TaxTMI 
TaxTMI 
2024 (4) TMI 91
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....") relevant to the Assessment Year 2010-2011. 2. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the addition made by the AO for Rs. 65,68,900/- on account of excess stock found during the survey operation. 3. The necessary facts are that the assessee in the present case, a partnership firm, is engaged in the business of manufacturing & trading of cotton, cotton seeds and cotton seeds oil. There was survey operation at the business premises of the assessee under section 133A of the Act wherein unaccounted stock of 2119 quintal having value of Rs. 65,68,900/- was found and therefore, the same being unaccounted stock was added to the total income of the assessee. 4. On appeal, the ld. CIT(A) was pleased....
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....on credit as well. However, the money invested in such unaccounted stock has neither been quantified nor brought to tax by the authorities below. Accordingly, we refrain from this controversy as nothing arises from the order of the authorities below. In other words, had there been any investment by the assessee in such an unaccounted investment, the same needs to be brought to tax under the provisions of section 69A of the Act. Coming back to the question whether the entire amount of excess stock found during survey shall be subject to tax or only the profit element embedded in such unaccounted stock shall be brought to tax. As it is an undisputed fact that the stock arises from the purchases and if such purchases are not found accounted fo....
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.... the assessment year under consideration the assessee had declared the gross profit at 3.56 per cent of the total turnover. If the yardstick of 30 per cent, as adopted by the Commissioner (Appeals), is accepted the gross profit rate will be much higher. In essence, the Tribunal only estimated the possible profit out of purchases made through non-genuine parties. No question of law in such estimation would arise. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick can be adopted. 8.1 Identical view was also taken by the Hon'ble Gujarat High Court in the case of President industry reported in 258 ITR 654 where it was held as under: The amount of sales by itself cannot represent....
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.... found during the course of survey, as direct expenses, which may please be noted. The said fact has been very well explained during the course of assessment proceedings for the A.Y.2010-11 and has been considered by the Learned Assessing Officer vide our submission dated 18/12/ 2012 8.3 However, the ld. AR appearing before us has not brought anything on record demonstrating from the financial statements that such unaccounted purchases have either been shown as part of the closing stock or sold out in the current/ subsequent year. Thus, in the absence of such details and to render equitable justice to the assessee and the revenue, we are of the view that some percentage of profit on such unaccounted purchases/stock is required to be added.....