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2019 (1) TMI 1067 - AT - Income TaxEstimation of income at 1% of the gross turnover - survey u/s 133A - Held that:- In the assessee’s case, there is no dispute that the turnover exceeds 10 crore. Though the department has made survey u/s 133A no evidence was brought on record to establish that the net profit is more than 0.4% or the assessee’s case is different from other cases and deriving more income than the other comparable cases. The department also did not find any concealed assets in assessee’s case. The AO did not give the basis for estimation of income at 1% of the gross turnover. AO also did not make any exercise to work out the net profit with the sale price and relevant expenses. The orders were passed by the ITO, Ward-2 Bhimavaram in the assessee’ case as well as other cases relied upon by the CIT(A). For the A.Y. 2013-14 in the case of Mr.Abdul Kalam Azad, the AO estimated the income at 0.4% after rejecting the books of accounts. Similarly in the case of Adabala Narsimha, the same AO estimated the income @0.4% clear of expenses. During the appeal hearing the department could not place any evidence before us to controvert the finding given by the Ld.CIT(A) or to substantiate the contention of the department that income estimated by the Ld.CIT(A) is less and assessee gets more income than the comparable cases decided by the AO. Therefore, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. The appeals of the revenue on these grounds are dismissed. Depreciation on crates - Held that:- Grounds of appeal before the CIT(A) in MHM Fish Packers, the assessee challenged the addition made by the AO for assessment of income separately on the fish crates without allowing the expenses relatable to earning the income on fish crates. The depreciation is an expenditure which required to be allowed while computing the income. Therefore, contention of the revenue that the CIT(A) has allowed the depreciation on crates without being agitated before him is incorrect. Therefore we dismiss the revenues appeal in ground with regard to depreciation. Estimation of income from the fish trading separately and the income from fish crates separately - Held that:- In this case, though the AO has taxed the entire receipt from fish crates as income and did not allow the expenditure relatable to earning of income. AR submitted before us that the assessee would be satisfied if the interest expenditure is also allowed. We are of the considered opinion that the depreciation on crates and the interest attributable to acquiring the fish crates required to be allowed in the interest of justice. We uphold the order of the Ld.CIT(A) with regard to the allowance of depreciation on fish crates and remit the issue of interest on crates back to the file of the AO with a direction to verify the issue with regard to the borrowed capital for acquiring the crates and allow the interest relatable to acquiring fish crates also. The AO should give an opportunity to the assessee before completing the assessment. Accordingly appeal of the revenue on this ground is dismissed and the cross appeal of the assessee on this issue is allowed.
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