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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 ..... sessment year 2011-12 on 26.9.2011 declaring total income of Rs. 2,71,050/-, besides agricultural income of Rs. 4,74,000/-. The case was selected for scrutiny and accordingly, notice u/s 143(2) & 142(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') along with questionnaire were issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished books of accounts and other details called for. The assessment was completed u/s 143(3) of the Act, determining the total income of Rs. 66,05,655/-. While completing the assessment, the assessing officer rejected books of accounts u/s 145 of the Act and estimated net profit of 20% on total stock put to sale. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & loss account. The A.O. further was of the opinion that the assessee could not produce stock registers and also failed to furnish quantitative details relating to sales and closing stock. Therefore, rejected books of accounts and estimated net profit of 20% on total stock put for sale. It is the contention of the assessee that net profit estimated by the A.O. is very much on higher side. The assessee further contended that under similar facts and circumstances and similar nature of businesses, ITAT, Visakhapatnam in several cases has directed the A.O. to estimate net profit of 5% on total stock put to sale. In this regard, relied upon the decision of ITAT, Visakhapatnam in the case of K. Hema Sundar Rao and Others in ITA No.616/Vizag/2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages Corporation Ltd. and the prices of the products are fixed by the State Government. The assessee being a license holder of State Government cannot sell the products over and above the MRP fixed by the State Government. We find force in the arguments of the assessee for the reason that the A.O. has estimated the net profit by relying upon the decision of A.P. High Court in the case of CIT Vs. R. Narayana Rao in ITA No.3 of 2003 which is rendered under different facts. The A.P. High Court has considered the case of an arrack dealer, whereas, the assessee is into the business of dealing in IMFL. Therefore, we are of the view that the A.O. was not justified in relying upon the judgement, which was rendered under different facts to estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the purchases made net of all other deductions. The assessing officer should also bear in mind that in no case the income determined should be below the income returned." 9. Considering the facts and circumstances of this case and also respectfully following the ratios of coordinate bench, we are of the view that the net profit estimated by the A.O. by relying upon the decision of Hon'ble A.P. High Court (supra), which was rendered under different facts is quite high. On the other hand, the assessee relied upon the decision of coordinate bench and the coordinate bench under similar circumstances estimated the net profit of 5% on total purchases net of all deductions. No contrary decision is placed on record by the revenue to take any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made additions of Rs. 22,08,240/- u/s 68 of the Act towards unexplained, unsecured loans. During the course of appellate proceedings, the assessee has filed additional evidences in the form of confirmation letters along with proof of income tax returns filed by the creditors. The CIT(A) forwarded additional evidences filed by the assessee to the assessing officer for his comments. The A.O. vide his remand report dated 12.6.2015, has commented on additions made by the A.O. towards unsecured loans. The CIT(A) after considering the additional evidences filed by the assessee and also taken into account the remand report of the A.O., has deleted addition towards 5 unsecured loans out of 8 unsecured loans accepted by the assessee. In so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have enough source of income to explain the loans given to the assessee. Therefore, we are of the view that A.O. was incorrect in making additions u/s 68 of the Act. The CIT(A) without appreciating the facts simply confirmed additions made by the A.O. Hence, we direct the A.O. to delete additions 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 addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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