TMI Blog2018 (1) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... of income, estimated without merits. Ld. CIT(A) rejected the arguments raised by the assessee and confirmed the addition. We find that even before us the assessee is not able to establish that the nexus between unsecured loans and the liquor business and therefore, we are of the opinion that the ld. CIT(A) has rightly confirmed the order passed by the Assessing Officer. Accordingly, this ground of appeal raised by the assessee is dismissed. - ITA No. 197/VIZ/2016 - - - Dated:- 30-8-2017 - SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, HON BLE ACCOUNTANT MEMBER For The Assessee : Shri G.V.N. Hari - Advocate. For The Department : Shri M.N. Murthy Naik Sr. DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER This is an appeal filed by the assessee against the order of Commissioner of Income Tax (Appeals), Rajahmundry, dated 03/02/2016 for the Assessment Year 2011-12. 2. Ground Nos. 1 to 3 are relates to estimation of profit on purchase price. 3. Facts are in brief that the assessee is an individual carrying on business of purchase and sale of IMFL (Indian made Foreign Liquor) in Srikakulam district. The assessee had filed his re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Narayana Rao 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 estimate the net profit. On the other hand, the Ld. A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly. 8. Respectfully following the decision of the coordinate bench of this Tribunal, we direct the A.O. to re-compute the income of the assessee at 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. 9. Ground No.4 relating to addition of ₹ 27,60,000/- in respect of unexplained cash credits. 10 In the assessment order, the Assessing Officer has noted that the assessee has claimed unsecured loans to the tune of ₹ 27,60,000/-. The Assessing Officer called upon the assessee to prove the loans with names and other particulars. The assessee has not filed any information before the Assessing Officer. Therefore, the Assessing Officer has considered the entire amount of ₹ 27,60,000/- as unproved cash credits and the same is added to the total income of the assessee. 11 On appeal before the ld. CIT(A), it was submitted that the impugned addition of ₹ 27,60,000/- was already offered to tax and adjusted against the net loss in the capital account. It was also submitted that books of account were already rejected and income is estimated, no separate addition can be made and requested to delete the impugned additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed sources. The Honourable Allahabad High Court followed the decision of the jurisdictional AP High Court in the case of CIT v. Maduri Rajaiahgari Kistaiah(120 ITR 294) wherein it was held that where certain unexplained sundry creditors are found in the account books of the assessee, whose business income is determined on estimate basis and not on the basis of his returned income, the AO is not prevented from treating the unexplained sundry creditors standing in the books of account as income from undisclosed sources. The Allahabad High Court also relied on the decision of the Hon'ble Apex Court in the case of CTT vs. Devi Prasad Vishwanath Prasad; 72 ITR 194 wherein it was observed that where there is an unexplained credit, it is open to the AO to hold that it is income of the assessee, and no further burden lies on the AO to show that the income is from any particular source. It is for the assessee to prove that, even if the sundry creditors represent income, it is income from a source which has already been taxed. There is nothing in law which prevents the AO in an appropriate case in taxing the sundry credit, the source and nature of - which is not satisfactorily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsecured loans to the tune of ₹27,60,000/-. When the Assessing Officer asked the assessee to produce the details, no details were filed. It is only submitted before the ld. CIT(A) that an amount of ₹ 27,60,000/- was already offered to tax and adjusted against net loss in the capital account. Even before us, the assessee has not filed any details. The argument advanced before the ld. CIT(A) that the amount of ₹ 27,60,000/- was already offered for taxation has been considered by the ld. CIT(A) and he has observed that the impugned credits as unsecured loans, offered to tax has no nexus to the income from liquor business, and therefore the impugned credits offered to tax is part of income, estimated without merits. Ld. CIT(A) rejected the arguments raised by the assessee and confirmed the addition. We find that even before us the assessee is not able to establish that the nexus between unsecured loans and the liquor business and therefore, we are of the opinion that the ld. CIT(A) has rightly confirmed the order passed by the Assessing Officer. Accordingly, this ground of appeal raised by the assessee is dismissed. 16. In the result, appeal filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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