2023 (1) TMI 318 - AT - Income Tax

Estimation of turnover - CIT(A) estimated the profit @5% of the turnover - HELD THAT:- When the learned CIT(A) estimated the profit @5% of the turnover, the same in our opinion is justified and the assessee now cannot plead to restrict the profit @ 3% of the turnover. So far as the decision in the case of Karla Srinivasa Rao [2022 (4) TMI 588 - ITAT VISAKHAPATNAM] is concerned, we find the Assessing Officer in the said case estimated the income @ 5% by rejecting the books of account, since the assessee failed to furnish the details of expenses claimed in the P&L account as well as the stock register. However, in the instant case, as mentioned by the AO, neither the assessee has maintained any books of accounts nor any books of accounts were produced for verification either at the time of search proceedings or during the post search proceedings or assessment proceedings.

Therefore, the same decision, in our opinion, is not applicable to the facts of the present case. Even otherwise also, the assessee during the Course of assessment proceedings as well as appeal proceedings before the learned CIT(A) had requested to adopt the net profit rate of 5%. Under these circumstances, we do not find any infirmity in the order of the learned CIT(A) restricting the profit rate at 5% of the turnover. The ground raised by the assessee on this issue is accordingly dismissed.

Addition being interest from sundry debtors - HELD THAT:- Admittedly, the addition was made on the basis of statement recorded u/s 131 dated 15.3.2017 from Shri P. Hema Kumar Reddy who in his answer to question No.12 had stated that the assessee group charges interest @ 18% per annum uniformly.

Statement was not recorded from the assessee and the statement was recorded only on 15.3.2017. There is no iota of any evidence found during the course of search that the assessee has received any interest during the impugned A.Y nor the Assessing Officer questioned Shri P. Hema Kumar Reddy for the impugned A.Y. Nothing has been brought on record by the Assessing Officer that the debtors were questioned/confronted and that they have admitted to have given any interest to the assessee. Under these circumstances we are of the considered opinion that the addition being interest @ 18% from sundry debtors as on 31.3.2011 is not justified being added on surmises and presumptions. We, therefore, set aside the order of the CIT (A) on this issue and the grounds raised by the assessee on this issue are allowed.