Assessee gets partial relief in unexplained investment case under Section 69 with agricultural income and loan documentation accepted

ITAT Visakhapatnam allowed partial relief to assessee in unexplained investment case u/s 69. Tribunal granted Rs. 5 lakhs relief for agricultural income and Rs. 2 lakhs for loan from brother, based on documentary evidence including VRO certificates, Pattadar Passbooks, and family members' income returns. However, ITAT upheld AO's estimation of 5% profit on liquor business stock sales due to assessee's failure to produce sales bills or books of account, following precedent in similar liquor business cases.

---

---

Issues:
1. Whether the addition of Rs. 15,00,000 made by the AO u/s. 69 of the Act on account of unexplained investment is justifiedRs.
2. Whether the confirmation of the AO's estimation of 5% of the total value of the stock put to sale as profit in the liquor business is justifiedRs.

Analysis:

1. The appeal was against the order of the CIT(A)-NFAC regarding the assessment for AY 2016-17. The assessee, engaged in liquor business, had filed his return but failed to provide necessary information during scrutiny. The AO made additions, including Rs. 15,00,000 as unexplained investment. The CIT(A)-NFAC upheld the AO's decision. The Tribunal considered evidence of agricultural income and loan from family members, granting relief of Rs. 5 lakhs for agricultural income and Rs. 2 lakhs for the loan, thus partly allowing the appeal.

2. The second issue involved the estimation of income at 5% of the total stock put to sale by the AO. The AR argued for a lower estimation based on Tribunal precedents. However, the Tribunal upheld the AO's decision, citing lack of evidence provided by the assessee and relying on a previous Division Bench decision. The Tribunal dismissed this issue raised by the assessee, upholding the 5% estimation.

In conclusion, the Tribunal partly allowed the appeal by granting relief on the unexplained investment issue but upheld the estimation of income at 5% of the stock put to sale in the liquor business. The decision was pronounced on 10th September, 2024.

---