Tangi Swati, Srikakulam V. THE ITO, Srikakulam

ITA 288/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6464 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 03-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Rejection of books of accounts; Gift; Business income; Income from undisclosed sources; Salary income
• Section: 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 28 8 /VIZ/ 201 5 ( / ASSESSMENT YEAR: 20 11 - 12 ) TANGI SWATI PLOT NO.185, 5THLANE BANKERS COLONY SRIKAKULAM [ PAN : A ERPT3399C ] VS. ITO, WARD - 2 SRIKAKULAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , A R / RESPONDENT BY : S HRI M.N.MURTHY NAIK , DR / DATE OF HEARING : 23 . 1 1 .2017 / DATE OF PRONOUNCEMENT : 20 . 1 2 .2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS) [CIT(A)] - 2, VISAKHAPATNAM VIDE 2 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM ITA NO.67/2013 - 14/997/ITO,W - 2,SKL/2014 - 15 DATED 27.04.2015 FOR THE ASSESSMENT YEAR 2011 - 12 AND RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND ALSO THE LAW APPLICABLE TO THE FACTS OF THE CASE . 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT J USTIFIED IN ESTIMATING THE PROFIT @ 10% OF PURCHASES AS AGAINST 5% OF COST OF GOODS SOLD. 3 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS 18,00 , 000 MADE BY THE ASSESSING OFFICER TOWARDS ALLEGED UNEXPLAINED CREDITS IN THE CAPITA L ACCOUNT. 4 . THE LEARNED COMMISSIONER O F 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% W H ICH I S ON A H I GHER 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 ADDITIO N 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. G ROUND NO. 1 AND 9 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 3 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM 3. GROUND NO. 2 IS RELATED TO THE ESTIMATION OF PROFIT @10% OF PURCHASES AS AGAINST 5% OF COST O F GOODS SOLD . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF LIQUOR AND WINE (IMFL) AND D URING THE FINANCIAL YEAR 2010 - 11 RELEVANT TO THE ASSESSMENT YEAR 2011 - 12, THE ASSESSEE HAS MADE THE PURCHASES OF RS.1,12,60,410/ - AND DECLARED SALES OF RS.1,26,08 ,268/ - . IN THE ASSESSMENT ORDER, THE AO HAS OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED ANY STOCK REGISTER AND NOT PRODUCED SALE BILLS, NO QUANTITATIVE DETAILS OF SALE S EFFECTED . T HEREFORE, T HE AO HAS ESTIMATED THE NET PROFIT, CLEAR OF ALL EXPENSES @ 20% OF THE STOCK S PUT TO SALE. ON APPEAL, THE LD. CIT(A) GRANTED THE PARTIAL RELIEF TO THE ASSESSEE BY SCALING DOWN THE PERCENTAGE OF PROFIT FROM 20% TO 10% OF PURCHASES AND DIRECTED THE A.O. TO RE - COMPUTE THE INCOME @ 10% OF PURCHASE PRICE. 4 . ON BEIN G 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 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM 5 . ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW. 6 . WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE ISSUE INVOLVED IN THIS APPEAL IS ESTIMATION OF PROFIT IN RESPECT OF IMFL BUSINESS CARRIED ON BY THE ASSESSEE. IN THIS R ESPECT, THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF TANGUDU JOGISETTY (SUPRA) HAS CONSIDERED THE PROFIT LEVEL IN TH IS LINE OF BUSINESS AND DECIDED THAT 5% OF PURCHASE PRICE IS REASONABLE PROFIT MARGIN AND DIRECTED THE A.O. TO RE - COMPUTE THE PROFIT OF THE ASSESSEE. THE RELEVANT P ART OF THE ORDER OF THE ITAT (SUPRA) IS EXTRACTED AS UNDER: 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A.O. ESTIMATED NET PROFIT OF 20% ON STOCK PUT FOR SALE. