Tribunal adjusts income estimate, disallows partner remuneration deduction

The Tribunal allowed the assessee's appeal, agreeing to estimate income at 3% of the cost of goods sold instead of the initial 5% determined by the Assessing Officer and upheld by the CIT(A). The Tribunal rejected the deduction of remuneration paid to partners, emphasizing that the income estimation was based on the cost of goods sold, not turnover or receipts.

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Issues: Estimation of income based on cost of goods sold, Disallowance of remuneration paid to partners

Estimation of income based on cost of goods sold:
The case involves an appeal by the assessee against the order of the Ld. CIT(A) confirming the estimation of income at 5% on the cost of goods sold for the A.Y. 2011-12. The assessee failed to produce sale invoices during the assessment proceedings, leading the A.O. to estimate profits based on the cost of sales. The A.O. relied on previous decisions and estimated the net profit at 5% of the goods put to sale. The Ld. CIT(A) upheld the A.O.'s decision. The assessee contended for a lower estimation of 3% of the cost of goods sold, citing a Tribunal decision approving a 2.5% estimation. The Tribunal noted that uniform net profit cannot be adopted for all cases and allowed the assessee's appeal, agreeing to the 3% estimation based on similar cases.

Disallowance of remuneration paid to partners:
The assessee sought to deduct remuneration paid to partners from the estimated income. However, the Tribunal rejected this claim, stating that since the income was estimated based on the cost of goods sold and not on turnover or receipts, the deduction of remuneration paid to partners was not allowable. Consequently, the Tribunal partly allowed the assessee's appeal, approving the 3% estimation of income based on the cost of goods sold but rejecting the deduction of remuneration paid to partners.

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