9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (12) TMI 212 - AT - Income TaxEstimation of income - estimating the profit @ 7.5% on sale of Imlo of old constructed building materials - assessee admitted that he has purchased old buildings on a due basis and he sold the imlo of demolished part of building to local ceramic manufacturer and scrapper in cash. Out of such cash, generated from the sale of imlo, cheque and demand draft were purchased from Angadiya to make payment - CIT(A) considering assessee has not maintained the books of account for the business carried by him and considering the deeming provision under section 44AD etc, estimated the profit of the assessee @ 7.5% only HELD THAT - The assessee has not discharged the onus imposed upon him for estimating the income based on comparable cases. Admittedly, the revenue has also estimated the income but without referring to the comparable cases. However, the revenue had to estimate the income in the absence of documentary evidence which was supposed to be provided by the assessee. Indeed, for estimating the income, the element of guesswork is always involved but the same should not be unrealistic. Primary onus lies upon the assessee which he failed to fulfil and therefore we are of the view that the income estimated by the learned CIT-A in the given facts and circumstances is reasonable and commensurate if the other facts of the assessee are seen in aggregation. As such, the assessee in the later years has purchased expensive cars and has also shown borrowed money but the assessee failed to justify the source of money for the purchase of cars as well as justifying the source of deposits in the bank. Thus, we are of the view that the profit estimated by the learned CIT-A is reasonable and commensurate with the activities carried on by the assessee. Hence the ground of appeal of the assessee is hereby dismissed. Estimating the household expenses from undisclosed sources - HELD THAT - AO and the learned CIT(A) found that the assessee has earned income from the sale of demolished material of building (imlo). As such the assessee claimed that that he earned net profit at ₹ 25 lakh after making payment of 6.5 crores whereas AO and CIT(A) estimated the profit @ 10% and 7.5% of ₹ 6.5 crore respectively. In either case, the assessee had sufficient income from the sale of imlo to meet his household expenses. Therefore, making separate addition on account of household expense in the given fact and circumstances will lead to double taxation which is not desirable under the provision of the Act. Thus, we hereby set-aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed. AO and the learned CIT(A) found that the assessee has earned income from the sale of demolished material of building (imlo). As such the assessee claimed that that he earned net profit at ₹ 25 lakh after making payment of 6.5 crores whereas AO and CIT(A) estimated the profit @ 10% and 7.5% of ₹ 6.5 crore respectively. In either case, the assessee had sufficient income from the sale of imlo to meet his household expenses. Therefore, making separate addition on account of household expense in the given fact and circumstances will lead to double taxation which is not desirable under the provision of the Act. Thus, we hereby set-aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed. Unexplained credit in bank account - Assessee argued deposits in the bank represent brokerage income and loans from friends and therefore no addition in the given facts and circumstances is warranted - HELD THAT - Admittedly, there were deposits in the bank account of the assessee and therefore the onus lies upon the assessee to justify the source of the same. But the assessee has not justified the same based on the documentary evidence. Accordingly in the absence of any explanation by the assessee about the source of money in the bank account, we have no other alternative except to confirm the order of the authorities below. Hence the ground of appeal of the assessee is hereby dismissed. Purchase of a car from undisclosed sources - assessee has purchased a Ford Car making a payment of the same by purchasing cheque from Angadiya in lieu of cash - HELD THAT - The revenue has not brought any iota of evidence suggesting that the earlier years income suffered to tax has been used for some other purposes either by way of making some investment or expenditure. Thus, in the absence of such information, it can be presumed that the amount of income which has suffered tax in the earlier year has been utilized for the purchase of the car. The earlier income after adjusting household expenses stands at ₹ 42.75 lakhs and the cost of the car purchased in the year comes at ₹ 21.25 lakhs only. Still the balance income available with the assessee stands at ₹ 21.50 Lakhs ( ₹ 42.75 lakhs - ₹ 21.25 lakhs). In view of the above, we hold that there was sufficient tax paid money available with the assessee which has been used for acquiring the car on hand. Therefore, no separate addition on account of purchase of car is required to be made. Hence, the ground of appeal of the assessee is hereby allowed.
Issues Involved:
1. Estimation of profit on sale of Imlo. 2. Estimation of household expenditure. 3. Unexplained credits in bank account. 4. Unexplained expenditure incurred from undisclosed sources. Summary: 1. Estimation of Profit on Sale of Imlo: The assessee challenged the addition of Rs. 41,55,750/- by estimating a 7.5% profit on the sale of Imlo. The Assessing Officer (AO) initially estimated a 10% profit due to lack of supporting documents, while the CIT(A) reduced it to 7.5% based on the deeming provisions under section 44AD. The Tribunal upheld the CIT(A)'s estimation, stating that the assessee failed to provide a basis for a lower profit rate and did not discharge the onus of proving the income from comparable cases. The Tribunal found the CIT(A)'s estimation reasonable and dismissed the assessee's appeal on this issue. 2. Estimation of Household Expenditure: The AO estimated the household expenses at Rs. 3 lakh from undisclosed sources, which the CIT(A) reduced to Rs. 1.5 lakh. The Tribunal noted that the assessee had sufficient income from the sale of Imlo to cover household expenses and making a separate addition would lead to double taxation. Therefore, the Tribunal directed the AO to delete the addition, allowing the assessee's appeal on this issue. 3. Unexplained Credits in Bank Account: For AY 2014-15, the AO treated Rs. 15.17 lakh credited in the assessee's bank account as unexplained, which the CIT(A) confirmed. The Tribunal upheld this addition, stating that the assessee failed to justify the source of the deposits with documentary evidence. 4. Unexplained Expenditure Incurred from Undisclosed Sources: - AY 2014-15: The AO added Rs. 21.25 lakh for the purchase of a Ford car from unexplained sources, which the CIT(A) confirmed. The Tribunal found that the assessee had sufficient tax-paid income from earlier years to cover this expenditure and directed the deletion of this addition. - AY 2015-16: The AO added Rs. 41,03,460/- for the purchase of an Audi car from unexplained sources, confirmed by the CIT(A). The Tribunal found that the assessee had Rs. 35.15 lakh of tax-paid income available from earlier years and directed the addition of only the remaining Rs. 5,88,460/- as unexplained expenditure. Conclusion: The Tribunal partly allowed the appeals for all the assessment years, confirming some additions while deleting others based on the availability of tax-paid income and the reasonableness of estimations. The orders were pronounced on 29/11/2023 at Ahmedabad.
|
