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2017 (4) TMI 1413 - AT - Income TaxEstimation of income - estimate the net profit from the sale of liquor @ 5% of the stock put for sale - Held that:- We find that though the assessee is maintaining the books of account, the AO has clearly brought out that they are not reliable as the sale bills did not contain the details of what is sold, how much is sold and to whom it is sold and most of them are self made vouchers. Therefore, though the AO has not specifically mentioned that the books of account have been rejected, the fact that he has proceeded to estimate the income after recording a finding that it is impossible to arrive at the real profit of the business practically amounts to his rejection of the books of account. No irregularity in the estimation of the income. Confirm the order of the AO as regards the estimation of income is concerned. However, the rate of the estimation at 5% to the cost of the goods sold, in our opinion is on a higher side. Hon'ble High Court of Andhra Pradesh in the case of CIT vs. Shri Kamlekar Shankar Lal [2013 (7) TMI 1108 - ANDHRA PRADESH HIGH COURT] wherein has held that a uniform profit rate of 5% of the cost of goods sold cannot be adopted in each and every case. In similar cases such as the assessee before us, the Tribunal has estimated the net profit at 3% of the cost of the goods sold.
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