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S. Sanyasi Naidu Versus ITO Ward-2, Srikakulam

2017 (9) TMI 818 - ITAT VISAKHAPATNAM

Estimation of income from 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. Accordingly, this g .....

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before the Ld. CIT(A). Not only that, from the paper book filed by the assessee, it is very clear that all the prospective buyers who advanced the loans to the assessee are from same village of the assessee. When I specifically pointed out the A.R. of the assessee that why you are not able to file confirmation letters from the loan creditors who are belonging to your native village, he has not given any explanation. Under these above facts and circumstances of the case, we are of the opinion tha .....

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filed bank account of Shri N.Neelakanteswara Rao to prove that the transaction has been taken place through bank. Similarly, in case of B. Bala Murali Krishna also the assessee has not filed the return of income for the A.Y. 2011-12 and bank account of B. Bala Murali Krishna has not been submitted. The assessee claims to have received an amount of ₹ 1 lakh from Smt. Usha Kumari but no details are filed. Therefore, the entire ₹ 5 lakhs treated by A.O. is unexplained and brought to ta .....

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icial Member: This appeal filed by the assessee is directed against order of the CIT(A), Visakhapatnam dated 13.11.2014 for the assessment year 2011-12. 2. Ground No.1 is general in nature. Ground No.2 is not pressed by the Ld. Counsel for the assessee. Ground Nos.3 & 4 are relating to estimation of income from IMFL business. 3. Facts are in brief that the assessee is the proprietor of M/s. Ganesh Wines and is carrying on business of Indian made foreign liquor (IMFL) had filed a return of in .....

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Ld. Counsel for the assessee has submitted that the issue involved in this appeal is squarely covered in the case of Sri Vysyaraju Satyanarayana Raju, Srikakulam Dist. In ITA No.2/Vizag/2016, which is reproduced as under: 3. 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 Tr .....

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ect, the coordinate bench of the Tribunal in the case of Tangudu Jogisetty (supra) 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. 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. estim .....

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tion of the assessee that the net profit estimated by the A.O. is quite high when compared to the nature of business carried on by the assessee. It is further submitted that the case law relied 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 .....

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rent facts. The A.P. High Court has considered the case of an arrack dealer, whereas, the assessee is into the business of dealing in IMFL. Therefore, we are of the view that the A.O. was not justified 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 .....

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sive considering the normal rate of profit in this line of business. Whereas, the Ld. D.R. supported the order of the CIT(A). Having considered the submissions of the assessee, we are of the view 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 ha .....

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of this case and also respectfully following the ratios of coordinate bench, we are of the view that the net profit estimated by the A.O. by relying upon the decision of Hon ble A.P. High Court (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 rec .....

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elating to unexplained investment of ₹ 12,17,723/-. In the assessment order, the A.O. has observed that the assessee has paid first instalment tender amount (1/6th of the tender amount) of ₹ 24,000/- on the day of auction. Further, the assessee has made a purchase of liquor stock worth ₹ 1,97,222/- on 1.7.2010 and ₹ 3,26,362/- on 2.7.2010 at the beginning of the operations. Further, the assessee has made bank guarantee deposit of ₹ 6,95,000/- and bank guarantee comm .....

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fore the A.O. that he is L-1 bidder of the liquor shop and to start the business, he has taken certain advances from prospective customers and made the above investment and regarding the documentary evidences for advances received from prospective customers, he submitted that the number is large since each had given him an amount of ₹ 2,000/- to ₹ 2,500/- only. It is very difficult to produce them immediately and also he has to incur lot of expenditure to bring them to the office. He .....

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nder the head income from other sources . 7. On appeal before the Ld. CIT(A), the assessee has not filed any details, therefore, the Ld. CIT(A) confirmed the order of the A.O. Before me, the Ld. Counsel for the assessee has filed a paper book consisting details of the persons from whom he received advance from page no.1 to 135 consisting near about 59 parties and submitted that these are the people from whom he has received the advances and the same may be admitted for remitting the matter back .....

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ve buyers and no details were filed. Therefore, the A.O. confirmed the addition. On appeal also no details were filed before the CIT(A). After hearing the assessee s counsel, I find that it is difficult to accept the explanation given by the assessee that he has received an advance from prospective buyers i.e. who are going to purchase the liquor. So far as admission of additional evidence is concerned, the A.O. passed the assessment on 27.1.2014. The Ld. CIT(A) passed an order on 13.11.2014 and .....

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ese above facts and circumstances of the case, we are of the opinion that this is not a fit case to admit the additional evidence at this juncture, therefore, additional evidence filed by the assessee is rejected and the order passed by the Ld. CIT(A) is confirmed. Accordingly, this ground of appeal raised by the assessee is dismissed. 10. Ground no.7 raised by the assessee is relating to unsecured loans of ₹ 5 lakhs. In the assessment order, the A.O. has asked the assessee to file confirm .....

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