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Vandana Rama Rao, Prop : Suryateja Wines, Voppangi Versus ITO, Ward-1, Srikakulam

2017 (8) TMI 448 - ITAT VISAKHAPATNAM

Estimation of profit in respect of IMFL business - 10% OR 5% - Held that:- The coordinate bench of the Tribunal in the case of Tangudu Jogisetty (2016 (7) TMI 379 - ITAT VISAKHAPATNAM) has considered the profit level in the line of business and decided that 5% of purchase price is reasonable profit margin in the line of IMFL business and directed the A.O. to re-compute the profit of the assessee. Thus we direct the A.O. to re-compute the income of the assessee at 5% of purchase price. Accordingl .....

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by the assessee were obtained from the creditors, who belongs to the assessee’s village and the amount is below ₹ 20,000/-. When the assessee has borrowed funds from friends and relatives, who are belonging to the same village, as to why he has taken near about five years to collect the confirmation letters. The assessee has not given any explanation for that. Also find that the additional evidence filed by the assessee in the form of confirmation letters is only an afterthought. It is no .....

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ent Year 2011-12. 2. Facts are in brief that the assessee is an individual, carrying on business of purchase and sale of IMFL, filed his return of income by declaring total income of ₹ 3,50,245/-. The return filed by the assessee was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act'). Later, after following due process, assessment was completed u/s 143(3) of the Act by estimating net profit at 20% of the stock put to sale. 3. On appeal, the Ld. CIT(A .....

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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 supported the orders passed by the authorities below. 6. I have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The issue involved in this appeal is with regard to estimation of profit in respect of IMFL business carried by the assessee. In this respect, the coordinate bench o .....

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tock 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. further observed that the assessee has failed to maintain stock registers and books of accounts maintained by the assessee are not susceptible for verification, therefore rejected the books of accounts and estimated net profit of 20% by relying upon the decision of Hon ble A.P. High Court. It is the contention of the assessee that t .....

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ate 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 the products over and above the MRP fixed by the State Government. We find force in the arguments of the assessee for the reason that the A.O. has estimated the net profit by relying upon the decision of A.P. High Court in the case of CIT Vs. R. Narayana Rao in ITA No.3 of 2003 which is rendered under different facts. The A.P. High C .....

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y 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 5% net profit on purchases is reasonable. The relevant portion of the order is reproduced hereunder: 3. We have heard the parties, perused the orders of the revenue authorities as well as other materials on record. It is the contention of the Ld. A.R. that the estimation of profit at 16% is high and excessive considering the normal .....

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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 officer to estimate the profit from the wine business of the assessee by applying the rate of 5% of the purchases made net of all other deductions. The assessing officer should also bear in mind that in no case the income determined should be below the income returned. 9. Considering the facts and circumstances of this case and also resp .....

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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 all deductions. Ordered accordingly. 7. In view of the above decision of the coordinate bench of the Tribunal, I 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. 8. So far as unexplained cash credits are concerned, during the cours .....

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ils before the Assessing Officer. The Assessing Officer assessed the amount of ₹ 6,92,234/- as unexplained cash credits and same is added to the total income of the assessee. The Assessing Officer further noted that the assessee has credited an amount of ₹ 93,769/- to the trading account, no details were filed and no explanation was also given, hence, above amount is also added to the total income of the assessee. 9. On appeal before the CIT(A), assessee except stating that amounts w .....

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he Income Tax (Appellate Tribunal) Rules, 1963 and submitted that the same may be admitted and the issue may be remitted back to the file of the Assessing Officer for fresh consideration. 12. On the other hand, Learned Departmental Representative seriously objected that at this stage, no additional evidence can be admitted. 13. I have heard both the sides, perused the material available on record and orders of the authorities below. The case of the assessee is that he borrowed certain funds from .....

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