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| The Tax Publishers2020 TaxPub(DT) 5620 (Jp-Trib) : (2020) 082 ITR (Trib) 0223 INCOME TAX ACT, 1961
Section 68
Since it was only suppressed sales made out of recorded purchases, but in any case, it was not a case of unexplained investment/unaccounted purchases made as wrongly understood by the authorities and in respect of undisclosed sales only profit can be added when purchases were recorded but sales was undisclosed, since addition made by AO and confirmed by CIT(A) was solely based on the statement of the assessee without any corroborative evidence, therefore, AO was directed to restrict the addition to the amount being profit element on unaccounted sales.
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Income from undisclosed sources - Addition under section 68 - Unaccounted sales - Profit estimation
Assessee was in the business of cattle feed on whole sale basis. During the course of survey, assessee offered for taxation the amounts of undisclosed income on account of Cash and Stock. But, the same were not included by assessee in its return of income. However, assessment was completed by making additions on account of the alleged excess cash alleged investments in the unaccounted purchases and GP on short stock. CIT(A) had accepted the availability of cash saying that the same was generated out of the undisclosed sales, assuming that it was the cash sales effected on the date of survey itself, hence directed to give set-off but rejected the contention of the utilization of the undisclosed sales proceeds towards the alleged unaccounted purchases. Held: Entire purchases made by assessee either on its own account or even the goods received on account of Aadat sale, was duly entered in the quantitative stock register and this way, entire purchases made were fully accounted for. It was only the suppressed sales made out of recorded purchases, but in any case, it was not a case of unexplained investment/unaccounted purchases made as wrongly understood by the authorities. It was not the case of AO that diary or other evidence was found slowing unexplained purchases. In respect of undisclosed sales only profit can be added when purchases were recorded but sales was undisclosed. Addition made by AO and confirmed by CIT(A) was solely based on statement of assessee without any corroborative evidence. Therefore, AO was directed to restrict addition to the amount being profit element on unaccounted sales.
Followed:ITO v. Suresh Chandra Koolwal (2004) 32 TW 23 (Jp). R .K. synthetics 30 TW 228 (Jd). Ashok Kumar Soni v. DCIT (2001) 72 TTJ 323 (Jd) : 2001 TaxPub(DT) 1426 (Jod-Trib), Karam Chand v. ACIT (2000) 73 ITD 434 (Chd) : (2000) 68 TTJ 789 (Chd) : 2000 TaxPub(DT) 0704 (Chd-Trib) & Rishab Kumar Jain v. ACIT (1999) 63 TTJ 789 (Chd) : 2000 TaxPub(DT) 0704 (Chd-Trib) of Rajesh Jain v. DCIT (1999) 63 TTJ 236 (Del) : 1999 TaxPub(DT) 0904 (Del-Trib) of Rajesh Jain v. DCIT (2006) 100 TTJ 929 (Del) : 2006 TaxPub(DT) 0022 (Del-Trib)
REFERRED :
FAVOUR : Partly in assessee's favour
A.Y. : 2010-11
IN THE ITAT, JAIPUR BENCH
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