9911796707
TMI Blog2017 (11) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock put to sale and accordingly computed the business income from IMFL at Rs. 38,11,715/-. On appeal, the CIT(A) has scaled down the percentage of profit from 20% to 10% and directed the A.O. to re-compute the income at 10% of purchase price. 4. On being aggrieved, assessee carried the matter in appeal before the Tribunal. At the time of hearing, the Ld. Counsel for the assessee has submitted that the issue involved in this appeal is squarely covered in the case of Sri Vysyaraju Satyanarayana Raju, Srikakulam Dist. In ITA No.2/Vizag/2016, which is reproduced as under: 3. On being aggrieved, assessee carried matter in appeal before the Tribunal. At the time of hearing, the Ld. Counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the decision of the coordinate bench of this Tribunal where the Tribunal has scaled down the estimation of profit from 10% to 5% in the case of Tangudu Jogisetty in ITA No.96/Vizag/2016 by order dated 2.6.2016. 4. On the other hand, the Ld. D.R. strongly supported the order passed by the authorities below. 5. I have heard both the parties, perused the materials available on record and gone throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which was rendered under different facts to estimate the net profit. On the other hand, the Ld. A.R. for the assessee, relied upon the decision of ITAT, Visakhapatnam bench in the case of T. Appalaswamy Vs. ACIT in ITA No.65 & 66/Vizag/2012. We have gone through the case laws relied upon by the assessee in the light of the facts of the present case and finds that the coordinate bench of this Tribunal, under similar circumstances held that estimation of 5% net profit on purchases is reasonable. The relevant portion of the order is reproduced hereunder: "3. We have heard the parties, perused the orders of the revenue authorities as well as other materials on record. It is the contention of the Ld. A.R. that the estimation of profit at 16% is high and excessive considering the normal rate of profit in this line of business. Whereas, the Ld. D.R. supported the order of the CIT(A). Having considered the submissions of the assessee, we are of the view that the issue is no more res integra in view of a series of decisions of the ITAT Hyderabad bench in similar cases. The coordinate bench in case of ITA No.127/Hyd/12 and others dated 18.05.2012 as well as a number of other cases have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition required to be made, the payment was the initial payment made in the beginning of the year, hence it cannot be held that the assessee has generated income out of business in the beginning of the day, therefore, the argument of the assessee is untenable, accordingly, rejected. Since the assessee failed to explain the sources of the initial investment, we hold that the A.O. has rightly made the addition, which was confirmed by the Ld. CIT(A). Therefore, we uphold the order of the Ld. CIT(A) and the appeal on this ground is dismissed. 7. The next ground of addition was ` 12,50,000/- confirmed by the Ld. CIT(A). During the assessment proceedings, the A.O. found that the assessee has stated to have received unsecured loans of Rs. 19,00,000/- for payment of initial license fee of ` 26,16,667/-. However, the assessee failed to furnish any evidence regarding the unsecured loans before the A.O. Therefore, the A.O. made the addition u/s 69 of the Act since the amount was paid for license fee. Aggrieved by the order of the A.O., the assessee went on appeal before the CIT(A) and the assessee filed the confirmations before the Ld.CIT(A). The Ld.CIT(A) admitted the additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A)'s order as under: 7.2 Credit in the name of Pithani Venkata Durga Prasad: The assesse had filed before the AO confirmation letter from one Pithani Venkata Durga Prasad,S/o Trimurthulu on 28.02.2014 confirming advance of Rs.2,50,000/- given to the assessee by way of DDs in favour of Excise department. It was also stated that the he was an Income-tax assessee having income from liquor business. Subsequently, the assessee filed an affidavit before the C1T(A) from one P. Venkata Durga Prasad confirming the advance of Rs.2,50,000/-. The assessee produced this creditor for verification before the AO and the said creditor deposed that he had advanced an amount of Rs.2,50,000/- to the assessee and that an amount of Rs.2,25,000/- was given by way of DDs and Rs.25,000/- was by way of cash. It was also stated that the amount was given from his accumulated savings from 2002 to 2008 out of his liquor business and small contract works. To the query whether the amount advanced to the assessee was reflected in his balance sheet, the creditor replied that he has not maintained any books of account as his turnover was below the threshold limit. A copy of the return for the A.Y.2013-14 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that he was working as labour mastry in and around Rajahmundry and that an amount of Rs.90,000/- was given by way of DDs and Rs. 10,000/ by way of cash out of accumulated balance since his childhood. It is noted that the signature in the confirmation letter was totally different from the signature in the affidavit raising doubt as to the genuineness of the transaction. From the perusal of sworn deposition it is apparent that it is improbable that the alleged creditor advanced the impugned amount of Rs.1,00,000/- out of his paltry income as labour maistry and that too without interest. Thus the genuineness and creditworthiness of the transaction remain doubtful. Hence the impugned addition in regard to this credit is confirmed. 7.5 Credit in the name of Sunkara Padmanabham: The assesse had filed before the AO confirmation letter from one Sunkara Padmanabham S/o. Venkateswararao on 03.03.2014 confirming advance of Rs.2,00,000/- given to the assessee by way of DDs. Subsequently, during the appeal hearing the assessee filed an affidavit from the said creditor before the CIT(A) from the said creditor confirming advance of Rs.2,00,000/- given to the assessee. The assessee produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs.90,000/- was given by way of DDs and Rs.10,000/- by way of cash. From the deposition, it is evident, that it is improbable that this creditor could advance the alleged amount out of such paltry income and that too without interest. Thus the creditworthiness of the creditor is doubtful. Hence the impugned addition in regard to this credit is upheld. 7.8 Credit in the name of Golagoni Venkata Sridhar: The assesse had filed before the AO confirmation letter from one Gulagoni Venkata Sridhar S/o. Paparao on 12.03.2014 confirming advance of Rs.2,00,000/- given to the assessee by way of DDs. Subsequently, during the appeal hearing the assessee filed an affidavit from G.V. Sridhar before the CIT(A) confirming advance of Rs.2,00,000/- to the assesee. The assessee could not produce this creditor before the AO for examination. It is noted that the signature in the confirmation letter and the signature in the affidavit are totally different, raising doubt as to identity of the creditor and genuineness of the transaction. Further, as per the household card enclosed, the annual income was stated to be Rs.30,000/-. Thus it is apparent that this creditor did not have capacity to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
