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2015 (11) TMI 1204 - AT - Income TaxEstimation of rate of net profit from business - CIT(A)estimated @ 4% as against 8% adopted by AO after rejecting the books of accounts - Held that:- We find that the assessee had not disclosed one savings bank account with Allahabad Bank Gariahat Branch in his books and hence the Learned AO was justified in rejecting the books of accounts and determining the profits on an estimated basis u/s 145(3) of the Act. We find that the Learned CITA had considered the average net profits declared by the assessee in the earlier years and accordingly had determined the net profit at 4% of gross receipts which in our opinion is reasonable in the facts and circumstances of the case. Hence we are not inclined to interfere with the order of the Learned CITA in this regard. - Decided against revenue Increase the turnover - undisclosed bank account of the assessee - CITA increasing the turnover by the amount credited in the undisclosed bank account and directing the Learned AO to compute net profit @ 6% as business income - Held that:- CIT(A) found that the assessee was not able to prove the credits in the said bank account to the extent of ₹ 22,25,000/- and held that the same has to be construed as turnover of the assessee and net profit to be determined at the rate of 6% thereon as he found that profits from undisclosed business would normally be higher than the regular business profits as the assessee need not incur certain expenditure thereon. We also find that the finding given by the Learned CITA that the only source of income of the assessee is his income from contract / sub contract business has not been refuted by the revenue. Hence we are in agreement with the findings given by the Learned CITA in this regard. - Decided against revenue Addition on undisclosed sundry debtor - CIT(A) deleted the addition - Held that:- CITA had given a categorical finding of the manner in which the security deposit was created in the earlier years and these findings have not been refuted by the revenue . Moreover, we hold that since the security deposits were made in the earlier years, the same cannot be the subject matter of addition as undisclosed income u/s 69 of the Act in the assessment year under appeal. Hence we are not inclined to interfere with the findings of the Learned CITA in this regard. - Decided against revenue Addition towards interest on fixed deposits - business income OR income from other sources - CIT(A) deleted the addition - Held that:- We are not in agreement with the arguments of the Learned AR that the fixed deposits were used as a security for availing overdraft facility by the assessee for the purpose of his business and hence the interest income derived thereon has got direct business nexus and has to be construed only as business income. It is seen that the entire books of accounts of the assessee has been rejected by the Learned AO which is also accepted by the assessee due to certain defects. We find that the Learned CITA had only accepted to the contentions stated by the assessee during first appellate proceedings and proceeded to accept the claim of the assessee. No evidences were produced to support the contentions of the assessee in this regard either before the Learned CIT(A) or before us. In the absence of clear evidences to prove the business nexus of investing the fixed deposits, the resultant interest income had to be taxed only as income from other sources. - Decided in favour revenue
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