TaxTMI 
TaxTMI 
2018 (1) TMI 132
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.... alleged unexplained credits in the capital account. 4. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs. 20,68,500 towards alleged unexplained gifts. 5. The learned Commissioner of Income Tax (Appeals) is not justified in estimating the profit on car hire charges @ 10% which is on a higher side. 6. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the separate addition made by the assessing officer towards interest income. 7. The learned Commissioner of Income Tax- (Appeals) ought to have held that no separate addition can be made u/s 68 once the income is estimated by rejecting the books of account. 8. The learned Commissioner of Income Tax (Appeals) ought to have granted the benefit of telescoping. 9. Any other ground that may be urged at the time of appeal hearing. 2. Ground No. 1 and 9 are general in nature which does not require specific adjudication. 3. Ground No. 2 is related to the estimation of profit @10% of purchases as against 5% of cost of goods sold. The assessee is engaged in the business of sale of liquor and wine (IMFL) and du....
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.... Hon'ble A.P. High Court. It is the contention of the assessee that the net profit estimated by the A.O. is quite high when compared to the nature of business carried on by the assessee. It is further submitted that the case law relied upon by the assessee is not applicable to the facts of the present case. The case before the Hon'ble A.P. High Court was that the assessee is into the business of trading in arrack, whereas it is in the business of dealing in IMFL. The assessee further contended that IMFL trade was controlled by the State Government through A.P. State Beverages Corporation Ltd. and the prices of the products are fixed by the State Government. The assessee being a license holder of State Government cannot sell the products over and above the MRP fixed by the State Government. We find force in the arguments of the assessee for the reason that the A.O. has estimated the net profit by relying upon the decision of A.P. High Court in the case of CIT Vs. R. NarayanaRao in ITA No.3 of 2003 which is rendered under different facts. The A.P. High Court has considered the case of an arrack dealer, whereas, the assessee is into the business of dealing in IMFL. Therefore, we are o....
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....f the matter than the view so taken by the coordinate bench. Therefore, we direct the A.O. to estimate the net profit of 5% on total purchases net of all deductions. Ordered accordingly." 7. In view of the above decision of the coordinate bench of the Tribunal, the AO is directed to re-compute the income of the assessee @ 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. 8. Ground No.3 is related to the addition of Rs. 18 lakhs made by the Assessing officer (AO) towards unexplained credits in the capital account. The assessee has introduced the capital of Rs. 18 lakhs on 02.07.2010 and admitted the same as income under the head 'business income'. The assessee declared the loss of Rs. 14,18,174/- and consequent to the admission of cash difference as "business income" it resulted in taxable income of Rs. 5,00,000/-. The Ld.AR submitted that the AO has assessed Rs. 18 lakhs as other income which is not correct. Ld.AR contended that once the income is estimated there is no reason to make separate addition. Since the assesssee has already admitted the same as business income, the Ld.AR submitted that there is no case of making a separate a....
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....transactions are in cash, and it is also noted from the assessee's capital account for the year 2009-10, the assesseehas shown receipt of gifts from these parties to the tune, of Rs. 6 lakhs, Rs. 3 lakhs & Rs. 3 lakhs, respectively. All these parties have stated in their confirmation lettersthat the impugned gifts for the subject year were out of their savings. It is unbelievable that they had this much savings in this short span of time and is pot proportionate for theft source of income. Therefore the capacity of the donors to make the alleged gifts is very much in doubt, which raises doubt on the genuineness of the transactions. Therefore, I find that the AC) has rightly disbelieved the capacity of alleged donors and hence the impugned additions made in this regard are confirmed. 5.3.2. With regard to the credit in the name of Smt. PoolariHymavathi of Rs. 5,00,000/-, it is seen that the said creditor has filed confirmation letter stating that the amount was given by way of cheque. As the transaction is in cheque, the identity and genuineness of the transaction is not in doubt. The said creditor has also stated that the amount was given out of the money sent to her b....