TMI Blog2012 (6) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 - SHRI G.C.GUPTA, SHRI AKBER BASHA, JJ. Department by: Shri. B.V. Prasad Reddy Assessee by: Shri. M.V. Raja Sekhar Rao O R D E R PER AKBER BASHA, AM:- This appeal by the Revenue and the Cross Objection by the assessee are directed against the order of the CIT (A)-VI, Hyderabad dated 30-11-2010 and they pertain to the assessment year 2004-05. 2. Brief facts of the case are that the assessee firm filed its return of income for the assessment year under consideration on 29-10- 2004 admitting a total income of Rs.20,370/- and the same was processed under section 143(1) of the Act on 2-5-2005. Subsequently, it was noticed that there was understatement of sales to the tune of Rs.93,65,993/- and therefore the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as AOP and disallowed the claim under section 40(b) being the remuneration of Rs.60,000/- paid to partner Sri M. Ram Reddy. The assessing officer asked the authorized representative of the assessee to produce the books of account and on verification, he observed that the assessee is entering the sale receipts on lump sum manner every day and when the details were called for, the assessee stated that the sale figures shown in the books are actually based on the sales sheets of the day. Further, in the answer to show cause notice, it was explained that it was not practicable for the firm to maintain cash sale bills in this line of business. The assessing officer felt that in the absence of sale bills, the sale proceeds entered in the day boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit on the cost of goods sold was adopted @ 30% on the total items of liquor items sold and thus arrived at Rs.93,65,993/- being the understatement of sales and added the same to the returned income. The assessing officer finally determined the total income of the assessee at Rs.94,86,870/- after making two other small additions. Aggrieved against the order of the assessing officer, the assessee went in appeal before the CIT (A). On appeal, the CIT (A) by following the decision of Hon ble Supreme Court in the case of CIT vs. Rangila Ram, the treatment of status as AOP held by the assessing officer was upheld and the remuneration to the partner of Rs.60,000/- was disallowed by the assessing officer is also upheld. Regarding estimation of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit ratio of the assessee with that of earlier years is base less. Hence, it is prayed that the order of the assessing officer is to be restored. 4. On the other hand, the learned counsel for the assessee submitted that the assessing officer has rejected the books of account and estimated the profit by means of working out the understatement of sales based on the highest gross margins prescribed by the APBCL. Even after rejecting the books of account and estimating the net profit, the assessing officer made further additions of Rs.1,00,507/- towards other heads of expenditure debited to Profit Loss A/c. It is submitted that once the estimation of income resorted by the lower authorities by rejecting the books of account, the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation of income after rejecting the books of accounts is either past history of the assessee or any other comparable cases. The learned counsel for the assessee clearly demonstrated before us that the assessee s net profit in the past is between 0.12% to 0.28% of sales. The co-ordinate Bench of the Tribunal in the case of Manjit Singh Bagga vs. ITO in ITA No.371 and others dated 30th Sept. 2010 held that the estimation of net profit at 3% is reasonable. In view of this matter, ends of justice would be met if we estimate the net profit of the assessee at 3% of the purchases or stock put for sale during the year under consideration as against the estimation of 5% made by the CIT (A). Accordingly, the ground raised by the Revenue on this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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