TMI Blog2017 (8) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... in the order of the CIT(A) and the same is upheld. The assessee’s ground of appeal on the issue is dismissed. Addition towards other income - Held that:- We agree with the assessee that since the income is estimated by rejecting the books of accounts, no separate addition required to be made on account of further expenditure/income. The assessee stated that the income was earned on the deposits made as guarantee deposit. The deposit made for securing the guarantee in connection with the setting up of business required to be considered while estimating the business income and the same cannot be taken as separate source. Therefore, once the business income is estimated, no separate addition required to be made towards the interest. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard both the parties, perused the materials available on record and gone through the orders of the authorities below. 7. The very same issue of estimation of profit in the trade of IMFL was considered by the coordinate bench of the Tribunal in the case of Tangudu Jogisetty in ITA No.96/Vizag/2016 by order dated 2.6.2016 and held that estimation of 5% net profit on purchase is reasonable and directed the A.O. to estimate the net profit of 5% on total purchases net of all deductions. The relevant portion of the order is extracted as under: 8. We have heard both the parties, 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the net profit. On the other hand, the Ld. A.R. for the assessee, relied upon the decision of ITAT, Visakhapatnam 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. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 other view of the matter than the view so taken by the coordinate bench. Therefore, we direct the A.O. to estimate the net profit of 5% on total purchases net of all deductions. Ordered accordingly. 8. We respectfully following the above order of the coordinate bench of the Tribunal, we set aside the order passed by the Ld. CIT(A) and direct the A.O. to estimate the profit from the business of the assessee by applying the rate of 5% of the purchases made net of all other deductions. 9. Regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant assessee had explainable sources by way of brought forward capital or loans/different amounts received from outside sources due credit has been given. That is the reason why the A.R. had signed in the order sheet, before the undersigned accordingly. 10. During the appeal hearing, the Ld. A.R. argued that once the books of accounts are rejected and the income is estimated, no separate addition required to be made relating to any other expenditure or investment. The assessee further relied on the decision of A.P. High Court in the case of Maddi Sudarshanam Oil Mills Co. Vs. CIT (37 ITR 369) and Indwell Constructions Vs. CIT 232 ITR 776 (A.P.). In the assessee s case, the investment was made in the beginning of the year for payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment of ₹ 13,23,611/-, therefore, we do not find any infirmity in the order of the CIT(A) and the same is upheld. The assessee s ground of appeal on the issue is dismissed. 11. With regard to addition of ₹ 48,200/- towards other income, we agree with the assessee that since the income is estimated by rejecting the books of accounts, no separate addition required to be made on account of further expenditure/income. The assessee stated that the income was earned on the deposits made as guarantee deposit. The deposit made for securing the guarantee in connection with the setting up of business required to be considered while estimating the business income and the same cannot be taken as separate source. Therefore, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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