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2014 (4) TMI 631 - AT - Income TaxEstimation of profit - Estimated unaccounted turnover of unaccounted receipts Held that:- The CIT(A) worked out the turnover on the basis unaccounted electricity charges worked out at ₹ 13,98,08,035 and estimated the profit on it at 2.76% - According to the CIT(A) unaccounted turnover is more than the accounted turnover - Instead of applying rate of profit at 2.76% as income on unaccounted turnover, it is appropriate to determine the net profit on the basis of mean rate of net profit which was worked at 2.06%, as recorded by the CIT(A) relying upon DCIT Central Circle, Vijayawada Versus M/s. Prakash Arts Moving Media [2010 (11) TMI 863 - ITAT VISAKHAPATNAM] - the AO is directed to recompute the net profit on unaccounted turnover at ₹ 13,98,08,035 by applying the mean rate of net profit as mentioned in CIT(A)'s order at 2.06% - Decided in favour of Assessee. Addition on account of estimated seed capital Unaccounted business carried on Held that:- The addition is made by the CIT(A) only on estimation basis though there is no whisper on this issue at the end of the AO which is nothing but enhancement of assessed income by CIT(A) without giving fair opportunity of hearing to the assessee - no information relating to the capital employed for the purpose of purchase of raw material outside the books of account was found during the course of search - the addition is only on surmises and conjectures which cannot be permitted in search assessment Decided partly in favour of Assessee. Genuineness of the transaction Validity of admission of additional evidence u/s 46A of the Rules Held that:- All 13 investors are of the family members/director of the assessee 5 company and out of them 9 are assessed to tax and they have furnished returns of income and investment is through banking channels - the CIT(A) deleted ₹ 30.25 lakhs pertaining to 9 parties and confirmed ₹ 4 lakhs from non 5 assessees Relying upon CIT vs. Lovely Exports [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - When the assessee furnished income 5 tax details, the burden cast upon the assessee is proved - If the Department has any doubt it could have proceeded against the investor and not against the assessee the addition cannot be made in the hands of the assessee - the same could be considered in the hands of the respective investors as unexplained investments u/s 69 of the Income Tax Act, 1961 there was no infirmity in the order of the CIT(A) - It is not possible to say that there is violation of Rule 46A of IT Rules Decided against Revenue. Unexplained credits in bank account Addition on account of protective basis - Held that:- CIT(A) was of the view that the additions are made by the AO on protective basis in the hands of the assessee - there is a confusion in mentioning of the bank account held jointly by Mr. Shivram K. Agarwal, the assessee and his wife Mrs. Vanita Agarwal at M/s Nasik Cooperative Urban Bank Ltd whose account number is 1624 - the company was shown as source of the cash deposits and also the end 5 user of the amounts for making out its expenditure in the form of electricity charges, the said amounts are offered for tax in the hands of M/s. Mahavir Ispat Pvt. Ltd thus, the AO is directed to delete the addition made on the protective basis in the hands of the assessee.
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