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2014 (5) TMI 1073 - AT - Income TaxEstimation of profit at 10% on unaccounted turnover - Held that:- In the present case, when the assessee has admittedly not produced its books of accounts before the revenue authorities, there is no option left with them but to estimate the profit of the assessee. However, profit has to be estimated applying a reasonable rate. In the present case search has taken place on 12-9-2006 i.e., in financial year 2006-07 relevant to the asst. Year 2007-08. Therefore, taking it as a base we direct the Assessing Officer to estimate the profit on unaccounted turnover at double the rate of the average net profit declared by the assessee for the asst. Year 2007-08 and the preceding two assessment years i.e., asst. year 2005-06 and 2006-07. Further, the Assessing Officer must ensure that there cannot be inclusion of disclosed turnover while estimating profit from undisclosed turnover as per the seized material. In other words, turnover already disclosed should be excluded from the unaccounted turnover. Following the decision of co-ordinate bench in case of Sri Ravinder Kumar (2013 (6) TMI 739 - ITAT HYDERABAD), we direct the Assessing Officer to allow telescoping of the unaccounted income at the hands of the partners while considering investments made by them.- Decided in favour of assessee in part Addition u/s 69C on account of unexplained purchases - Held that:- It is not disputed that the Assessing Officer himself has accepted the fact that the entries made in the loose papers represent unaccounted sales of the assessee. It is also a fact that the Assessing Officer has estimated profit on such unaccounted sales turnover. That being the case, it is not reasonable on the part of the Assessing Officer to make additions on account of unaccounted purchases on the basis of the same entries as found recorded in the seized documents. Therefore, the finding of the CIT (A) in this regard appears to be just and reasonable - Decided in favour of assessee Addition of unaccounted interest income - Held that:- Assuming for the sake of argument that the amounts mentioned by the Assessing Officer is correct, then it actually represent the sale shown on credit basis (sundry debtors) as held by the CIT (A). That being the case, no addition can be made at the hands of the assessee on account of interest on such credit sales as the sales relate to the firm “Jai Balaji Sanitary Stores and not the assessee. In the aforesaid circumstances, in our view, the addition made by the Assessing Officer has no legs to stand. - Decided in favour of assessee Addition as unexplained investment - Held that:- AR at the time of hearing before us as well in his written submission has submitted that assessee has neither purchased the land nor has paid the amount of ₹ 4,60,000/- to the persons concerned. In view of such submission, we are inclined to remit this issue to the file of the Assessing Officer to verify the claim of the assessee and decide the issue accordingly after affording a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Entitlement to exemption u/s 54F - Held that:- It is worthwhile to note here the co-ordinate bench of this Tribunal in case of Sri M.V. Subramanyeswara Reddy and others (2014 (4) TMI 71 - ITAT HYDERABAD ) and Shyamlal Tandon vs. ITO (2014 (4) TMI 867 - ITAT HYDERABAD ) held that if the property is a residential property but used for commercial purpose the nature and character of the property would not change so as to invalidate the claim of exemption u/s 54F of the Act. Following the aforesaid view of the co-ordinate bench and considering the factual aspect of this issue, we allow the claim of the assessee u/s 54F of the Act. - Decided in favour of assessee Addition as unaccounted income - Held that:- The amount received by the assessee on the dissolution of the firm was towards contribution made by him in the partnership business. Therefore, the amount received by him being a capital invested by him earlier in the partnership business cannot be treated as income of the assessee. We therefore direct the Assessing Officer to delete the same. - Decided in favour of assessee
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