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TMI Blog2013 (12) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... is - The issue was restored for fresh adjudication. X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions of the jurisdictional ITAT on the similar issue and facts. It is an established fact that where books are not reliable, the estimation may be resorted but such estimation should be based on reasonable and comparable basis. The appellant brought the decision of the Hon'ble ITAT, Hyderabad in the case of Kanaka Durga Wines, to the notice, where in, the net profit on stocks I purchase is estimated at 3% as indicated. However, identical issue has been examined in appeal by the jurisdictional ITAT in a more recent decision, in the case of M/s. Amaravathi Wine Shop, in ITA No. 1196/Hyd/2011 dt. 08.06.2012. The Hon'ble ITAT "B" Bench, Hyderabad, in the case have held as under: "........we set aside the order of the CIT(Appeals) and directed the Assessing Officer to estimate the net profit at 5% of the purchase or stock put for sale during the year subject to the assessed income not less than the returned income. " 5.3 On the similarity of the facts of the case under appeal to the decision of Hon'ble ITAT's latest decision in the case of M/s. Amaravathi Wines, as referred above, I am of the considered opinion that the profits at the rate of 5 0 /0 on purchases or stocks put fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have appreciated the addition u/s. 68 of I.T. Act is independent from estimation of prof it as held by Hon'ble Supreme Court in the case of Kale Khan Mohammed Hanif vs. CIT (1963) 50 ITR 1 and CIT vs. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194, 196". 6. The Assessing Officer noticed from the balance sheet that the partners have made additions to the capital totalling to Rs.14,40,000/- during the financial year under consideration. As assessee could not explain the source along with the documentary evidence, the Assessing Officer brought the amount to tax as unexplained cash credit under section 68 of the I.T. Act. The assessee objected to the same before the CIT(A) and relied on the decisions of the jurisdictional High Court in the case of Indwell Constructions vs. CIT (232 ITR 776) and Maddi Sudarshanam Oil Co. Vs. CIT (1959) 37 ITR 369 (AP). The learned CIT(A) while holding that on merits there is no error in treating the said amounts as unexplained credits of the firm, deleted the addition relying on the above two decisions relied upon by the assessee. The order of the learned CIT(A) is as under: "6.3. I have gone through the submissions of the appellant. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal High Court was with reference to disallowance under section 40b and the Hon'ble jurisdictional High Court has analysed the computation of income under the head "Business" from sections 28 to 44D. Therefore, the principles laid down in the said decision are to be applied only to the extent of computation of income under the head "Business". However, as far as the addition of cash credits under section 68 and 69 are concerned, the Hon'ble Supreme Court is very clear on this issue. In fact, the principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. Devi Prasad Vishwanath Prasad, 72 ITR 194(SC) are as under: "There is nothing in law which prevents the ITO in an appropriate case in taxing both the cash credit, the nature and source of which is not satisfactorily explained, and the business income estimated by him under section 13 of the Indian Income-tax Act, 1922, af ter rejecting the books of account of the assessee as unreliable. Where there is an unexplained credit, it is open to the ITO to hold that it is income of the assessee, and no further burden lies on the ITO to show that that income is from any particular source. It is for the assessee to prove that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an inference drawn by the Tribunal is one of law or of fact is not a question which can arise out of the decision of the Tribunal and a question in that form cannot be referred to the High Court u/s 66 of the Indian Income-tax Act, 1922." (Emphasis supplied) 9. As can be seen from the above ratio laid down by the Hon'ble Supreme Court, the AO was not precluded from adding any unexplained cash credit as undisclosed income of the business and it is for Assessee to adduce evidence that the same is not taxable. Therefore, we are not in agreement with the decision of the Ld.CIT(A). 10. Accordingly, since the issue is covered in favour of the Revenue by the Order of the Hon'ble Supreme Court in the cases relied in the grounds (supra), we have no hesitation in setting aside the Order of the CIT(A). However, we are of the opinion that assessee should be given one more opportunity in explaining the credits in the capital accounts of the partners of the firm. Therefore, to the extent of addition under section 68 of the Act made by the Assessing Officer the issue is restored to the file of the Assessing Officer for giving one more opportunity to the assessee to explain the source and if the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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