2014 (2) TMI 947

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....eturn of income was filed on 29.09.2009 admitting a total income of Rs.4,25,000/-. The A.O. made the following additions to the total income : (i) Unexplained expenditure towards license fee Rs.13,36,000/- (ii) Unexplained investment towards license fee Rs.15,50,125/- (iii) Unaccounted sales as estimated Rs.10,79,918/- (iv) Deduction u/s.80C disallowed Rs.4,000/- 3. Learned CIT(A) after considering the submissions of assessee confirmed the first two additions and the last one of deduction under section 80C. The estimation of unaccounted sales by A.O. was modified on the basis of ITAT Orders in similar business as estimation at 5% on cost of purchases or stock sold. Revenue is aggrieved on modifying the estimation, whereas assessee is ag....

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....ITA.No.310/Hyd/2012- A.Y. 2009-2010 (Assessee's Appeal) 5. Assessee filed revised grounds in the course of present appeal. These are as under : "1. The order of the learned CIT(A), in so far as it is prejudicial to the interests of the appellant, is against law, weight of evidence and probabilities of the case. 2. The learned CIT(A) erred in confirming the action of the A.O. in rejecting the books of account and further erred in holding that the net profit be estimated at 5% of the purchases or the stock put to sale. 3. Without prejudice to ground No.2, the learned CIT(A) erred in confirming an addition of Rs.15,50,125/- as not reflected in the P & L account despite the fact of rejecting the books of account and estimating the net profi....

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....raised a preliminary objection that the amounts cannot be taxed when the incomes are estimated. In view of the principles laid down by the Hon'ble Supreme Court in the case of Kalekhan Mohammed Hanif vs. CIT 50 ITR 1 which in turn was followed in CIT vs. Devi Prasad Vishwanath Prasad 72 ITR 194 (SC), A.O. was not precluded from adding any unexplained cash credit or other amounts even when estimation of income was resorted to. In view of this, the preliminary objection raised in ground No.3 was rejected. 9. Coming to the main issue of additions, the learned Counsel placed on record, the statement filed in earlier year to support that the assessee was in same business in earlier years and so A.O./CIT(A) was not correct in rejecting the sourc....