2014 (12) TMI 480

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....ounts. 2. By order dated 19.12.2003, the following substantial question of law was framed:- "(a) Whether on the facts and in the circumstances of the case the Tribunal was correct in law in deleting the addition of Rs. 9,10,000/- made on account of profits eawrned on unaccounted sales, notwithstanding the fact that additions on account of unexplained cash and unexplained investments in stocks had been restored to the file of the Assessing Officer for further investigations?" 3. The respondent assessee an individual was subjected to seizure operations on 13.10.1995 at his residential and business premises under Section 132 of the Income Tax Act, 1961. Seizure of incriminating material including cash of Rs. 12,42,950/- was made. Subsequent....

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....ent assessee at the Bar that addition of Rs. 50,000/- has been sustained in the appeal effect order and the assessee has accepted the said addition. 6. With regard to unexplained stock, the assessee had surrendered Rs. 6,07,900/- in the return for the block period. The Assessing Officer had made further addition of Rs. 2,76,227/-. The Tribunal restored the issue to the Assessing Officer. It is stated at the Bar by the counsel for respondent assessee that in the consequential or in the appeal effect order, the Assessing Officer had sustained addition of Rs. 1,58,910/- on account of undisclosed stock and the said addition has been accepted by the assessee. 7. With regard to profit from undisclosed sales, the Assessing Officer has recorded t....

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....istributed according to the requirement as on different units. I keep the records of main suppliers. These slips are estimated amounts and unsystematically maintained, therefore, I cannot match the slips with the books of accounts maintained for all the units. However, I wish to point out that the totals which are arrived at, by your honour in respect of my diary are grossly wrong as the point given in the figures has been totally ignored. Over and above all, we have surrendered all the assets cash and unaccounted expenses in our block returns. Whatsoever unaccounted cash, unaccounted stock and unaccounted expenses incurred, are surrendered is the result of business transactions not recorded in the books of accounts, on the points of law, ....

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.... the reasoning given by the Tribunal specifically the last paragraph quoted above and have reservation on the reasons and the conclusion recorded by the Tribunal. The said reasoning holds that the assessee had surrendered about Rs. 5 lacs on account of cash found at the time of search and also Rs. 6 lacs on account of excessive stock and therefore no addition should be made on account of profits outside the books of accounts. Thus the factum that the assessee had earned undeclared profits outside the books was accepted. In other words, the entries recorded in the diary etc. were treated as incriminating and reliable material. In case the assessee was transacting business outside the books of accounts, necessarily he would have earned profit....