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of <h1>ITAT ruling on income estimation for retail trader highlights importance of proper records</h1> <h3>Shri Sridhar Ramagiri Versus Income Tax Officer Ward-11 (2) Hyderabad</h3> The ITAT Hyderabad directed the AO to estimate the income of an individual engaged in retail trading of IMFL for A.Y. 2014-15 at 3% of goods put to sale, ... Estimation of the net profit in retail of wines - Held that:- We find that this Tribunal, in the case of Secunderabad Wines (2016 (7) TMI 1449 - ITAT HYDERABAD) have held 3% of the cost of goods put to sale to be reasonable estimation of income. Issues:Estimation of income in retail trading for A.Y. 2014-15 based on proper books of account maintenance.Analysis:The case involved an individual engaged in retail trading of IMFL, who filed income tax return for A.Y. 2014-15 but failed to maintain proper books of account. The Assessing Officer (AO) estimated net profit at 5% of purchases or stock put to sale due to lack of proper documentation. The assessee appealed to the CIT (A), who upheld the AO's decision. The assessee then appealed to the ITAT Hyderabad. The counsel for the assessee cited a previous Tribunal decision where 3% of the cost of goods put to sale was considered a reasonable estimation of income. The DR supported the lower authorities' orders. The ITAT referred to the previous Tribunal decision and directed the AO to adopt 3% of the goods put to sale as the income for the relevant A.Y., thereby allowing the assessee's appeal.This judgment highlights the importance of maintaining proper books of account in income tax assessments. It also demonstrates the significance of citing relevant precedents to support arguments in tax appeals. The decision of the ITAT was based on the principle of consistency with previous rulings and the application of a reasonable estimation method for determining income in retail trading cases. The judgment serves as a reminder for taxpayers to adhere to accounting standards and for tax authorities to consider past decisions in similar cases for fair and consistent assessments.
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