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2019 (12) TMI 1112 - ITAT CUTTACKEstimation of turnover - CIT(A) resorting to the weighted average method - appellant has shown gross receipts from retail trading on the basis of turnover - counsel submitted that the assessee has shown income as per provisions of section 44AF - HELD THAT:- Undisputedly, for the relevant assessment year, the appellant has disclosed total gross receipts of ₹ 28,98,562/- and shown net profit @ 10% to arrive at business income of ₹ 2,89,856/-, which is higher than the rate of 5% prescribed by the legislature for computing the profits and gains of retail business, who have turnover less than ₹ 40 lakhs during the relevant financial period. Therefore, as noted that the assessee herself has shown higher percentage of net profit of the turnover. Since there is no dispute regarding estimation of net profit, therefore, no further addition is required on this point. From the assessment as well first appellate order, unable to see any valid reason or show cause to the assessee by the authorities below before making any addition on account of closing stock found during the survey. It is well established principle of business of accounting that if the assessee’s income of the assessee has been shown or estimated u/s.44AF then the assessee is not required to maintain any books of account and no further addition or disallowance is called for regarding his trading expenditure or any other account. Therefore, the addition made on the basis of closing stock found during the survey cannot be held as sustainable. I may point out that even if the authorities below want to tinker the point of closing stock found during the survey, then they are also required to consider the opening stock of the assessee at the beginning of the financial year i.e. on 1.4.2009 otherwise, addition on account of closing stock cannot be made in the hands of the assessee especially when the assessee herself is showing higher percentage of net profit on the turnover undertaken during the relevant financial period. Accordingly, Ground No.B is allowed. Unexplained investment - appellant could not produce any evidence before the CIT(A) to justified the source of such income - assessee is legal heir of parents and got all the movable and immovable property after their demise - HELD THAT:- AO has made addition by invoking the provisions of section 69 of the Act without any specific provisions of the Act and the assessee has substantially established that she had sufficient source of funds in the form of her accumulated saving for the last 15 years, against sale of property and jewellery and other valuables received from her parents on their death. Therefore, unable to agree with the contention of the lower authorities for making the addition and confirming the same. - Decided in favour of assessee.
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