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of <h1>Tribunal Upholds CIT(A) Decision on Book Rejection & Profit Estimation</h1> The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision on both issues related to the rejection of books of accounts and the ... Determination of profits in the business of wines – Rejection of books of accounts – Held that:- There was no reason to interfere with the order of the CIT(A), following Income-tax Officer, Ward 1, Warangal Versus Shri P. Ramaiah, Warangal and others [2013 (12) TMI 1001 - ITAT HYDERABAD] - consistent directions has been made to adopt the rate of 5% of the purchase value or stock put to use whichever is more – thus, the order of the CIT(A) upheld – Decided against Revenue. Issues:1. Rejection of books of accounts2. Estimation of profitsAnalysis:Issue 1: Rejection of books of accountsThe Revenue appealed against the Order of the CIT(A) for the A.Y. 2008-2009, challenging the rejection of books of accounts by the Assessing Officer (A.O.). The A.O. rejected the books as the sale figures lacked supporting sale bills/receipts. Consequently, the A.O. estimated profits at 27% due to the absence of sale bills, leading to an enhanced sales figure and ultimately determining the total income of the assessee. The Ld. CIT(A) upheld the rejection of books by the A.O., emphasizing the need for reliable estimation based on a reasonable and comparable basis in the absence of reliable books of accounts.Issue 2: Estimation of profitsRegarding the estimation of profits, the Ld. CIT(A) directed the A.O. to estimate net profit at 5% on purchases or stock put for sale, following a previous ITAT order. The Revenue challenged this decision, arguing for a higher estimation based on specific factors related to the liquor trade in Nalgonda District. However, the Tribunal, after considering the arguments, upheld the decision of the CIT(A) based on consistent precedents from coordinate benches. The Tribunal emphasized the need for uniformity in estimating profits in liquor business cases, citing previous decisions that supported the 5% estimation method. The Tribunal dismissed the appeal of the Revenue, affirming the order of the CIT(A) in estimating profits at 5%.In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision on both issues related to the rejection of books of accounts and the estimation of profits. The Tribunal emphasized the importance of following consistent precedents in determining profits in liquor business cases, supporting the 5% estimation method based on purchase value or stock put for sale.
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