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TMI Blog2016 (12) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made towards unsecured loans received from G. Narayana Swamy and K. Rama Rao. In so far as unsecured loans received from G. Veera Swamy, the assessee failed to prove the credit by filing necessary identity, creditworthiness and genuineness of the transactions. Even before us, the assessee failed to file any details with regard to the unsecured loans accepted from G. Veera Swamy. Therefore, we are of the view that the A.O. has rightly made additions towards unsecured loans received from G. Veera Swamy, accordingly, additions made by the A.O. are upheld. - I.T.A.No.415/Vizag/2015 - - - Dated:- 23-12-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f net profit from 20% to 10% on total stock put to sale. In so far as additions towards unexplained credits being unproved, unsecured loans, the CIT(A) confirmed additions of Rs. 10,25,246/- and balance amount of Rs. 11,83,000/- is deleted. Similarly, the CIT(A) deleted additions towards unexplained investments of Rs. 9,13,951/- by holding that source in the form of unsecured loans is available to explain the unexplained investment of Rs. 9,31,951/-, accordingly directed the A.O. to delete additions towards unexplained investment. In so far as additions towards interest income, the CIT(A) confirmed action of the A.O. in bringing to tax interest income under the head income from other sources . Aggrieved by the CIT(A) order, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the materials available on record and gone through the orders of the authorities below. The A.O. estimated net profit of 20% on stock put for sale. The A.O. was of the opinion that the assessee has not maintained proper books of accounts and vouchers in support of purchases and sales. The A.O. further observed that the assessee has failed to maintain stock registers and books of accounts maintained by the assessee are not susceptible for verification, therefore rejected the books of accounts and estimated net profit of 20% by relying upon the decision of Hon ble A.P. High Court. It is the contention of the assessee that the net profit estimated by the A.O. is quite high when compared to the nature of business carried on by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder similar circumstances held that estimation of 5% net profit on purchases is reasonable. The relevant portion of the order is reproduced hereunder: 3. We have heard the parties, perused the orders of the revenue authorities as well as other materials on record. It is the contention of the Ld. A.R. that the estimation of profit at 16% is high and excessive considering the normal rate of profit in this line of business. Whereas, the Ld. D.R. supported the order of the CIT(A). Having considered the submissions of the assessee, we are of the view that the issue is no more res integra in view of a series of decisions of the ITAT Hyderabad bench in similar cases. The coordinate bench in case of ITA No.127/Hyd/12 and others dated 18.05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we direct the A.O. to estimate net profit of 5% on total stock put to sale net of all deductions. 6. The next issue that came up for our consideration is addition towards unproved, unsecured loans u/s 68 of the Act. The A.O. made addition towards unsecured loans for the reason that the assessee failed to prove the identity, genuineness of the transactions and creditworthiness of the parties. It is the contention of the assessee that he had furnished confirmation letters from loan creditors and also proved the genuineness of the transactions and creditworthiness of the parties. The assessee further contended that the creditors have source of income to prove the creditworthiness and also furnished proof of income tax returns filed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, opined that genuineness of the transactions has not been proved. 8. We do not find any merits in the findings of the CIT(A), for the reason that the assessee has filed confirmation letters from G. Narayana Swamy and K. Rama Rao along with bank statements and income tax returns filed for the year 2009-10. On perusal of the details filed by the assessee, we find that the creditors have accepted that they had given loans to the assessee by way of demand drafts. The creditors also filed necessary evidences to prove the genuineness of the transactions and creditworthiness. Once the initial onus is discharged by filing confirmation letters along with proof of income, the A.O. was incorrect in making additions u/s 68 of the Act. If at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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