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2017 (11) TMI 1063 - AT - Income TaxDisallowance of expenses made in the transport business of the assessee by applying net profit of 5% - Held that - There is no illegality in the action of the AO in disallowing the claim of expenditure under each head. The CIT(A) after considering the previous history of declared total income estimated the income @ 5%. We find that the estimation of income may be adopted in the case when the assessee has not produced any supporting evidence and to bring the controversy to an end. There is no dispute that the income of the assessee was assessed to tax as a result of disallowance made by the AO is equal to 12.70% of the turnover which is on the higher side in transport business and therefore a reasonable and proper estimate was required to be made in this case of the assessee. The ld. CIT(A) has estimated the income of the assessee at 5% thereby restricted the disallowance of ₹ 10,01,460/- as against the total disallowance made by the AO of ₹ 34,00,216. Having regard to the facts and circumstances of the case where the assessee has failed to produce any supporting evidence as well as proper books of accounts in support of the claim we are of the considered view that the proper and just estimation of the income. The impugned order is accordingly modified. Accordingly this ground of the Revenue is partly allowed. Disallowance expenditure in the liquor expenses - assessee failed to produce any supporting evidence as well as books of accounts - CIT(A) restricted the disallowance by estimating the net profit of the assessee at 4% in the liquor business - Held that - This issue is identical as raised in the ground no. (i), therefore, having regard to the facts and circumstances of the case and our finding in respect of the ground no. (i). We think it proper and reasonable to estimate the income in the liquor business @ 5%. The impugned order of the ld CIT(A) is accordingly modified. This ground is Revenue is party allowed. Addition u/s 68 - unexplained cash deposit - Held that - We find that when the Assessing Officer has made the addition on various heads and part of which was sustained by the CIT(A) amounting to many times more than this deposit made in the bank account then the assessee is entitled for the benefit of telescopic to the extent of the other addition sustained by that appeal. Hence, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Unexplained loan account to various persons - addition deleted by the ld. CIT(A) by giving the benefit of telescopic - Held that - Once the Assessing Officer has accepted the agricultural income of more than ₹ 50 lacs then accepting the claim by the ld. CIT(A) to the tune of ₹ 34 lacs in bank deposit which is specifically shown as sale proceed of food soyabin cannot be found fault with. Hence, to the extent of sources of deposit of ₹ 34 lacs we do not find any error or illegality in the order of the ld. CIT(A). As regards the balance amount of ₹ 63 lacs the ld. CIT(A) has deleted the said addition by considering the fact that the turnover of assessee from the transport and liquor business is ₹ 8.22 crores, therefore, the said amount of ₹ 63 lacs can be sourced from the receipt of wine and transport business. He further noted that the closing balance in the account of the assessee was only ₹ 3,13,001/- and therefore the deposit were made by the assessee throughout the year under consideration. Since this deposit was not in lump sum but spread over during the year therefore, we do not find any reason to interfere with the order of the ld. CIT(A) by accepting the source of the deposit as receipt from the wine and transport business. As regards the benefit of telescopic of ₹ 12,01,000/- when the addition sustained by the ld. CIT(A) exceeds the cumulative amount of deposits in the bank and advance given to the party then we do not find any error or illegality in granting the said benefit of telescopic.
Issues Involved:
1. Deletion of disallowance of ?23,98,756 out of total disallowance of ?34,00,216 made by AO in transport business. 2. Deletion of disallowance of ?8,91,071 out of total disallowance of ?16,97,753 made by AO in liquor business. 3. Deletion of addition of ?1,09,01,000 made by AO under Section 68 for unexplained cash deposits. 4. Deletion of addition of ?14,00,000 made by AO under Section 68 for unexplained cash deposits. 5. Deletion of addition of ?2,10,580 made by AO for unexplained loans given to various persons. Detailed Analysis: 1. Deletion of Disallowance in Transport Business: The AO disallowed ?34,00,216 in transportation expenses due to the assessee's failure to produce books of accounts and supporting documents. The CIT(A) estimated the income from transportation at 5% and restricted the disallowance to ?10,01,460, thereby deleting ?23,98,756. The Tribunal noted that the assessee failed to produce evidence but found the AO's disallowance resulting in a net profit rate of 12.70% to be excessive. The Tribunal upheld the CIT(A)'s estimation of 5% net profit as reasonable, considering the nature of the transport business and past profit rates. 2. Deletion of Disallowance in Liquor Business: The AO made a disallowance of ?16,97,753 due to lack of supporting evidence. The CIT(A) restricted this by estimating net profit at 4%. The Tribunal found this issue similar to the transport business and modified the CIT(A)'s order to estimate the income at 5%, thus partly allowing the Revenue's appeal. 3. Deletion of Addition for Unexplained Cash Deposits of ?1,09,01,000: The AO added ?1,09,01,000 as unexplained cash deposits under Section 68, noting the assessee failed to provide supporting evidence. The CIT(A) accepted the explanation for ?34,00,000 as sale proceeds of food soyabean and presumed the balance ?63,00,000 to be from agricultural produce, wine, and transport business receipts. The Tribunal upheld this, noting the AO accepted agricultural income of over ?50,00,000 and the turnover from transport and liquor business was ?8.22 crores. The Tribunal found no error in the CIT(A)'s deletion of the addition. 4. Deletion of Addition for Unexplained Cash Deposits of ?14,00,000: The AO added ?14,00,000 as unexplained cash deposits. The CIT(A) granted telescopic benefit, considering the sustained additions as the source of these deposits. The Tribunal upheld this, noting the cumulative additions sustained by the CIT(A) exceeded the deposits, thus finding no error in the CIT(A)'s order. 5. Deletion of Addition for Unexplained Loans of ?2,10,580: The AO added ?2,10,580 for unexplained loans. The CIT(A) granted telescopic benefit, considering the sustained additions as the source. The Tribunal upheld this, noting the sustained additions exceeded the cumulative amounts of deposits and loans, thus finding no error in the CIT(A)'s order. Conclusion: The Tribunal partly allowed the Revenue's appeal, modifying the CIT(A)'s order to estimate the income in the liquor business at 5% instead of 4%. The Tribunal upheld the CIT(A)'s decisions regarding the transport business, unexplained cash deposits, and unexplained loans, finding the CIT(A)'s estimations and telescopic benefits reasonable and justified.
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