Unaccounted Purchases in absence of discrepancy in stock records cannot be added to total income as unexplained investments

Brief of the case:

The ITAT Bangalore in the case of M/s Sai Bhagwan Traders vs. ITO held that unaccounted purchases cannot be added to the total income as unexplained investments when there was no discreoency found in stock records. In such a case addition only to the extent of a reasonable gross profit rate on alleged unaccounted purchases is justified.

 Facts of the case:

• Assessee an individual was engaged in manufacturing of deolied cake and refined oils filed its return on 30.10.2007 of income declaring a total income of Rs. 2,43,310/-. A survey took place in the business premises of the assessee on 02.11.2006.

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