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNTS AND VOUCHERS IN SUPPORT OF PURCHASES AND SALES. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS FAILED TO MAINTAIN STOCK REGISTERS AND B OOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE ARE NOT SUSCEPTIBLE FOR VERIFICATION, THEREFORE REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED NET PROFIT OF 20% BY RELYING UPON THE DECISION OF HONBLE A.P. HIGH COURT. IT IS THE CONTENTION OF THE ASSESSEE THAT T HE NET PROFIT ESTIMATED BY THE A.O. IS QUITE HIGH WHEN 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 BEFOR E THE HONBLE 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 5 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM ASSESSEE FURTHER CONTENDED THAT IMFL TRADE WAS CONTROLLED BY THE STATE GOVERNMENT THROUGH A.P. STATE BEVE RAGES 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 CONSIDERE D 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. 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 BUSINES S. 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 CO ORDINATE BENCH IN CASE OF ITA NO.127/HYD/12 AND OTHERS DATED 18.05.2012 AS WELL AS A NUMBER OF OTHER CASES HAVE HELD THAT PROFIT IN CASE OF BUSINESS IN INDIAN MADE FOREIGN LIQUOR HAS TO BE ESTIMATED AT 5% OF THE PURCHASES MADE BY THE ASSESSEE. THEREFORE, FOLLOWING THE DECISION OF THE ITAT HYDERABAD BENCH, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO ESTIMATE THE PROFIT FROM THE WINE BUSINESS OF THE ASSESSEE BY APPLYING THE RATE OF 5% OF THE PURCHASES MADE NET OF ALL OTHER DEDUCT IONS. THE ASSESSING OFFICER SHOULD ALSO BEAR IN MIND THAT IN NO CASE THE INCOME DETERMINED SHOULD BE BELOW THE INCOME RETURNED. 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO RESPECTFULLY FOLLOWING THE RATIOS OF COORDINATE BENCH, WE AR E OF THE VIEW THAT THE NET PROFIT ESTIMATED BY THE A.O. BY RELYING UPON THE DECISION OF HONBLE A.P. HIGH COURT (SUPRA), WHICH WAS RENDERED UNDER DIFFERENT FACTS IS QUITE HIGH. ON THE OTHER HAND, THE ASSESSEE RELIED UPON THE DECISION OF COORDINATE BENCH A ND THE COORDINATE BENCH UNDER SIMILAR CIRCUMSTANCES ESTIMATED THE NET PROFIT OF 5% ON TOTAL PURCHASES NET OF ALL DEDUCTIONS. NO CONTRARY DECISION IS PLACED ON RECORD BY THE REVENUE TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDIN ATE BENCH. THEREFORE, WE DIRECT THE A.O. TO ESTIMATE THE NET PROFIT OF 5% ON TOTAL PURCHASES NET OF ALL DEDUCTIONS. ORDERED ACCORDINGLY. 6 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM 7 . IN VIEW OF THE ABOVE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, THE AO IS DIRECTED TO RE - COMPU TE THE IN COME 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 CA PITAL ACCOUNT. 9 . ON THE OTHER HAND, LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM 10 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS INTRODUCED THE CASH CREDIT S OF RS.18 LAKHS WHICH WAS ADMITTED AS BUS INESS INCOME. THE INTRODUCTION OF CAPITAL WAS ON 2.7.2010. IT IS NOT FURNISHED BY THE ASSESSEE WHEN THE ASSESSEE COMMENCED THE BUSINESS WHETHER THE AMOUNT OF RS.18 LAKHS WAS GENERATED OUT OF BUSINESS INCOME OR NOT REQUIRED TO BE EXPLAINED AND ESTABLISH ED BY THE ASSESSEE. IN CASE THE SUM OF RS.18 LAKHS REPRESENTS BUSINESS INCOME, THERE IS NO REASON TO MAKE A SEPARATE ADDITION ON ACCOUNT OF CASH CREDIT . AS PER THE TRADING ACCOUNT THERE WAS NO OPENING STOCK, HENCE IT APPEAR S THAT THE IMPUGNED ASSESSMENT YEAR WOULD BE THE FIRST YEAR OF BUSINESS. FOR I MFL BUSINESS THE YEAR STARTS FROM 1 ST JULY AND THE ASSESSE E HAD INTRODUCED THE CASH ON 02 . 