2024 (9) TMI 868

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..../01/2024 arising out of the order passed u/s. 143(3) of the Income Tax Act, 1961 ["the Act"] for the AY 2016-17. 2. Briefly stated the facts of the case are that the assessee is an individual engaged in liquor business has field his return of income for the AY 2016-17 electronically on 29/09/2016 admitting a total taxable income of Rs. 9,53,550/- which includes business income, salary income and commission. Later on, the case was selected for scrutiny through CASS under complete scrutiny. Accordingly, notice u/s. 143(2) of the Act was issued on 03/07/2017and in response to the same, the assessee's Authorized Representative appeared from time to time and filed copy of the return, P & L Account, balance sheet and audit report. The Ld. AO a....

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.... and brought the same to tax. Accordingly, the Ld. AO completed the assessment u/s. 143(3) of the Act and determined the total income of the assessee at Rs. 35,65,398/- and passed the order dated 11/12/2018. The Ld. AO also initiated the penalty proceedings u/s. 271(1)(c) of the Act. Aggrieved by the order of the Ld. AO, the assessee is in appeal before the Ld. CIT(A)-NFAC. 3. On appeal, after considering the submissions of the assessee, the Ld. CIT(A)-NFAC observed that with respect to estimation of income @ 5% on the value of the total stock to use, the Ld. AO has taken a very reasonable view while estimating the profit in the absence of books of accounts. Further, with respect to unexplained investment, the Ld. CIT(A)-NFAC observed th....

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....of the Act and the tax auditor did not report any irregularities in his audit report. So the Ld. CIT(A) ought to have accepted the book results of the appellant's business income f or the AY 2016-17 in the interest of justice." 4. From the above grounds of appeal, there are two core issues that need adjudication ie., (i) Whether the Ld. CIT(A)-NFAC is justified in sustaining the addition of Rs. 15,00,000/- made by the Ld. AO u/s. 69 of the Act on account of unexplained investment? (ii) Whether the Ld. CIT(A)-NFAC is justified in confirming the Ld. AO's estimation of 5% of the total value of the stock put to sale as profit in the liquor business of the assessee? 5. At the outset, on the first issue, the Ld. AR submitt....

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....assessee to provide the documentary evidence with regard to earning of the agricultural income of Rs. 10 lakhs during the year by the family members of the assessee. Further, the Ld. DR submitted that the assessee has also failed to prove the creditworthiness of his brother Mr. Y. Rajasehara Rao who advanced the loan of Rs. 5 lakhs to the assessee along with documentary evidence. In the absence of any proper cogent documentary evidence, the Ld. AO has made the addition. Even before the Ld. CIT(A)-NFAC the assessee has not produced any evidence to substantiate his claim. Therefore, the Ld. DR pleaded that the decision taken by the Ld. Revenue Authorities need not be disturbed. 7. I have heard both the sides and perused the material availa....

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....14-15 and 2015-16. On perusal of all these documents as well as the submissions of the assessee, I am of the considered opinion that the assessee's family members are having agricultural income and the assessee's brother is also having creditworthiness to advance loan to the assessee. Considering these facts and circumstances of the case, I hereby grant relief to the assessee to the extent of Rs. 5 lakhs towards agricultural income and Rs. 2 lakhs towards the loan availed from the assessee's brother Mr. Y. Rajesekhara Rao as explained out of Rs. 15 lakhs additions made u/s. 69 of the Act. Accordingly, the Ld. AO is directed to grant relief to the assessee as above. It is ordered accordingly. Thus, the first issue raised by the assessee is p....

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....es, the assessee has not produced sales bills in support of the sales admitted during the year in the Trading and P & L Account and has also not produced any books of account for verification. Under these circumstances, the Ld. AO proposed to reject the book results of the assessee and resorted to estimate the income on liquor business @ 5% on the stock put to use during the year under consideration. While coming to such decision, the Ld. AO relied on the decision of this Tribunal in the case of T. Appala Swamy vs. ACIT in ITA Nos. 65 & 66/Viz/2012, dated 26/02/2014. Further, on similar set of facts and circumstances, the Division Bench of this Tribunal in the case of Kalla Viswanatha Babu vs. ITO in ITA No. 249/Viz/2020, AY 2011-12 (supra)....