TMI Blog2016 (6) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the net profit estimated by the A.O. by relying upon the decision of Hon ble A.P. High Court ( 2011 (7) TMI 1274 - ANDHRA PRADESH HIGH COURT] 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 all deductions. Ordered accordingly. - I.T.A. No. 96/Vizag/2016, 97/Vizag/2016, 98/Vizag/2016, 102/Vizag/2016, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved for the year under consideration. Therefore, issued a show cause notice and asked to justify the low net profit declared with necessary evidences for sales and purchases along with expenditure claimed in the Profit loss account. In response to notice, the assessee furnished books of accounts and other details called for. The A.O., considering the details furnished by the assessee, observed that the assessee has not maintained any stock register and also sales bills do not contain quantitative and qualitative details, and hence, the net profit admitted could not be accepted. With these observations, issued a show cause notice and asked to explain why the books of accounts should not be rejected and profit shall not be estimated @ 20% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of accounts maintained by the assessee are not susceptible for verification. The assessee has not maintained stock register and also sales bills issued by the assessee not contains quantitative and qualitative details of sales. In view of the unverifiable nature of books of accounts, the A.O. rejected the books of accounts u/s 145 of the Act and estimated the net profit of 20% on total stock put for sale. While doing so, the A.O. has relied upon the decision of Hon ble Andhra Pradesh High Court in the case of CIT Vs. R. Narayana Rao in ITA No.3/Vizag/2003 dated 21.6.2011, wherein the Hon ble A.P. High Court held that estimation of net profit at 16% on purchase price would be reasonable. 5. Aggrieved by the CIT(A) order, the assessee pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that series of raids conducted on liquor traders by the Anti Corruption Bureau at various places in Andhra Pradesh reveals that the liquor traders have marked up price of the alcoholic beverages by as much as 30% to 40% higher than the maximum retail price fixed by the State Government. Therefore, considering the fact that the retail trader sell liquor at 30% to 40% higher than the MRP and also resorted to lose sale of liquor and other facts and circumstances of the case, direct the A.O. to estimate the net profit of 10% on purchase price. Aggrieved by the CIT(A) order the assessee is in appeal before us. 7. The Ld. A.R. for the assessee submitted that the CIT(A) is erred in estimating net profit of 10% on total purchase put for sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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