07 . 2010. T HE AO HAS NOT DISCUSSED THE ISSUE IN THE ASSESSMENT ORDER AND THE ASSESSEE HAS NOT E STABLISHED BEFORE US THAT SUM OF RS. 18 LAKHS WAS GENERATED OUT OF BUSINESS INCOME. THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF THE AO TO REEXAMINE THE ISSUE WHETHER THE CASH CREDIT MADE IN THE BOOKS OF ACCOUNTS RELATING TO RS.18 LAKHS WAS BUSINESS INCOME OR NOT AND RECONSIDER THE ISSUE A FRESH ON MERITS. 8 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM 11 . GROUND NO.4 IS RELATED TO THE ADDITION OF RS. 20,68,500/ - WHICH IS UNEXPLAINED GIFTS. THE AO AS WELL AS THE CIT (A) CONFIRMED THE GIFTS SINCE THE SOURCE WAS NOT ESTABLISHED BY THE ASSESSEE WITH EVIDENCE THE LD. CIT (A)CONFIRMED THE ADDITION BY DISCUSSING THE ISSUE IN DETAIL AND THE RELEVANT PART OF THE ORDER OF THE CIT(A) IS EXTRACTED AS UNDER: 5.3.1. WITH REGARD TO THE GIFTS ALLEGEDLY RECEIVED FROM FATHER - IN - LAW, THE CONTENTION WAS THAT THE GIFT WAS GIVEN OUT OF HIS AGRICULTURAL INCOME SAVINGS. BUT NO EVIDENCE WAS PRODUCED IN THIS REGARD. AS REGARDS THE GIFT FROM SPOUSE, IT IS SEEN THAT HIS MONTHLY SAL ARY WAS ONLY RS.23,000/ - AND HIS BANK STATEMENT DID NOT REFLECT ANY SAVINGS AND THE BALANCE AT ANY POINT OF UME DID NOT EXCEED MORE THAN RS.16000/ - . HENCE THE CONTENTION THAT THE GIFT WAS GIVEN, OUT OF SAVINGS IS RIGHTLY DISBELIEVED BY THE AO. SIMILARLY, N O EVIDENCE WAS FILED REGARDING THE CAPACITY OF THE ALLEGED DONOR, VENKATARAMANA MURTHY TO GIVE THE ALLEGED GIFT OF RS.1.5 LAKHS. 'BESIDES, AIL THE IMPUGNED TRANSACTIONS ARE IN CASH, AND IT IS ALSO NOTED FROM THE ASSESSEE'S CAPITAL ACCOUNT FOR THE YEAR 2009 - 10, THE ASSESSEE HAS SHOWN RECEIPT OF GIFTS 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 LETTERS THAT THE I MP UGNED 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 DOU BT 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. POOL ARIHYMAVATHI OF R S . 5,00,000/ - , IT IS SE EN THAT THE SAID CREDITOR HAS F I L ED 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 CR EDITOR 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 AND DELETE THE IMPUGNED ADDITION MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, ANY DISCREPANCY AS TO THE SOURCE IN THE HANDS OF THE CREDITOR, S M T. POOJARI HYMAV A THI MAY BE CONSIDERED IN HER HANDS . 5 . 3.3 . A PLEA WAS ALSO RAISED THAT ONCE THE BOOKS OF ACCOUNT ARE REJECTED, THEN THE AG IS NOT JUSTIFIED IN MAKING ADDITION TO CASH CREDI TS WITH REFERENCE 9 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM TO THE SAME BOOKS OF ACCOUNT. IN SUPPORT, THE ASSESSES RELIED ON THE DECISION OF THE HON'BLE AP HIGH COURT IN THE CASE OF MADDI SUDARSHANAM OIL MI LLS CO. V. CIT(37 ITR 369) AND INDWELL CONSTRUCTIONS V. CIT(232 ITR 776 AP). IN THIS REGARD, IT IS RELEVANT TO NOTE A SIMILAR ISSUE AS TO WHETHER ADDITION U/S.68 OR 69 COULD BE MADE WHEN THE AD HAS ESTIMATED THE INCOME WAS DEALT BY THE HON'B!E ITAT, HYDERA BAD IN THE CASE OF SMT . SHEBA GUPTA(ITA NO . 461/HYD/2013, DT D.10.0 7 . 2013) WHEREIN IT WAS HELD THAT EVEN IF THE INCOME IS ESTIMATED, THE AO MAY I NVOKE THE PROVISIONS OF SEC 68/69 OF THE ACT THE HON'B L E TRIBUNAL FOLLOWED T HE DEC I S I ON IN THE CASE OF P . V .S ITARAMASWAMY NA I DU IN IT A NO . 