2017 (11) TMI 1063 - AT - Income Tax

Tribunal adjusts income estimates in liquor business, upholds decisions on transport, cash deposits, and loans.

Income Tax officer, Bundi Versus Shri Rameshwar Meena, Prop. M/s Rajshree Goods Transport

Income Tax officer, Bundi Versus Shri Rameshwar Meena, Prop. M/s Rajshree Goods Transport - TMI Issues Involved:1. Deletion of disallowance of Rs. 23,98,756 out of total disallowance of Rs. 34,00,216 made by AO in transport business.2. Deletion of disallowance of Rs. 8,91,071 out of total disallowance of Rs. 16,97,753 made by AO in liquor business.3. Deletion of addition of Rs. 1,09,01,000 made by AO under Section 68 for unexplained cash deposits.4. Deletion of addition of Rs. 14,00,000 made by AO under Section 68 for unexplained cash deposits.5. Deletion of addition of Rs. 2,10,580 made by AO for unexplained loans given to various persons.Detailed Analysis:1. Deletion of Disallowance in Transport Business:The AO disallowed Rs. 34,00,216 in transportation expenses due to the assessee's failure to produce books of accounts and supporting documents. The CIT(A) estimated the income from transportation at 5% and restricted the disallowance to Rs. 10,01,460, thereby deleting Rs. 23,98,756. The Tribunal noted that the assessee failed to produce evidence but found the AO's disallowance resulting in a net profit rate of 12.70% to be excessive. The Tribunal upheld the CIT(A)'s estimation of 5% net profit as reasonable, considering the nature of the transport business and past profit rates.2. Deletion of Disallowance in Liquor Business:The AO made a disallowance of Rs. 16,97,753 due to lack of supporting evidence. The CIT(A) restricted this by estimating net profit at 4%. The Tribunal found this issue similar to the transport business and modified the CIT(A)'s order to estimate the income at 5%, thus partly allowing the Revenue's appeal.3. Deletion of Addition for Unexplained Cash Deposits of Rs. 1,09,01,000:The AO added Rs. 1,09,01,000 as unexplained cash deposits under Section 68, noting the assessee failed to provide supporting evidence. The CIT(A) accepted the explanation for Rs. 34,00,000 as sale proceeds of food soyabean and presumed the balance Rs. 63,00,000 to be from agricultural produce, wine, and transport business receipts. The Tribunal upheld this, noting the AO accepted agricultural income of over Rs. 50,00,000 and the turnover from transport and liquor business was Rs. 8.22 crores. The Tribunal found no error in the CIT(A)'s deletion of the addition.4. Deletion of Addition for Unexplained Cash Deposits of Rs. 14,00,000:The AO added Rs. 14,00,000 as unexplained cash deposits. The CIT(A) granted telescopic benefit, considering the sustained additions as the source of these deposits. The Tribunal upheld this, noting the cumulative additions sustained by the CIT(A) exceeded the deposits, thus finding no error in the CIT(A)'s order.5. Deletion of Addition for Unexplained Loans of Rs. 2,10,580:The AO added Rs. 2,10,580 for unexplained loans. The CIT(A) granted telescopic benefit, considering the sustained additions as the source. The Tribunal upheld this, noting the sustained additions exceeded the cumulative amounts of deposits and loans, thus finding no error in the CIT(A)'s order.Conclusion:The Tribunal partly allowed the Revenue's appeal, modifying the CIT(A)'s order to estimate the income in the liquor business at 5% instead of 4%. The Tribunal upheld the CIT(A)'s decisions regarding the transport business, unexplained cash deposits, and unexplained loans, finding the CIT(A)'s estimations and telescopic benefits reasonable and justified.