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of <h1>Tribunal directs higher profit estimation in liquor trade to ensure fair tax collection</h1> <h3>Income Tax Officer Versus Beeravelli Venkat Reddy, Beeravelli KiranReddy, Kalakota Ram Reddy, Yerra Aruna Reddy, Mandadi Nageshwar, R. Venkateshwarlu, Poleboina Harish, Kuncham Srinivas, Maram Venkat Reddy, M. Venkateshwara Rao, Mayuri Wines, M/s Mayuri Wines, Yerra Aruna Reddy, Mothey (V&M) Ginjupalli Ramesh,</h3> Income Tax Officer Versus Beeravelli Venkat Reddy, Beeravelli KiranReddy, Kalakota Ram Reddy, Yerra Aruna Reddy, Mandadi Nageshwar, R. Venkateshwarlu, ... Issues:Estimation of net profit for assessment years 2007-08 & 2008-09 based on liquor trade business.Analysis:The appeals by the Revenue were against the orders passed by the CIT(A) for assessment years 2007-08 & 2008-09. The facts of the case involved the business of retail trade in liquor, where the purchases were made from the Andhra Pradesh Beverages Corporation Ltd. The Assessing Officer computed the turnover by adopting a profit margin of 27% due to the absence of sale bills. The CIT(A) directed the net profit to be estimated at 3% based on a decision of ITAT, Hyderabad Bench in a similar case. The Revenue raised common grounds of appeal challenging the estimation of sales and net profit by the Assessing Officer and the CIT(A). The Revenue contended that the case relied upon by the CIT(A) was not comparable, and the net profit should be estimated at 5% due to practices in the liquor trade.The Tribunal noted that the decision to estimate net profit at 3% was based on past history and comparable cases. However, considering the Revenue's submissions, the Tribunal directed the Assessing Officer to estimate the net profit at 5% of purchases or stock put for sale, ensuring the assessed income not less than the returned income. The Tribunal modified the CIT(A)'s order accordingly, partly allowing the Revenue's appeals. The decision aimed to address concerns raised by the Revenue regarding the estimation of net profit in liquor trade businesses and ensure appropriate tax collection in the interest of social justice.In conclusion, the Tribunal's judgment provided clarity on the estimation of net profit in liquor trade businesses, balancing past history, comparable cases, and the Revenue's concerns. The decision aimed to uphold fairness and accuracy in tax assessments while considering the unique aspects of the liquor trade industry.
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