TMI Blog2015 (1) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal filed by assessee is directed against the Order of Ld. CIT(A)-VI, Hyderabad dated 07.02.2014 whereby he enhanced the income of the assessee by applying higher rate of profit at 12% and also confirmed the addition made by A.O. on account of unexplained cash credits. 2. Assessee in the present case is an individual who is carrying on the business of civil contractor. The return of income for the year under consideration was filed by him on 30.09.2009 declaring total income of ₹ 87,56,980. In the assessment completed under section 143(3) vide order dated 31.12.2011, total income of the assessee was computed by A.O. at ₹ 1,95,91,220 after making the following additions aggregating to ₹ 1,08,34,240. Additions (i) Unexplained cash credits u/s.68 (as discussed above) Rs.83,36,000 (ii) Excess claim of depreciation (as discussed above) Rs.7,61,561 (iii) Difference in turnover (as discussed above). Rs.8,68,101 (iv) Difference in interest (as discussed above). Rs.2,01,150 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors was accepted to be established in case of Mr. Praveen Rao for ₹ 13,00,000 and a further sum of ₹ 10,00,000 was treated as the credit explained through the part of agricultural income earned by the assessee. Thus after giving credit to the said amounts of ₹ 23,00,000 (Rs.13,00,000 + ₹ 10,00,000), the AO treated the balance amounts of ₹ 83,36,000 (1,06,36,000-23,00,000) as unexplained credit as unexplained income of appellant, for the year under reference. The fact revealed during the assessment and the remand proceedings, indicate that the balance of credits were not explained by tile appellant with the help of relevant information or evidence so as to prove that the amounts of ₹ 83,36,000 represent the explainable credits. In fact, the appellant could furnish the confirmations from few of the parties/creditors, and out of such confirmations/ information, the assessee could not prove the credits to the satisfaction of the assessing officer. Where the Identity of the creditors not established, and the genuineness of the transaction not established, the amounts attributable to such parties deserve to be treated as unexplained credits, even with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The submissions of the appellant and the case law relied upon by the assessee (Namasivayam Chettiar Vs. CIT 38 ITR 579,588 (SC) support such view. However, such estimation need to be reasonable and can be relatable to the facts of case with reference to the business in similar lines, in the vicinity, where the other factors are comparable. It is also a fact that the catena of judicial decisions by ITAT, Hyderabad, Including the decision in the case of C. Eswar Reddy and Others (ITA No. 668 670/HYD/2009 dt. 31.01.2011), held that the profits of business of civil contracts/construction may vary from 8 to 120/0, which may depend on facts relatable to each case. In this case, it may be reasonable to hold that the assessee's profit in business receipts is not less than 12% and the failure on part of the appellant to reply on the notice of enhancement may indicate these facts. Accordingly, the profits of the business are required to be estimated at 12% of the gross business receipts of the assessee for the year under reference. In fact, the appellant has made a request vide letter dt. 09.01.2014, to estimate the profits of business at 8% on a total business receipts of ₹ 11, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed. In this case, the unexplained cash credits of ₹ 83,36,000/- was not proved to be representing the estimated business profits. Accordingly, the addition on account of estimation of profits on business Income at the rate of 12%, do survive, in addition to the addition of ₹ 83,36,000/- made on account of treating the cash credits as unexplained credits. To this extent the estimated income of ₹ 1,42,83,869/-, @ 12% on the business receipts of ₹ 11,90,32,243/- stand enhanced by this order, as compared to the addition of ₹ 83,36,000/ - made by the assessing officer on account of treating the cash credits as unexplained as per provisions of Sec. 68, and confirmed in this order. Penalty proceedings u/s. 271(1)(c) are directed to be initiated separately, on the addition of ₹ 1,42,83,869/-, which is treated as the unexplained income, resulting in concealment of income which was also, indicated by the appellant. 4. Aggrieved by the order of Ld. CIT(A), assessee has preferred this appeal before the Tribunal. 5. We have heard the arguments of both sides and also perused relevant material on record. The preliminary issue raised by Ld. Counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant neither filed any written submissions nor made personal attendance on the date of hearing i.e., 30.01.2014, giving rise to the presumption that the appellant does not have any objections for such proposals. 7. The above observation of the non-attendance on 30.01.2014 is totally contrary to the facts. It is shocking to find-out that on a day when the learned CIT(Appeals)-VI was away on official training (and did not take steps to re-post the case before leaving on such training), he arbitrarily concluded a month later that none attended on 30 January 2014 without verification. 6. As is clearly evident from the averments made by assessee in his affidavit, Ld. CIT(A) has passed the impugned order enhancing the income of the assessee without giving proper and sufficient opportunity of being heard to the assessee and this position is not disputed even by learned D.R. In our opinion, the impugned order passed by Ld. CIT(A) enhancing the income of the assessee, thus, is in violation of the principles of natural justice. Accordingly, we set aside the same and remit the matter back to him to dispose of the appeal of the assessee afresh, after giving the assessee a pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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