| The Tax Publishers2020 TaxPub(DT) 3675 (Del-Trib) INCOME TAX ACT, 1961
Section 153A
Where sales declared by assessee was tallying with the entire quantity recorded in the seized documents and the difference was only on account of inference drawn by the AO that those quantities were in rupees, the AO was not justified in estimating sales on the basis of such seized documents and consequently, the addition made by taking 5% net profit on such alleged sales was liable to be deleted.
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Search and seizure - Estimation of sales on basis of seized documents - Addition of net profit on alleged sales -
Assessee was carrying out business of jewellery on wholesale basis. A search and seizure action was carried out at the residence of the assessee, during the course of which certain documents were found and seized. Assessee estimated sales at Rs. 3,50,93,668 on the basis of the seized documents and thereby made addition by taking 5% net profit on such alleged sales. Assessee submitted that it had closing balance of gold jewellery weighing 2736.010 gms; AO however, erred in assuming that the jewellery weighing 2736.010 gms represented the alleged sales of jewellery of the value of Rs. 27,36,010 gms. Further, acting on the basis of the said mistake, the AO estimated the sales at Rs. 3,50,93,668 as against the sales of Rs. 95,75,449, which had been shown by the assessee. Held: On perusal of the seized documents, it was found that there was closing balance of 2763.010 gms of gold jewellery, which was in terms of quantities and the AO interpreted the same as alleged sales of Rs. 27,63,010. It was specifically clarified before the authorities below that the difference between the weight and the value was determined depending upon the purity of the gold as reflected in the working giving in the seized documents. A bare perusal of those documents read with explanation, it was quite clear that the value of the quantity of the gold jewellery had been inferred as in terms of value and the sales had been estimated on the basis of values instead of working given by the assessee in terms of quantity of purchase and sale. Further, the sales declared by the assessee at Rs. 95,75,449 in fact was tallying with the entire quantity recorded in the seized documents and the difference was only on account of inference drawn by the AO that those quantities were in rupees. Otherwise there was no difference in quantities mentioned in the seized records. Thus, the said estimation of sales at Rs. 3,50,93,668 was erroneous and addition of 5% net profit made on such alleged sales was deleted.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2006-07
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