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2022 (11) TMI 67 - ITAT VISAKHAPATNAMRevision u/s 263 - sources of cash deposits and low profit on turnover over the preceding year - HELD THAT:- Admitted facts are that the assessee is engaged in the business of purchase and sale of Cull Birds which is predominantly in cash. From the comparative statement filed by the Ld. AR, we find that the assessee has earned its profit percentage of 0.76% on the turnover. It is also found from the order of the Ld. AO that the Ld. AO has verified the ledger account copies of purchases and sales, month-wise bills / vouchers for the expenditure incurred, stock ledger and closing stock valuation. AO has not relied on the books due to the fact that most of the bills do not have details of transactions and the expenditure is supported by self-made vouchers AO estimated the profit @ 0.85% of the turnover. Since the books of accounts could not be relied upon the only option available to the Assessing officer is to estimate the income and accordingly he has estimated the income without mentioning the facts in the assessment order that he has rejected the books of accounts. In this trade of purchase and sale of Broilers and Cull Bird, segregation of sale bills and the veracity of the assessee’s transactions are practically difficult and hence the books of accounts cannot be relied upon. In these circumstances AO has estimated the net profit which is considered reasonable. Further, the net profit ratio of 0.76% declared by the assessee in the earlier years was not disputed by the Ld. AO. We therefore, find the estimation is reasonable and the order of the AO is not erroneous or prejudicial on this ground. Agricultural income - AR submitted that it has been received from the Andhra Pradesh Civil Supplies Corporation into Canara Bank account of the assessee. It was also submitted that the assessee’s daughter who was owning agricultural lands and a copy of the Pattadar Pass Book was submitted as a proof of such ownership. The daughter of the assessee Ms. Gude Kalyani also submitted that she derived the agricultural income and has gifted the same to her father due to his illness. The assessee has mistakenly disclosed this as an agricultural income while filing his return of income. The observation of the Pr. CIT that the assessee did not claim any expenditure for earning such income could not be accepted because of the fact of confirmation of gift received from the assessee’s daughter where she has earned agricultural income. Cash payments to M/s. CPF (India) Private Limited the Ld. Pr. CIT has invoked the provisions of section 40(A)(3) and observed that exemption under Rule 6DD of the IT Rules is not available for these transactions - As noted from the submissions of the assessee that the assessee has submitted SFT 13 for the cash payments to the suppliers of Broiler birds and poultry feedings. Since the Ld. AO has recorded in his order that he has verified the copies of purchases, sales, bills, vouchers, stock register etc., and has formed an opinion that the estimating the income at 0.85% of the turnover which amounts to verification by the Ld. AO and does not require invoking the provision of section 263 of the Act by the Ld. Pr. CIT by considering the order of the Ld. AO as erroneous and prejudicial to the interests of the Revenue. We therefore are of the considered view that the AO merely accepting the explanation of the assessee cannot be faulted merely because it could have been lawful to make more detailed inquiries or because he did not write specific reasons of accepting the explanation cannot be a reason to invoke the powers u/s. 263 of the Act. In view of the above discussions, we hereby vacate the impugned revision order and restore the order of the Ld. AO. Appeal of the assessee is allowed.
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