2017 (3) TMI 678

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....of income under the head "business only". The return of income of the assessee was processed u/s 143(1) of the Act, accepting the income shown by the assessee. However, subsequently the case was picked up under income escaping assessment u/s 147 of the Act and accordingly notices u/s 148/143(2) and 142(1) of the Act were served upon the assessee. The assessment was framed u/s 147 r.w.s.143(3) of the Act at a total income of Rs. 12,40,128/- after making certain additions/disallowances to the total income of the assessee which have been discussed in details hereinafter. 3. We first take up ground no. 4 of the assessee where the issue raised by the assessee is that the ld. CIT(A) erred in confirming the order of AO by sustaining the addition of Rs. 2,36,564 on account of gross profit on the unrecorded purchases. The AO during the assessment proceedings observed certain differences in the amount of purchases shown by the assessee vis-à-vis sales shown by the corresponding parties in their respective books of accounts as detailed below Company Statement by the assessee understated:- Name of the Party Amount as per Amount shown Amount Bharat Nursery Pvt.Ltd. Rs.5,11,315.00....

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....are generally of administrative nature or are otherwise fixed and these don't change only because the assessee has done some unaccounted purchases & sales also. In these appellate proceedings the A R has not adduced anything to even remotely suggest that the assessee had to incur some new or hitherto undeclared expense to earn the additional incomes. Therefore it is held that all the expenses of the Profit & Loss Account are already allowed to the assessee and there is no cause for allowing any further deduction for expenses. In addition to the above, the assessee had also made an alternative plea that the AO had not supplied the copy of confirmation of account obtained from the sellers and therefore a reply of 'Not accepted' was given to the AO earlier. The assessee had also requested for a remand back of the matter 'for a proper rebuttal. In this connection it is held that the suppliers are not third parties but are the creditors of the assessee and the assessee had quoted their names and address to support his purchases. Thus in the eyes of the law as explained in the case of Sukh Ram v. ACTT (2001) 99 ITD 417 (Delhi) ( case confirmed by Delhi High Court and re....

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....assessee that the information gathered in accordance with the provisions of section 133(6) of the Act was not cross verified is baseless. On examination of lower authorities, we find that sufficient opportunities were given by the lower authorities to counter the allegations framed by the AO but the assessee failed to do so. The ld AR before us has also not brought anything contrary to the finding of ld CIT(A). Now coming to the rate adopted by the AO for determining the profit on the undisclosed purchases we find that the lower authorities have taken the GP rate as disclosed by the assessee in this return of income and the same rate of profit has also been applied on the undisclosed purchases. The argument of the assessee that the net profit on the undisclosed purchases should be used to work out profit does not have any force. It is because that all the indirect expenses has been duly incurred and claimed by the assessee against the disclose sales of the business. Thus, we are of the view there was no indirect expense which was incurred by the assessee in relation to undisclosed sale and not claimed. Thus, in our considered view the GP rate adopted by the lower authorities is rea....

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.... alternative explanation backed by any evidence. The facts of this addition are the same as for ground No. 2 above, In this case also the assessee only makes general statement but there is no substantiation. In the absence of filing of any verifiable facts, rejoinder to remand report and other arguments, the ground of appeal No. 3 is also dismissed." Being aggrieved by the order of CIT(A) the assessee is in second appeal before us. For this, the assessee has raised the following grounds of appeal : "5) That the Id. CIT(A) erred in sustaining the addition of Rs. 693038/- under the head circulating capital on unrecorded purchase". 10. The ld. AR before us submitted that the instant issue is directly linked with unrecorded purchases for which ground no.1 has been raised. In ground no.1 it was prayed to restore the matter to the AO and therefore the ld. AR further requested to restore the matter to the AO for fresh adjudication. On the other hand the ld. DR raised no objection if the matter is restored to the AO. 11. We have gone through the submissions made by both the sides and perused the orders of the lower authorities. The issue in the present ground of appeal of the assessee....