26/H Y D/12 V I DE OR DERDT .9.1. 2013 THE HON'B L E TRIBUNAL TOOK THE FLEW THAT UNLESS THE ASESSEE, BY INDEPENDENT AND SATISFACTORY EVIDENCE ESTABLISHES THAT THESE AMOUNTS RELATE OR REFERABLE TO THE UNDISCLOSED INCOME FROM KNOWN OR DIS CLOSED SOURCES, I.E. THE BUSINESS, WHOSE INCOME HAD ALREADY BEEN ESTIMATED, THE ITO IS ENTITLED TO TREAT UNEXPLAINED CASH CREDIT AS INCOME FROM UNDISCLOSED SOURCES, THE HON'BIE TBUNAL PLACED RELIANCE ON THE JUDGEMENT O F JURISDI CTI ONA L HIGH COURT IN THE CA SEOF CIT V. MADURI RA J AIAHGARI KISTAIAH(120 ITR 294) AND OF THE APEX COURT IN THE CASE OF DEVI PRASAD VISWANATH PRASAD 72 ITR 194. THE HON'B L E TRIBUN AL REFERRED TO THE OBSERVATION OF SUPREME COURT IN THE CASE O F KALE KHAN MOHAMMED HANIF VS. CIT (50 ITR 1 SC), 'IT CANNOT BE SAID T HAT THE AUTHORITIES WERE PRECLUDED FROM TREATING THE AMOUNTS OF THE CREDIT ENTRIES AS INCOME F ROM UNDISCLOSED SOURCES SIMPLY BECAUSE THE ENTRIES APPEAR IN THE BOOKS OF A BUSINESS WHOSE INCOME THEY HAD PREVIOUS L Y COMPUTED ON A PE RCENTAGE BASIS' WHILE RENDERING THE ABOVE DECISION. THEREFORE, THE CONTORTIONS RAISED IN THIS REGARD ARE REJECTED. 11 .1. D URING THE APPEAL HEARING, THE LD.AR DID NOT PLACE ANY FRESH EVIDENCE EXCEPT IN THE CASE OF SRI T.V.RAMANA MURTHY . THE LD.AR SUBMITTED THAT THE DONOR SRI T.V.RAMANA MURTHY IS A BROTHER OF THE ASSESSES HUSBAND AND TO SUPPORT 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 A PSRTC AND DRAWING SALARY OF RS.25,000/ - PER MONTH AND WORKING FOR THE LAST 10 YEARS AND HA D 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 10 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM 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 MUR THY 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 BROTHERS 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 GI FT AND MAKING THE ADDITION OF RS.1,50,000/ - RELATING TO GIFT RECEIVED FROM SHRI T.V.RAMANA MURTHY. ACCORDINGLY ADDITION MADE BY THE AO AMOUNTING TO RS.1.5 LAKH OUT OF THE TOTAL ADDITION OF RS.20,68,500/ - IS DELETED. WITH REGARD TO THE BALANCE AMOUNT OF RS .19,18,500/ - , THE ASSESSEE DID NOT PLACE ANY EVIDENCE TO CONTROVERT THE FINDING OF THE LD. CIT (A) . 11 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) AND CONFIRM THE ADDITION OF RS.19,18,500/ - . THE APPEAL OF THE ASSESSEE ON THIS GROUND IS PARTLY ALLOWED. 1 4 . GROUND NO.6 IS RELATED TO THE ADDITION OF INTEREST INCOME WHICH WAS NOT ARGUED BY THE LD.AR, THEREFORE GROUND NO.6 IS DISMISSED AS NOT PRESSED. 1 5 . GROUND NO.7 IS RELATED TO THE ADDITION U/S 68 ON ESTIMATION OF INCOME AFTER REJECTING THE BOOKS OF ACCOUN TS. THIS GROUND IS NOT ARGUED BY THE LD.AR, THEREFORE THIS GROUND IS DISMISSED AS NOT PRESSED. 1 6 . IN THE RESULT, APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH DEC 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 20 . 1 2 .2017 L. RAMA, SPS 12 ITA NO . 28 8 /VIZ/201 5 TANGI SWATI, SRIKAKULAM / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - TANGI SWATI, PLOT NO.185, 5 TH LANE, BANKERS COLONY, SRIKAKULAM 2 . / THE RESPONDENT ITO, WARD - 2, SRIKAKULAM 3 . THE COMMISSIONER OF INCOME TAX - 2 , VISAKHAPATNAM 4.THE COMMISSIONER OF INCOME TAX(APPEALS) - 1, 2(I/C), VISAKHAPATNAM & RAJAHMUNDRY 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM