9911796707
TMI Blog2024 (9) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... he certificates issued by the VRO as well as the copy of the return of income filed by the assessee s brother Mr. Y. Rajasekhara Rao for the AY 2014-15 and 2015-16. On perusal of all these documents as well as the submissions of the assessee, the assessee s family members are having agricultural income and the assessee s brother is also having creditworthiness to advance loan to the assessee. We hereby grant relief to the assessee to the extent of Rs. 5 lakhs towards agricultural income and Rs. 2 lakhs towards the loan availed from the assessee s brother Mr. Y. Rajesekhara Rao as explained out of Rs. 15 lakhs additions made u/s. 69 AO s estimation of 5% of the total value of the stock put to sale as profit in the liquor business of the assessee - HELD THAT:- It is an undisputed fact that the assessee was engaged in the liquor business. During the proceedings before the Ld. Revenue Authorities, the assessee has not produced sales bills in support of the sales admitted during the year in the Trading and P L Account and has also not produced any books of account for verification. Under these circumstances, the Ld. AO proposed to reject the book results of the assessee and resorted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been received from his family members. Therefore, the Ld. AO issued a show cause notice dated 03/12/2018 and communicated the Ld. AO s proposal for estimation of income. However, there was no response from the assessee and therefore the Ld. AO proceeded to complete the assessment. During the assessment proceedings, the Ld. AO observed that the assessee has claimed (i) Rs. 10,84,000/- as his own capital in the business; (ii) Rs. 10,00,000/- as funds received from family members out of their agricultural income and Rs. 5,00,000/- received from the assessee s brother. On perusal of the assessee s submissions and the evidences placed before him, the Ld. AO made addition of Rs. 15,00,000/- as unexplained investment u/s. 69 of the Act. Further, the Ld. AO estimated the income of the assessee from liquor business ie., @ 5% on the total stock put to sale (Rs. 3,62,48,715/-) which worked out to Rs. 18,12,435/- and brought the same to tax. Accordingly, the Ld. AO completed the assessment u/s. 143(3) of the Act and determined the total income of the assessee at Rs. 35,65,398/- and passed the order dated 11/12/2018. The Ld. AO also initiated the penalty proceedings u/s. 271(1)(c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment? (ii) Whether the Ld. CIT(A)-NFAC is justified in confirming the Ld. AO s estimation of 5% of the total value of the stock put to sale as profit in the liquor business of the assessee? 5. At the outset, on the first issue, the Ld. AR submitted that the assessee s family members hold 7.02 Acres of agricultural land from which they earn around Rs. 3.5 lakhs to Rs. 4 lakhs per year and therefore the assessee s family members have contributed funds in the business of the assessee out of their agricultural income. The Ld. AR further submitted that in support of the assessee s claim, the assessee has also produced confirmation letters from the family members along with Pattadar Passbooks of the family members in support of their landholdings. The Ld. AR further submitted that, in addition to the above, during the AY under consideration the assessee has taken loan of Rs. 2 lakhs from his brother Sri Y. Rajasekhara Rao. Furthermore, to prove the creditworthiness of Y. Rajasekhara Rao, the assessee has also furnished his return of income before the Ld. AO. However, the Ld. AO did not consider the submissions and documentary evidences submitted by the assessee, and made an addition of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Before me, the assessee has also produced the copies return of income his family members, confirmation letters from the assessee s family members, Pass Books of the assessee s family members evidencing their agricultural land holdings and the certificates issued by the VRO as well as the copy of the return of income filed by the assessee s brother Mr. Y. Rajasekhara Rao for the AY 2014-15 and 2015-16. On perusal of all these documents as well as the submissions of the assessee, I am of the considered opinion that the assessee s family members are having agricultural income and the assessee s brother is also having creditworthiness to advance loan to the assessee. Considering these facts and circumstances of the case, I hereby grant relief to the assessee to the extent of Rs. 5 lakhs towards agricultural income and Rs. 2 lakhs towards the loan availed from the assessee s brother Mr. Y. Rajesekhara Rao as explained out of Rs. 15 lakhs additions made u/s. 69 of the Act. Accordingly, the Ld. AO is directed to grant relief to the assessee as above. It is ordered accordingly. Thus, the first issue raised by the assessee is partly allowed. 8. At the outset, on the second issue, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby extracted as under: 9. We have heard the rival contentions and perused the materials on record and the orders of the Authorities below. Admitted f acts are that the assessee f ailed to produce any evidence in support of sales made and hence the Ld. AO rejected the books of account and estimated the income @ 20% of the stock put to sale. The reliance placed by the Ld. AR in the decision of the Coordinate Bench of the Tribunal in the case of Majji Naga (supra) and Tangadu Jogisetty in ITA No. 96/Viz/2016 (supra) deserves consideration. Respectfully following the decisions of the Coordinate Bench of the Tribunal we hereby direct the AO to estimate the net prof it @ 5% of the purchase price of the stock which was put to sale which is net of deductions. Accordingly, ground no.3 raised by the assessee is partly allowed. 11. Respectfully following the above decision of the Division Bench of this Tribunal, which is binding on me, I hereby uphold the decision of the Ld. CIT(A)-NFAC in sustaining the decision of the Ld. AO in estimating the net profit @ 5% of the purchase price of the stock that was put to sale which is net of deductions. Accordingly, this issue raised by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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