9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (8) TMI 605 - AT - Income TaxEstimation of income - determination of N.P. - assessee is engaged in the business of (IMFL) liquor trade - Held that - The very same issue of estimation of profit in the trade of IMFL was considered by the coordinate bench of the Tribunal in the case of Tangudu Jogisetty 2016 (7) TMI 379 - ITAT VISAKHAPATNAM and held that estimation of 5% net profit on purchase is reasonable and directed the A.O. to estimate the net profit of 5% on total purchases net of all deductions Unexplained expenditure and interest income - Held that - In regard to creditor - Smt. Goka Bujjamma - CIT(A) gave a categorical finding that the balance sheet filed by the assessee as on 31/03/2010 the cash in hand was 94, 882/-. There was no other evidence before the ld. CIT(A) that she is having sufficient means to advance the loan. Even before the Tribunal assessee has not filed any details to show that she is having sufficient money to advance loan to the assessee. Under these facts and circumstances of the case I find that Assessing Officer as well as ld. CIT(A) rightly believed that the assessee failed to prove the creditworthiness of the creditor. Therefore find no infirmity in the order of the ld. CIT(A). Thus this ground of appeal raised by the assessee is dismissed. With regard to creditor - G. Jagannadam he deposed that he advanced the impugned amount in cash for his brother s business out of HUF agricultural income and savings. The assessee has not filed any evidence with reference to the said creditor G. Jagannadam neither before the Assessing Officer nor before the ld. CIT(A). Therefore ld.CIT(A) confirmed the order of the Assessing Officer by observing that the assessee failed to prove the creditworthiness of the creditor. Thus find no infirmity in the order passed by the ld. CIT(A). Thus this ground of appeal raised by the assessee is dismissed. With regard to claim of agricultural income from HUF Assessing Officer took a view that agricultural income to the tune of 55, 000/- is acceptable. However ld. CIT(A) has enhanced the agricultural income to the tune of 1 lakh in the individual status as available to explain the source for the initial expenditure/investment. Thus find that ld. CIT(A) has taken a reasonable view in calculating the agricultural income hence no interference is called for. Addition being unexplained amount - Held that - AO has asked the assessee to explain the source of 3, 49, 461/-. It was submitted before the Assessing Officer that it forms part of opening capital and it could not be added. The assessee has not filed any evidence to show that it forms part of the opening balance therefore the Assessing Officer added the same to the total income of the assessee. Even before the ld. CIT(A) he did not file any details. Even before the Tribunal no details in respect of above addition are filed. Addition in respect of interest income - AO has treated the same as income from other sources - Held that - Before the Tribunal the assessee has not brought any material to show that the interest income received by the assessee is from business. As find that the assessee has received interest income from the bank deposits therefore it cannot be considered as business activity. Thus ld. CIT(A) correctly held that interest income received by the assessee as income from other sources. Therefore find no infirmity in the order of the ld. CIT(A).
Issues Involved:
1. Estimation of profit in IMFL business. 2. Treatment of unexplained expenditure and interest income. Estimation of profit in IMFL business: The appeal concerned the estimation of profit in the business of Indian made Foreign Liquor (IMFL) by the assessee. Initially, the assessment was completed by estimating the net profit at 20% of the stock put to sale. However, on appeal, the percentage was scaled down to 10% by the Commissioner of Income Tax (Appeals). The Tribunal considered a similar case where the profit margin was reduced to 5% and directed the Assessing Officer to re-compute the profit at 5% of the total purchases net of all deductions. The Tribunal found that the A.O. had relied on a judgment not applicable to the present case, and the assessee's contention was supported by a decision of the ITAT Visakhapatnam bench. Consequently, the Tribunal directed the A.O. to estimate the net profit at 5% of the purchase price, following the decision of the coordinate bench. Treatment of unexplained expenditure and interest income: Regarding unexplained expenditure, the Assessing Officer questioned certain expenditures exceeding the opening capital balance of the assessee, leading to an addition of unexplained income. The Tribunal observed that the assessee failed to prove the creditworthiness of the creditor, resulting in the dismissal of the appeal on this ground. Similarly, in the case of another creditor, the Tribunal upheld the decision of the Assessing Officer as the assessee did not provide any evidence to establish the creditworthiness of the creditor. The Tribunal also addressed the agricultural income claimed by the assessee and found the CIT(A)'s calculation reasonable. Additionally, the Tribunal dismissed the appeal related to an unexplained amount and interest income, as the assessee did not provide sufficient evidence to support their claims. In conclusion, the Tribunal partly allowed the appeal concerning the estimation of profit in the IMFL business while dismissing the grounds related to unexplained expenditure and interest income. The decision was based on the evidence presented and the application of relevant legal principles in each issue discussed during the proceedings.
|
