9911796707
TMI Blog2012 (9) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 dated 28-7-2011 in the case of M/s. Kanaka Durga Wines. 3. Brief facts are, the assessee is a Bar and Restaurant. For the assessment year 2007-08, it filed its return of income declaring a total income of Rs.2,57,060/-. Initially, return was processed u/s 143(1). Subsequently, the assessment was reopened by issuing a notice u/s 148 on 29-6-2009 on the reason that the assessee had understated the sales to the extent of Rs.45,62,681/-. In course of reassessment proceedings, the assessee appeared and produced its books of account and other documents like purchase bills, vouchers for expenses as called for by the AO. As has been observed by the AO, the assessee did not produce any sale bills and therefore the AO was not willing to accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit at the rate of 20% for medium and premium liquor item and 25% for beer item which worked out to Rs.2,54,04,320 when compared to the gross sales of liquor admitted by the assessee in the return to the tune of Rs.2,28,28,192 a difference of Rs.25,76,110/- arose which was treated as understatement of sales by the AO. After taking into consideration the assessee's contention that the sale of empty bottles admitted at Rs.3,73,085 in the return of income is to be reduced from the turnover and it is incidental to liquor trade. The net understatement of sales was determined at Rs.22,03,025/- which was added to the total income of the assessee. The assessee being aggrieved of such addition filed an appeal before the CIT (A). Before the CIT (A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve directed for estimation of profit at 3%. The learned DR contended that in case of Kanaka Durga Wines, it is an exclusive wine shop whereas the assesseee is operating a Bar as well as Restaurant where food articles were also sold. Therefore, the profit element will not be the same in the case of exclusive wine shop. The leaned DR further contended even in case of exclusive wines, the ITAT recently has directed for estimation of profit at 5%. 6. The learned AR, on the other hand, submitted that though the petitioner runs a Restaurant along with Bar but in reality the major sales is of liquor item and the sale of food articles is of very negligible amount may be about 5% of the total turnover. The learned AR reiterating its contentions rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as undisclosed income of the assessee for the year under consideration. It is well settled law that the best guide for estimation 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 y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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