TMI Blog2013 (8) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of estimation of profit - It is well settled principles of law that when profit is estimated there cannot be any inference that the assessee has concealed the income or furnished inaccurate particulars of income so as to attract the provisions of section 271(1)(c) of the Act - Following decisions of CIT vs. Iqbal Singh & Co. [2009 (3) TMI 568 - HIGH COURT OF PUNJAB AND HARYANA] and Eagle Synthetics (P) Ltd. Vs. Income-tax Officer [2010 (2) TMI 719 - ITAT, Ahmedabad] - Decided against Revenue. - ITA No.410 to 414/Hyd/13, ITA Nos. 415 and 416/Hyd/13 - - - Dated:- 12-7-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Appellant : Shri Phani Raju For the Respondent : Shri T. Chaitanya Kumar ORDER Per Saktijit Dey, J. M:- All these appeals filed by the department in the case of same assessee-respondent are directed against different orders of CIT(A)- III, Hyderabad. ITA Nos. 415/Hyd/13 and 416/Hyd/13 are appeals arising out of assessment orders passed pertaining to the assessment years 2007-08 and 2008-09 whereas ITA Nos. 410-414/Hyd/13 are concerning imposition of penalty u/s 271(1)(c) of the Act pertaining to assessment years 2002-03, 2003-04, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l life business. In fact, by taking all these factors into account the honourable Income-tax Appellate Tribunal Hyderabad has consistently held that net profit in similar liquor cases may be estimated at 5% of sales. This view has also been upheld by the Honourable High Court of Madhya Pradesh in the case of Badri Prasad Bhagwandas vs. CIT 82 Taxmann 109 (MP) which has been relied upon by the Assessing Officer in assesses own cases for earlier years. Those assessments and estimations have been accepted by the appellant. In those assessments 115% of the purchases has been estimated as ales and 5% of the sales turnover has been estimated as the net profit. 5.4. Given the above facts and circumstances I hold that estimation of 5% of sales turnover as net profit is in order and the Assessing Officer is directed to do so. No other deduction or exemption will be available to the appellant after this estimation." 5. We have considered rival submissions of the parties and perused the material on record. It is a fact that this bench of the Tribunal in a large number of cases of assesses, carrying liquor trade has directed estimation of profit at the rate of 5% on the sales turnover of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot maintaining sale bills proposed to reject the books of account and estimate the profit. The assessee objecting to the rejection of books of accounts submitted that since the books of account are audited and expenditure is mainly on account of purchase of stock from A.P.B.C.L., a Government Organisation, there is no reason to reject the books of accounts. It was further submitted that so far as other small expenditures debited to Profit Loss A/c are concerned, they were incurred in day to day running of the business and cannot be fully vouched. 9 The Assessing Officer however did not accept the contention of the assessee and rejected the books of accounts by observing that the expenditure claimed are unverifiable in the absence of proper supporting vouchers. Accordingly, the Assessing Officer after rejection of books of accounts proceeded to estimate the profit. While doing so, the Assessing Officer by relying upon the decision of Hon'ble M.P. High Court in case of Badri Prasad Bhagavandas Co. Vs. CIT reported in 82 Taxman 109 (MP) and the decisions of Income-tax Appellate Tribunal, Hyderabad Bench in similar cases, estimated the sales at 115% of the purchases made during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court has taken cognizance of the ongoing economic environment of the liquor trade. It has been held that in case the books of accounts are rejected, estimation of net profits at the rate of 5% of sales would be acceptable. This is only a mere estimation and the judgement does not imply that wherever an assessee has shown less net profits, the difference would be concealment of income. Moreover, if the order of the Assessing Officer is examined it is found that there is absolutely no basis for estimation of sales turnover and thereafter net profits. No reference is made to any evidence which would point out to these facts. 5.4 From the above the unmistakable conclusion is that there is no concealment of income or incorrect filing of particulars by the appellant. The additions have been made only on the basis of a simple estimate which does not necessitate any penal action. Accordingly, I hold that on the question of estimation of income at the rate of 5% penalty is not leviable. 5.5 With regard to the small additions under section 68 of Income Tax Act, I also find that the assessing officer has not pointed out any evidence to show that there is concealment on this account. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and perused the orders of the lower authorities. We have also gone through the decisions relied upon by the parties before us. A perusal of the order passed u/s 271(1)(c ) of the Act reveals that no wherein the order passed, the Assessing Officer has recorded a conclusive finding of fact that the assessee has either concealed the particulars of income or has furnished inaccurate particulars of income which is a condition precedent for imposing penalty u/s 271(1)(c) of the Act. Merely because the profit has been estimated and certain additions are made in the assessment would not automatically lead to imposition of penalty u/s 271(1)(c) of the Act. The additions made in assessment proceedings ipso facto does not lead to a conclusion that the assessee has concealed particulars of income or furnished inaccurate particulars of income. There must be material brought on record on the basis of which a conclusion can be formed that there is a conscious attempt on the part of the assessee to conceal its income or furnish inaccurate particulars of its income. It is not disputed that the major addition in case of the assessee is on account of estimation of profit. It is well settled p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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