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TMI Blog2018 (1) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. Therefore, we remit the matter back to the file of the AO to reexamine the issue whether the cash credit made in the books of accounts relating to 18 lakhs was business income or not and reconsider the issue afresh on merits. Unexplained gifts - Held that:- The assesseee is sister-in-law of Sri T.V.Ramana Murthy who is working as APSRTC driver, Gr.I for the last 10 years and as per the salary certificate, his gross salary is around 25,000/-. To support the business of his brother’s wife, Sri T.V.Ramana Murthy has stated to given a gift of 1.5 lakh. He has filed the confirmations and the source was explained as salary savings. Since the creditor is identified and having salary income of 25,000/- per month, we are of the view that there is no case for suspecting the gift and making the addition of 1,50,000/- relating to gift received from Shri T.V.Ramana Murthy. Accordingly addition made by the AO amounting to 1.5 Lakh out of the total addition of 20,68,500/- is deleted. With regard to the balance amount of 19,18,500/-, the assessee did not place any evidence to controvert the finding of the Ld.CIT(A). Therefore, we uphold the order of the CIT(A) and confirm the addition of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has not maintained any stock register and not produced sale bills, no quantitative details of sales effected. Therefore, the AO has estimated the net profit, clear of all expenses @ 20% of the stocks put to sale. On appeal, the Ld. CIT(A) granted the partial relief to the assessee by scaling down the percentage of profit from 20% to 10% of purchases and directed the A.O. to re-compute the income @ 10% of purchase price. 4. On being aggrieved, assessee carried matter in appeal before the Tribunal. At the time of hearing, the Ld. Counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the decision of the coordinate bench of this Tribunal where the Tribunal has scaled down the estimation of profit from 10% to 5% in the case of Tangudu Jogisetty in ITA No.96/Vizag/2016 by order dated 2.6.2016. 5. On the other hand, the Ld. D.R. strongly supported the order passed by the authorities below. 6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The issue involved in this appeal is estimation of profit in respect of IMFL business carried on by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isakhapatnam bench in the case of T. Appalaswamy Vs. ACIT in ITA No.65 & 66/Vizag/2012. We have gone through the case laws relied upon by the assessee in the light of the facts of the present case and finds that the coordinate bench of this Tribunal, under 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 18.05.2012 as well as a number of other cases have held that profit in case of business in Indian made foreign liquor has to be estimated at 5% of the purchases made by the assessee. Therefore, following the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has introduced the cash credits of ₹ 18 lakhs which was admitted as business income. The introduction of capital was on 2.7.2010. It is not furnished by the assessee when the assessee commenced the business whether the amount of ₹ 18 lakhs was generated out of business income or not required to be explained and established by the assessee. In case the sum of ₹ 18 lakhs represents business income, there is no reason to make a separate addition on account of cash credit. As per the Trading account there was no opening stock, hence it appears that the impugned assessment year would be the first year of business. For IMFL business the year starts from 1st July and the assessee had introduced the cash on 02.07.2010. The AO has not discussed the issue in the assessment order and the assessee has not established before us that sum of ₹ 18 lakhs was generated out of business income. Therefore, we remit the matter back to the file of the AO to reexamine the issue whether the cash credit made in the books of accounts relating to ₹ 18 lakhs was business income or not and reconsider the issue afresh on merits. 11. Ground No.4 is related to the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e In the hands of the assessee. However, any discrepancy as to the source in the hands of the creditor, Smt. Poojari Hymavathi may be considered in her hands. 5.3.3. A plea was also raised that once the books of account are rejected, then the AG is not justified in making addition to cash credits with reference to the same books of account. In support, the assesses relied on the decision of the Hon'ble AP High Court in the case of Maddi Sudarshanam Oil Mills Co. v. CIT(37 ITR 369) and Indwell Constructions v. CIT(232 ITR 776 AP). In this regard, it is relevant to note a similar issue as to whether addition u/s.68 or 69 could be made when the AD has estimated the income was dealt by the Hon'b!e ITAT, Hyderabad in the case of Smt. Sheba Gupta(ITA No.461/Hyd/2013, dtd.10.07.2013) wherein It was held that even if the income is estimated, the AO may invoke the provisions of Sec 68/69 of the Act The Hon'ble Tribunal followed the decision in the case of P.V.Sitaramaswamy Naidu in ITA No.26/Hyd/12 vide orderdt.9.1.2013 The Hon'ble Tribunal took the flew that unless the asessee, by independent and satisfactory evidence establishes that these amounts relate or referable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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