2003 (11) TMI 283

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....of M/s Sunrise Sales Corporation, a sum of Rs. 2,37,650 was made towards deficit stock of goods and a sum of Rs. 5,19,791 is made in respect of unaccounted income from unaccounted sales. A search was conducted in this group of cases on 15th Nov., 1999. Initially deficit of closing stock of Rs. 29,60,520 was noticed. The assessee then raised certain dispute as regards correctness of the rates adopted of deficit stock, which was reworked out to Rs. 17,12,318. The AO found that purchases were duly accounted for. Therefore, addition of Rs. 2,37,670 representing gross profit at 13.88 per cent was made. It appears that Shri C. Chandresh Shah, who is looking after the finance of the firm had stated in the statement recorded on oath that there were....

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....ounted sale transactions. The addition is based on certain assumptions. The decision of the Andhra Pradesh High Court in the case of Rajnik & Co. vs. Asstt. CIT (2001) 171 CTR (AP) 117 : (2001) 251 ITR 561 (AP) on which heavy reliance is placed by the Department is a case where there was a systematic evasion of tax. Such fact is not established in the facts of the case. In the case of Rajnik & Co., the learned counsel pointed out, that there were matching undisclosed investments. The Department, in this case, has not found any undisclosed investments or assets. The addition is simply based on certain arbitrary decisions and surmises and is not borne out either on material found during the course of search or any acceptable evidence. Relianc....