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TMI Blog2018 (1) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs. 20,68,500 towards alleged unexplained gifts. 5. The learned Commissioner of Income Tax (Appeals) is not justified in estimating the profit on car hire charges @ 10% which is on a higher side. 6. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the separate addition made by the assessing officer towards interest income. 7. The learned Commissioner of Income Tax- (Appeals) ought to have held that no separate addition can be made u/s 68 once the income is estimated by rejecting the books of account. 8. The learned Commissioner of Income Tax (Appeals) ought to have granted the benefit of telescoping. 9. Any other ground that may be urged at the time of appeal hearing. 2. Ground No. 1 and 9 are general in nature which does not require specific adjudication. 3. Ground No. 2 is related to the estimation of profit @10% of purchases as against 5% of cost of goods sold. The assessee is engaged in the business of sale of liquor and wine (IMFL) and during the financial year 2010-11 relevant to the assessment year 2011-12, the assessee has made the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen compared to the nature of business carried on by the assessee. It is further submitted that the case law relied upon by the assessee is not applicable to the facts of the present case. The case before the Hon'ble A.P. High Court was that the assessee is into the business of trading in arrack, whereas it is in the business of dealing in IMFL. The assessee further contended that IMFL trade was controlled by the State Government through A.P. State Beverages Corporation Ltd. and the prices of the products are fixed by the State Government. The assessee being a license holder of State Government cannot sell the products over and above the MRP fixed by the State Government. We find force in the arguments of the assessee for the reason that the A.O. has estimated the net profit by relying upon the decision of A.P. High Court in the case of CIT Vs. R. NarayanaRao in ITA No.3 of 2003 which is rendered under different facts. The A.P. High Court has considered the case of an arrack dealer, whereas, the assessee is into the business of dealing in IMFL. Therefore, we are of the view that the A.O. was not justified in relying upon the judgement, which was rendered under different facts to es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases net of all deductions. Ordered accordingly." 7. In view of the above decision of the coordinate bench of the Tribunal, the AO is directed to re-compute the income of the assessee @ 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. 8. Ground No.3 is related to the addition of Rs. 18 lakhs made by the Assessing officer (AO) towards unexplained credits in the capital account. The assessee has introduced the capital of Rs. 18 lakhs on 02.07.2010 and admitted the same as income under the head 'business income'. The assessee declared the loss of Rs. 14,18,174/- and consequent to the admission of cash difference as "business income" it resulted in taxable income of Rs. 5,00,000/-. The Ld.AR submitted that the AO has assessed Rs. 18 lakhs as other income which is not correct. Ld.AR contended that once the income is estimated there is no reason to make separate addition. Since the assesssee has already admitted the same as business income, the Ld.AR submitted that there is no case of making a separate addition as unexplained cash credit in the capital account. 9. On the other hand, Ld.DR supported the orders of the lower authorities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from these parties to the tune, of Rs. 6 lakhs, Rs. 3 lakhs & Rs. 3 lakhs, respectively. All these parties have stated in their confirmation lettersthat the impugned gifts for the subject year were out of their savings. It is unbelievable that they had this much savings in this short span of time and is pot proportionate for theft source of income. Therefore the capacity of the donors to make the alleged gifts is very much in doubt, which raises doubt on the genuineness of the transactions. Therefore, I find that the AC) has rightly disbelieved the capacity of alleged donors and hence the impugned additions made in this regard are confirmed. 5.3.2. With regard to the credit in the name of Smt. PoolariHymavathi of Rs. 5,00,000/-, it is seen that the said creditor has filed confirmation letter stating that the amount was given by way of cheque. As the transaction is in cheque, the identity and genuineness of the transaction is not in doubt. The said creditor has also stated that the amount was given out of the money sent to her by her husband who is employed in USA. Thus the assessee has discharged the onus cast on her, therefore, the AO is directed to accept the loan transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port the business of his brother he has given a gift of Rs. 1.5 lakh. The Ld.AR further submitted that Sri Ramana Murthy is working as bus driver in APSRTC and drawing salary of Rs. 25,000/- per month and working for the last 10 years and had sufficient salary savings to give gift of Rs. 1.50 lakh. The Ld.AR argued that he had given the gift and his financial position supports the credit worthiness, hence Ld.AR argued that the same may be allowed. 12. On the other hand, Ld.DR supported the orders of the lower authorities. 13. We have heard both the parties and perused the material placed on record. The assesseee is sister-in-law of Sri T.V.Ramana Murthy who is working as APSRTC driver, Gr.I for the last 10 years and as per the salary certificate, his gross salary is around Rs. 25,000/-. To support the business of his brother's wife, Sri T.V.Ramana Murthy has stated to given a gift of Rs. 1.5 lakh. He has filed the confirmations and the source was explained as salary savings. Since the creditor is identified and having salary income of Rs. 25,000/- per month, we are of the view that there is no case for suspecting the gift and making the addition of Rs. 1,50,000/- relating to gift ..... X X X X Extracts X X X X X X X X Extracts X X X X
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