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2019 (5) TMI 426 - AT - Income TaxEstimation of income - rejection of books of accounts - estimation of income at 5% - HELD THAT - As relying on SRI VENKATESWARA WINES VERSUS THE INCOME TAX OFFICER, WARD 10 (4) , HYDERABAD. 2015 (11) TMI 1746 - ITAT HYDERABAD direct the AO to adopt 3% of the cost of goods of liquor sold as the income of the assessee. Accordingly, the grounds raised on this issue are allowed. Addition of interest from bank deposit - AO made this addition under the head income from other sources - AR has submitted that interest income earned are out of deposits, which are made only for the purpose of business - HELD THAT - We remit this issue back to the AO to verify the interest income. If it is earned out of free deposits, the additional income may be sustained. Addition u/s 68 - petition for admission of the additional evidences - HELD THAT - We admit the additional evidences (supra) submitted by the assessee, as the same are important evidences to decide the issue. Since the additional evidences submitted before the ITAT for the first time, the revenue authorities had no occasion to consider the same. Remit the issue back to the file of the AO with a direction to consider and verify the additional evidences submitted by the assessee and decide the issue in accordance with law after providing an opportunity of being heard to the assessee in the matter. Thus, this ground is allowed for statistical purposes.
Issues Involved:
- Estimation of income at 5% - Rejection of books of account - Addition of interest income from bank deposits - Treatment of cash credits in bank account as income - Admission of additional evidences Estimation of Income at 5%: The appeal challenged the estimation of income at 5% by the Assessing Officer (AO) for the AY 2013-14. The Tribunal referred to previous decisions and directed the AO to adopt 3% of the cost of goods sold as the income of the assessee. This decision was based on the principle that 3% of the cost of goods sold was considered reasonable in the line of business, as established in previous cases. Rejection of Books of Account: The CIT(A) confirmed the AO's decision to reject the books of account, leading to the estimation of income at 5%. The Tribunal upheld the rejection of books of account due to the assessee's failure to maintain them. This failure justified the estimation of income, with the Tribunal focusing on the appropriate rate of estimation rather than the rejection itself. Addition of Interest Income from Bank Deposits: The AO added ?55,516 as interest income from bank deposits under the head of income from other sources. The Tribunal remitted this issue back to the AO for verification, emphasizing that if the interest income was earned from free deposits, the additional income could be sustained. Treatment of Cash Credits as Income: Regarding the addition of ?31,09,500 as cash credits into the bank account, the AO observed discrepancies in the explanations provided by the assessee. The Tribunal noted that the assessee failed to provide sufficient evidence to prove the sources of these credits, leading to the addition of the amount under section 68 of the IT Act. The CIT(A) upheld this addition, prompting the assessee to submit additional evidences before the Tribunal for the first time. Admission of Additional Evidences: The Tribunal admitted the additional evidences submitted by the assessee, considering them crucial to deciding the issue. As these evidences were not presented before the lower authorities, the Tribunal remitted the issue back to the AO for further examination based on the new evidence. This decision allowed the appeal of the assessee for statistical purposes.
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