ITAT Hyderabad adjusts profit estimation to 3% for fair treatment

The Appellate Tribunal ITAT Hyderabad allowed the assessee's appeal for the Assessment Year 2013-14, directing the Assessing Officer to estimate the income at 3% of the cost of goods put to sale, contrary to the initial 5% estimation. This decision was based on the Tribunal's previous judgment in a similar case, emphasizing the consistent application of a 3% profit estimation. The Tribunal's reliance on precedent showcases its authority to adjust profit estimations and ensure fair treatment across cases, ultimately resolving the dispute regarding profit estimation methodology for the assessee.

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Issues: Estimation of profit at 5% of stock put to sale by AO, CIT(A) confirmation, Comparison with Tribunal's previous judgments, Request for profit restriction at 3%, Decision based on similar cases.

In this judgment by the Appellate Tribunal ITAT Hyderabad, the appeal for the Assessment Year 2013-14 revolves around the estimation of profit at 5% of the stock put to sale by the Assessing Officer (AO), which was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee, an individual and liquor dealer, had filed a return of income admitting a total income of Rs. 4,62,410. During the assessment proceedings, the AO found the assessee's books of account unverifiable and proceeded to estimate the income at 5% of the goods put to sale, citing a previous decision of the Tribunal. The CIT(A) upheld the AO's order, leading to the current appeal.

The counsel for the assessee argued that the Tribunal had previously restricted profit at 3% in similar cases and requested a similar direction for the present case. On the other hand, the Departmental Representative (DR) supported the orders of the authorities below. After considering the arguments and reviewing the material on record, the Tribunal noted its previous decision in a case involving Shri K.V.K.Kishore Babu, where the profit was restricted to 3% of the goods put to sale. Citing this precedent, the Tribunal allowed the assessee's appeal and directed the AO to estimate the income at 3% of the cost of goods put to sale, in line with its previous judgments.

Ultimately, the Tribunal allowed the assessee's appeal, emphasizing the consistent application of the 3% profit estimation in similar cases. The judgment highlights the importance of precedent and the Tribunal's authority to adjust profit estimations based on past decisions, ensuring fair treatment across cases. The order was pronounced in the Open Court on 28th April 2017, bringing a resolution to the dispute regarding the profit estimation methodology for the assessee in this case.

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