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2017 (1) TMI 765 - ITAT VISAKHAPATNAM

2017 (1) TMI 765 - ITAT VISAKHAPATNAM - TMI - Estimation of profit in respect of IMFL business carried by the assessee -Determination of income - Held that:- We direct the A.O. to re-compute the income of the assessee at 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. - Unexplained credits - Held that:- The assessee has proved identify of the party and also creditworthiness of the creditor and genuineness of the transaction. In our opinion, the ass .....

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e Tax (Appeals) is deserves to be reversed. - Decided in favour of assessee - ITA No. 105/VIZ/2015 - Dated:- 12-1-2017 - SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER For The Assessee : Shri G.V.N. Hari - Adv. Department : Shri M. Narayana Rao - DR ORDER This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Visakhapatnam, dated 30/01/2015 for the Assessment Year 2011-12. 2. Facts of the case, in brief, are that assessee is the proprietor of M/s. Sr .....

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me at 10% of purchase price. 4. On being aggrieved, assessee carried matter in appeal before the Tribunal. At the time of hearing, the Ld. Counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the decision of the coordinate bench of this Tribunal where the Tribunal has scaled down the estimation of profit from 10% to 5% in the case of Tangudu Jogisetty in ITA No.96/Vizag/2016 by order dated 2.6.2016. 5. On the other hand, the Ld. D.R. strongly suppo .....

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fit margin in the line of IMFL business and directed the A.O. to re-compute the profit of the assessee. The relevant portion of the order is extracted as under: 8. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. estimated net profit of 20% on stock put for sale. The A.O. was of the opinion that the assessee has not maintained proper books of accounts and vouchers in support of purchases and sales. The A.O. f .....

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upon by the assessee is not applicable to the facts of the present case. The case before the Hon ble A.P. High Court was that the assessee is into the business of trading in arrack, whereas it is in the business of dealing in IMFL. The assessee further contended that IMFL trade was controlled by the State Government through A.P. State Beverages Corporation Ltd. and the prices of the products are fixed by the State Government. The assessee being a license holder of State Government cannot sell th .....

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stified in relying upon the judgement, which was rendered under different facts to estimate the net profit. On the other hand, the Ld. A.R. for the assessee, relied upon the decision of ITAT, Visakhapatnam bench in the case of T. Appalaswamy Vs. ACIT in ITA No.65 & 66/Vizag/2012. We have gone through the case laws relied upon by the assessee in the light of the facts of the present case and finds that the coordinate bench of this Tribunal, under similar circumstances held that estimation of .....

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w that the issue is no more res integra in view of a series of decisions of the ITAT Hyderabad bench in similar cases. The coordinate bench in case of ITA No.127/Hyd/12 and others dated 18.05.2012 as well as a number of other cases have held that profit in case of business in Indian made foreign liquor has to be estimated at 5% of the purchases made by the assessee. Therefore, following the decision of the ITAT Hyderabad bench, we set aside the order of the CIT(A) and direct the assessing office .....

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(supra), which was rendered under different facts is quite high. On the other hand, the assessee relied upon the decision of coordinate bench and the coordinate bench under similar circumstances estimated the net profit of 5% on total purchases net of all deductions. No contrary decision is placed on record by the revenue to take any other view of the matter than the view so taken by the coordinate bench. Therefore, we direct the A.O. to estimate the net profit of 5% on total purchases net of a .....

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8377; 3,50,000/-. The Assessing Officer asked the assessee to submit the details about unexplained credits of ₹3,50,000/-. The assessee submitted before the Assessing Officer that he has received cash from one Sri Gurugubelli Jagan Mohan Rao, s/o late Shri Mukunda Rao, Srikakulam and he filed a confirmation before the Assessing Officer. It was also submitted before the Assessing Officer that the assessee has invested an amount of ₹3,50,000/- towards investment for 10% share in the bu .....

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mount of ₹ 3,50,000/- was considered as unexplained credit to the capital account and the same is added to the income of the assessee. 9. On appeal before the CIT(A), confirmed the order of the Assessing Officer. 10. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. In the assessment order, the Assessing Officer has noted that in the assessee s capital account, there is an amount of ₹ 3,50,000/- has been cre .....

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