,75,205, as opening balance, as on 15th Oct., 2003, the date of survey. The fact that the office premises of M/s Siddhi Plastics & M/s Vinod Kumar Foot Wear is common was also found correct from the available evidences on record. The books of accounts of both the concerns are found to be maintained in a single computer which is owned by this assessee. This was estab....
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....0 Shri Kanhaiyalal Rs. 20,000 ------------ Total Rs. 2,20,000 ------------ In his statement recorded, the assessee admitted that these amounts represented the cash loan given by him from his undisclosed sources and not recorded in the books of accounts, therefore, he surrendered this amount for taxation. But in the return of income, he did not disclose this surrendered income on the plea that in fact the aforesaid transactions were related to the building construction as the assessee had made the payment to the contractor through his employee and for memorizing the transaction this diary was kept. It was further stated that the transactions are duly recorded in the books of accounts of the assessee and also are debited in the addi....
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....e during survey by way of plausible evidences. The assessee has successfully disproved the same. Consequently, we dismiss ground No. (3) of this appeal. 12. The facts of ground No. (4) of Revenue's appeal are that the AO has found that the assessee has made cash payments towards the purchase totalling to Rs. 55,000, in contravention of the provisions of s. 40A(3) of the Act. Consequently, the AO disallowed 20 per cent of this amount and added Rs. 11,000 in the total income of the assessee. However, the learned CIT(A) has deleted this addition by observing that all the payments made in cash are within permissible limit and are not hit by s. 40A(3) of the Act. 13. We have heard rival submissions and have perused the available materials on r....