TaxTMI 
TaxTMI 
2015 (5) TMI 402
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....x (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. 71,89,691/-on account of unaccounted purchase of Shankar Kapasiya (cotton seeds). 4. The Ld. Commissioner of Income tax (A)-XVI, Ahmedabad has erred in law and on facts in deleting the addition made-of Rs. 1,65,231/- on account of unaccounted purchase of Kalyan Kapas. 5. The Ld. Commissioner of Income tax (A)-XVI, Ahmedabad has erred in law and on facts in directing the Assessing Officer to compute the profit on sale of cotton bales and make the addition of the profit thereon and not the entire sale itself i.e. Rs. 27,71,015/-. 6. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. 8,10,665/- on account of unaccounted sale of Kala by clubbing the income of Raghuvir Cotton Company. 7. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. 11,16,568/-on account of unexplained stock difference of cotton and cotton seeds. 8. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. ....
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....h information with regard to purchases, sales and closing stock which was the primary data. Assessee submitted these details which differ from details submitted during assessment proceedings for the same period. Assessing Officer found that there was difference in purchases, sales and closing stock. He concluded that primary data and other documents have been prepared artificially. He rejected book results of assessee on the grounds that sales and purchases were not reflected correctly in primary books of account, production register and stock register were not prepared which is basic requirement in manufacturing unit and books of account prepared after survey do not reflect correct and complete financial affairs of assessee. 3.1 Assessing Officer after rejecting books of account estimated gross profit rate of various items based on yield as stated by main partner of assessee during survey and by taking average purchase rates of different items and sale rates of different items. In his statement Shri Thakkar the main partner stated that 100 kgs of Kala yields 70 kg of Kapas and 70 kgs of Kapas yields 28 kgs of cotton and 42 kgs of cotton seeds. On the basis of these calculations....
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.... completed the books on regular basis has resulted in difference in data furnished during survey and subsequently during assessment proceedings. Assessee is expected to complete books of account on regular basis, which has not been done in this case. In view of discrepancy pointed out by Assessing Officer, books of account of assessee were not reliable. He has rightly rejected the books of account u/s. 145(3). This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. 3.3 Regarding addition of Rs. 19,63,297/- made by Assessing Officer on account of low gross profit rate, we find that Assessing Officer has computed gross profit rate of various items dealt with by assessee on the basis of records of assessee, norms of industry and statement of main partner of assessee firm. Assessing Officer then applied gross profit rate so computed on sale of various items to compute gross profit rate of assessee. The sale figures given by assessee during assessment proceedings were adopted by Assessing Officer. Gross profit computed by Assessing Officer is Rs. 37,24,780/-. After reducing gross profit declared by assessee amounting to Rs. 17,61,483/-. Assessing Offi....
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....ed was 53833 kg and there was a difference of only 4 kg which was negligible. Assessing Officer has chosen not to accept purchase account in which quantity record have been made. It was also stated on behalf of assessee that all purchases so recorded were duly supported by purchase bills and were in agreement with the data contained in impounded books and there was no reason that same be treated as unaccounted. In this background, CIT(A) rightly observed that these purchases are accounted for. Assessing Officer has not mentioned anything in remand report against arguments of counsel. Accordingly, CIT(A) rightly accepted the contentions of assessee and where rightly deleted addition of Rs. 1,23,987/- on account of purchase of Kapas Shanker. This factual finding of CIT(A) needs no interference from our side. We uphold the same. 4.3 Next issue as raised in Revenue's appeal is with regards to addition of Rs. 71,89,691/- under the head Shanker Kapasiya i.e. cotton seeds. Assessing Officer has mentioned that as per pages 1 to 5 of X-13, assessee purchased 518120 kgs of shanker kapasiya during period 5.12.2001 to 28.01.2001. Out of these only 142534 kgs was accounted for in the books. ....
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.... has not given any adverse opinion on the point in remand report. Moreover Assessing Officer made addition of the entire purchases which was not correct. At best addition of the peak amount can be made. In view of this, CIT(A) deleted addition of Rs. 71,89,691/-. This factual finding of CIT(A) needs no interference from our side. We uphold the same. 4.4 Next issue as raised in Revenue's appeal is with regards to addition of Rs. 1,65,231/- as unaccounted purchase of Kalyan Kapas. Under the head Kalyan Kapas, Assessing Officer has made addition of Rs. 1,65,231/- on account of unaccounted purchase of 4950 kgs Kalyan Kapas. Assessing Officer has mentioned that as per X-13 page no. 50 to 60 purchase of Kalyan Kapas is 382680 kgs whereas figures submitted by assessee during survey the purchase was of 377730 kgs. The difference of 4950 kgs has been treated as unaccounted purchase by Assessing Officer and addition of Rs. 1,65,231/- being sale price, has been made. 4.4.1 Matter was carried before the First Appellate Authority, wherein it was submitted on behalf of assessee that Assessing Officer has compared the figures of purchase given at the time of survey and impounded books. What....
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....icer is directed to compute profit on sale of cotton bales and make addition of profit on sale of cotton bales and not entire sale. This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same. 4.6 Next issue as raised in Revenue's appeal is with regards to addition of Rs. 8,10,665/- for unaccounted sale of kala. Assessing Officer has mentioned in Annexure X-13 which belongs to assessee firm it has purchased 3,13,315 Kgs of kala as per page nos. 10-18. Since X-13 belongs to assessee and not to Raghuvir Cotton, the purchase of kala has been made by assessee firm and not by Raghuvir Cotton as stated by assessee. Assessing Officer therefore held that income of Raghuvir Cotton is to be considered for clubbing with income of assessee. As against purchase of 3,13,315 kgs of kala purchase of 75,520 kgs was entered in ledger. Assessing Officer has further mentioned that opening stock of kala was 2,59,400 kgs and hence 5,72,715 kgs of kala was available for production of kapas. As per norms given by assessee Assessing Officer has mentioned that assessee has produced 1,60,360 Kgs of cotton and 2,40,540 kgs of cotton seed. There was no closing stock avail....
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....Rs. 11,16,568/- on account of unexplained stock difference. Assessing Officer has mentioned that there was difference in stock of cotton of 1,27,971 kgs and of cotton seeds of 79,703 kgs. Assessing Officer treated the difference of stock as unexplained investment of the assesses and made addition of Rs. 11,16,568/- by working of the profit on sales of these items. In appeal, stand of assessee has been that addition has been made by relying on question No.2 &3 of statement recorded on 12.2.2002. It was further argued that Assessing Officer has separately added gross profit of various items dealt in by assessee and determined unaccounted sales of cotton seeds. 4.7.1 In appeal, CIT(A) having considered the observations of Assessing Officer and arguments of assessee found that assessee was right in arguing that Assessing Officer has already made addition of gross profit of various items. Same addition can not be made again. Accordingly, same was deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same. 4.8 Next issue as raised in Revenue's appeal is with regards to addition of Rs. 3,47,181 /- on account of disallowance of ....