TMI Blog2017 (12) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT, Visakhapatnam Bench in the case of Meka Ramamurthy [2017 (12) TMI 589 - ITAT VISAKHAPATNAM] consistently held that profit rate at 5% of purchase price, clear of all deductions is reasonable. Consistent with the view taken therein, estimate of profit at 5% of purchase price is reasonable and directed Assessing Officer, accordingly. Addition towards unexplained investment - Held that:- Neither before the Assessing Officer nor before the ld.CIT(A), the assessee could prove the source of investment, in fact, no explanation was offered. Thus, additional evidence filed for the first time, cannot be entertained, more particularly on the ground that even the confirmation letters are not sufficient to prove the investment. It is the duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit rate of 2.3%. 4. Since the profit declared from business of IMFL is too low, the assessee was called upon to justify the claim of deriving such a low profit, with the help of books of account, sale bills and vouchers etc. Admittedly, the assessee did not maintain any stock register, and the sale bills maintained did not contain quantitative and qualitative details. Under these circumstances, the Assessing Officer rejected the book results and estimated the net profit at 20% on stock put to sale. 5 . The assessee tried to justify low gross profit by contending that in the year under consideration, the volume of sale is more leaving ₹ 1,23,768/- as closing stock. The gross profit rate varies depending upon the brands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- and 1st Purchase of ₹ 3,00,000/- and 8G Commission of ₹ 3,21,681/-. Thus, the total investment made during the month of June, 2010 before the commencement of the business comes to ₹ 31,23,549/-. The assessee claimed that he is assessed to tax regularly and besides wine business, he has also carried crusher business. He further stated that he has used certain amounts from his crusher business also for the purpose investment in the wine business. He therefore, filed a cash flow statement to prove certain amounts relating to crusher business were also used. Such amount was arrived at ₹ 29,73,195/- as cash on hand available which he sought credit from the above investment. On verification of the cash flow statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main contention of the assessee is that when books are rejected, there cannot be any separate addition towards unproved cash credits. In this regard, he placed reliance on the decision of the Jurisdictional High Court in the case of Indwell Constructions vs. CIT (232 ITR 776) and also the decision in the case of Maddi Sudarshanam Oil Mills Co. Vs. CIT (37 ITR 369) . 10 . The ld. CIT(A) observed that there is a rampant practice of sale of liquor above the MRP which was rightly taken into consideration by the A.O. However, profit estimated 20% was found to be excessive and thus estimated the profit at 10% of purchase price. 11 . As regards unexplained investment, the ld. CIT(A) observed that the Assessing Officer is not precluded f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not prove their creditworthiness. 17 . I have considered the rival submissions and carefully perused the records. 18 . In IMFL business, few newspapers have no doubt mentioned about considered sale of liquor at a higher price i.e. at a price higher than the rate fixed by the Government, but the fact remains that in the assessee s case, there is nothing on record to suggest that he has flouted the norms and sold liquor at a higher price. The Government of Andhra Pradesh through AP Beverages Corporation Ltd. is the only agency authorised to sell IMFL. Sale rate is fixed by A.P. Beverages Corporation. However, having regard to the huge licence fee payable and other incidental expenditure, the ITAT, Visakhapatnam Bench consistently ..... X X X X Extracts X X X X X X X X Extracts X X X X
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