1 IN INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA No.1616/Hyd/2018 Assessment Year: 2014-15 Sri Maragoni Vs. ITO, Satyanarayana Goud, Ward-9(1), Hyderabad. Hyderabad. PAN: APPPM 4729 J (Appellant) (Respondent) Assessee by: Sri P. Murali Mohan Rao Revenue by: Smt. Komali Krishna, DR Date of hearing: 04/07/2019 Date of pronouncement: 21/08/2019 ORDER PER A. MOHAN ALANKAMONY, AM.: This appeal is filed by assessee against order of Ld. CIT(A)-7, Hyderabad dated 05/07/2018 in appeal No. 0251/CIT(A)/- 7/2017-18 passed U/s. 143(3) r.w.s 250(6) of Act for assessment year 2014-15. 2. assessee has raised several grounds in its appeal however cruxes of issues are that: - (i) Ld. CIT (A) has erred in upholding order of Ld. AO who had estimated income of assessee @ 5% on sale of 2 Gold amounting to Rs. 29, 87,305/- which was purchased from M/s. Manappuram Finance Limited in public Auction. (ii) Ld. CIT (A) has erred in upholding order of Ld. AO who had made addition of Rs. 1,28,17,370/- towards unexplained expenditure U/s. 69C of Act. 3. brief facts of case are that assessee is individual having income from business filed his return of income for AY 2014- 15 on 9/1/2015 declaring his income at Rs. 5,12,870/-. Initially, return was processed U/s. 143(1) of Act and thereafter case was taken up for scrutiny wherein Ld. AO made addition of Rs. 29,87,305/- by estimating profit of assessee @ 5% on turnover with respect to trading in Gold and further made addition of Rs. 1,28,17,370/- towards unexplained source for purchase of Gold based on peak payment. 4. assessee had declared his turnover in his return of income as Rs. 60,34,420/- and income from his business Rs. 5,12,870/- and had also claimed credit for TCS of Rs. 6,03,442/- being amount collected from him by M/s. Manappuram Finance Limited towards total payment received from him of Rs. 5,97,46,091/- for purchase of gold in public Auction. On query, assessee had explained that he was in business of running tiffin centre and also trading in Gold purchased from M/s. Manappuram Finance Limited in public auction. 3 It was further submitted that margin earned by assessee with respect to purchase of Gold from M/s. Manappuram Finance Limited in public auction and sale of same was only 0.5% on turnover. On further examining issue, it was revealed that assessee had not maintained proper records for purchase and sale of Gold. assesse s contention was that, he participated in public auction and purchase gold with his own capital of approximately Rs. 25,27,268/- along with cash received from various other persons who could not participate in auction, and from sale / transfer of gold purchased in auction earned bare margin of 0.5% on turnover. assessee had also stated that he does not remember names and address of persons from whom he had received advances because advances were received at auction site and transactions were completed then and there by handing over Gold purchased. It was further learned from M/s. Manappuram Finance Limited that in case of assessee entire bid amount was paid in one lump sum on date of auction itself. 5. From above information gathered, Ld. AO opined that margin of profit of 0.5% stated to have been earned by assessee is too low and hence estimated profit @ 5% of turnover amounting to Rs. 29,87,305/- and added to income of assessee since assessee could not provide any evidence to prove his stand. Further, 4 Ld. AO worked out peak payment for purchase of Gold at Rs. 1,28,17,370/- and added same to income of assessee as assessee could not explain source for purchase of Gold. 6. When matter travelled before Ld. CIT (A), Ld. CIT (A) confirmed order of Ld. AO by agreeing with his view. 7. Before us, Ld. AR for first time submitted paper book containing 1 to 155 pages being confirmation letters along with PAN No., received from various parties stating that they had advanced certain amount to assessee. Ld. AR thereafter vehemently argued stating that Ld. AO as well as Ld. CIT (A) has hastily come to decision disbelieving explanation offered by assessee with respect to source for purchase of gold. Ld. AR further pleaded that since assessee has filed additional evidence before Bench matter may be remitted back to file of AO for fresh consideration. Ld. DR on other hand pleaded for confirming orders of Ld. Revenue Authorities. 8. We have heard rival submissions and carefully perused materials on record. From facts of case, it is apparent that assessee has submitted before Ld. AO (Q. No. 17, page 5 of Assessment Order) that assessee did not remember names and address of persons from whom he has received advances at 5 time of auction. It is also accepted by assessee that transactions were completed on auction spot as Gold was handed over to persons who had paid advance to assessee. In this situation we wonder as to how assessee has now remembered names and address of all individuals with whom he had business transactions and was successful in obtaining confirmation letters from various parties from whom he has purported to have received advances for purchase of Gold. However considering prayer of assessee/Ld. AR, in interest of justice we hereby remit entire matter back to file of Ld. AO for fresh consideration as assessee has furnished additional evidence ( for establishing his source for purchase of gold which may also explain margin of profit earned) before Bench at time of hearing though such exercise adopted by assessee is not appreciable. 9. In result, appeal of assessee is allowed for statistical purposes. Pronounced in open Court on 21 st August, 2019. Sd/- Sd/- (P. MADHAVI DEVI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated:21 st August, 2019 OKK Copy to:- 6 1) Sri Maragoni Satyanarayana Goud, C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, 1 s t Floor, Somajiguda, Hyderabad. 2) ITO, Ward-9(1), Hyderabad. 3) CIT(A)-7, Hyderabad 4) Pr. CIT-7, Hyderabad 5) DR, ITAT, Hyderabad 6) Guard File Maragoni Satyanarayana Goud v. ITO, Ward-9(1), Hyderabad