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TMI Blog2015 (6) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... les. The assessing officer erred by estimating the income of the assessee at 6% of gross receipts without taking books of accounts into consideration which is not correct, not justified and bad in law. 3) The CIT Appeals - IV, erred by estimating the total income of the assessee at 6% since the margins in scrap business is 2% to 3% only. The said business is in unorganised sector with low margins and lot of competition from other dealers. Hence NP ratio will be only between 2% to 3%. We hereby request your good self to accept the said NP ratio as they are reasonable in this line of activity. 4) The CIT(A)-IV has erred while confirming the Order of the Assessing Officer wherein the AO. has failed to appreciate that the amount received as commission on sale transaction but considered the same as sale transaction of assessee which is not correct and not justified. We, hereby, submit you to kindly consider the commission income only and calculate tax on such Income. 5) A sum of Rs. 76,600/- has been added towards difference between profit arrived on estimation basis and the amount of net profit as per the return of income which is not correct, not justified and bad in law. 6) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the A.O. Hence, the penalty proceedings U/S 271(1)(C) may not be initiated. 14) The Assessee may add, alter or substitute any other points to the grounds of appeal before or at the time of hearing of the case /appeal". Precise and additional grounds of appeal: "1. The learned CIT (A) erred in sustaining the additions made by the assessing officer for the assessment year under consideration. 2. The learned CIT (A) erred in upholding the additions made to the income of the assessee based on the loose sheets and dumb materials which has no evidential value. 3. The learned CIT (A) ought to have applied the principle of Telescoping of the income determined in the earlier years against the expenditure of subsequent years. 4. The learned CIT (A) ought to have applied the principle of Telescoping of unexplained expenditure against the income of the appellant. 5. The learned CIT (A) erred in confirming the order passed by the assessing officer by estimating the income of the assessee at 6%. 6. The learned CIT (A) ought to have directed the assessing officer to accept the books of account of the assessee. 7. The learned CIT (A) ought to have appreciated the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the return of income for the AY. 2007-08, the assessee reflected the cheque issued by M/s. Hind Steel Traders towards purchase of iron scrap and duly reflected in the sales. Out of the other advances, an amount of Rs. 20,000/- was made to Sri P. madhusudhan against purcahse of property and the same is reflected in the balance sheet filed by the assessee for the year under consideration. Further, an amount of Rs. 50,000/- was paid to Sri Manish Agarwal of Rs. 50,000/- as a loan through cheque and the same was also reflected in the balance sheet and therefore, these three transactions are accepted as business transactions. As regard to the other two blank cheques for Rs. 2,00,000/- and Rs. 10,00,000/- issued by M/s. Saif Steels & Mr. Shaik Abdul Nayeem respectively, the assessee stated that no such loans were actually given by him and the same were kept with him against supply of iron scrap. The explanation offered by the assessee for the above two blank cheques was not accepted by AO by making reference to page No. 42 of seized annexure A/LNA/Res/01 dt. 07-11-2007, which is a Xerox copy of promissory note executed by Mr. Shaik Abdul Nayeem. Mr. Shaik Abdul Nayeem signed on a reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant is engaged in money lending business and advanced a sum of Rs. 12,00,000/- and made addition of amount as unexplained investment. 5. On appeal before the CIT(A), it was submitted before the CIT(A) that those blank cheques were obtained from the persons, who intended to borrow from him. However, the appellant stated that he never advanced any money to the said person therefore, no addition was called for. The Ld.CIT(A) after examining the explanation had disbelieved the explanation offered by the appellant and finally held that the appellant was using his own unaccounted money in providing unaccounted loans against security of promissory notice and cheques and therefore, upheld the addition. 6. It was contended before us that the documents seized are only dumb documents and therefore, no addition can be made. On the other hand, Ld.CIT(A) had placed reliance on the lower authorities and submitted that the seized documents cannot be called dumb documents since the documents are duly signed and filled up. Since the assessee had failed to explain satisfactorily under what circumstances, the blank cheques came into his possession of the appellant, the addition sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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