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TMI Blog2013 (12) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit at 24% by taking the average of medium and premium retailers margin. The cost of goods sold was worked out at Rs.4,79,40,450/- and the gross sales have worked out at Rs.5,94,46,154/-. Since the assessee declared gross sales at Rs.5,40,63,708/- the difference of Rs.53,82,450/- was added as surplus sales of the assessee and brought them to tax. The learned CIT(A) considering the coordinate Bench decisions on the issue, directed the Assessing Officer to estimate the net profit at 5% on the purchases or stock put for sale during the year whichever is more. The relevant portion of the order of the learned CIT(A) is as under : "5.2 The appellant objected to such estimation on blanket note, when the products are offering different margins, even as per G.O. issued by the APBCL. The appellant also contended that the A.O erred in not following the decision of jurisdictional ITAT on similar facts. It was contended that the appellant is operating its business in city limit where there is continuous Excise Department checks and it cannot sell at the rates as estimated by the assessing officer and it was stated that after meeting out the day to day expenditure and also after meeting out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Amaravathi Wines, as referred above, I am of the considered opinion that the profits at the rate of 5 0 /0 on purchases or stocks put for sale during the year is justified. Respectfully following the decision of the ITAT, the Assessing Officer is directed to estimate the net profit at 5 0 /0 on the purchases or stock put for sale during the year, whichever is more. Further, in estimating the profits, the income already offered by the appellant on such sales, may be taken into consideration, to avoid the duplication of income. In the result, ground Nos. 1 is partly allowed." 3. After considering the arguments of the learned D.R. we do not find any reason to interfere with the order of the CIT(A) who in-turn, followed the decisions of the coordinate Bench as stated above. The Coordinate Bench of this Tribunal is uniformly accepting the 5% as net profits and in the case of ITO, Warangal vs. Shri P. Ramaiah and others in ITA.No.1739/Hyd/2012 dated 21.03.2013 held as follows : "4. We have heard the parties present and perused the material on record in the light of the impugned orders of the CIT(A). We find that the issue involved in the present appeal is squarely covered by the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon by the assessee. The order of the learned CIT(A) is as under: "6.3. I have gone through the submissions of the appellant. It is a fact that the credits were made in the names of the partners, in the books of the appellant and the appellant failed to furnish the details, before the Assessing Officer, at the stage of the assessment proceedings. As such there is no grave error in treating the said amounts as unexplained credits of the firm. But, in the instant case the profits are estimated at higher rate by rejecting the books of account, and the ratio of the decision of jurisdictional High Court, in the case of Indwell Construction Vs. CIT ( 232 ITR 776) which has further relied upon it's own decision in the case of Maddi Sudarshanam Oil Mills Co. Vs. CIT (37 ITR 369), support the view/stand of the appellant that once the income-tax authorities have rejected the books, they cannot have it both ways, namely,.Adopting flat rate to compute profits as well as rely on the books for the purpose of adding the unexplained cash credits, which were part of the accounts. The facts of this case are similar to the facts of the case of judicial decision and the ratio of the decision sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, and no further burden lies on the ITO to show that that income is from any particular source. It is for the assessee to prove that, even if the cash credit represents income, it is income from a source which has already been taxed." Kale Khan Mohammad Hanif V. CIT [1963] 50 ITR 1 (SC) followed. The Hon'ble Supreme Court reversed the decision of the Hon'ble Allahabad High Court wherein the Hon'ble Allahabad High Court held that additions cannot be made. The Hon'ble Supreme Court has followed its earlier decision in case of Kale Khan Mohammed Hanif Vs. CIT, 50 ITR 1 wherein the apex court held as under: "It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to sho w either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the IT Act. In the absence of such proof, the ITO is entitled to treat it as taxable income. (A Govindarajulu Mudaliar V. CIT [1958] 34 ITR 807 (SC) followed. In the original assessments for the assessment years 1945-46 and 1947-48 the assessee's accounts were not found complete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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