Book results in liquor business accepted where high licence fee explained low margin and no specific defect justified profit estimation.

An exceptionally high liquor licence fee materially reduced the assessee's margin in the liquor contract business, and the books were not shown to be unreliable by any specific discrepancy, wrong entry, or comparable case. A general objection that sales and expenses were not fully vouched was insufficient to reject the book results or justify estimation of profit by applying a net profit rate. The disclosed trading results were therefore accepted and the addition sustained in first appeal was deleted.

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Issues: Whether the addition sustained by applying a net profit rate on the assessee's liquor should be deleted and the book results accepted.

Analysis: The assessee had paid an exceptionally high licence fee for the liquor contract, which materially affected the margin of profit in that line of business. Apart from a general objection that the sales and expenses were not fully vouched and verifiable, no specific discrepancy, wrong entry, or comparable case was brought on record to justify rejection of the books or the profit rate adopted. In these circumstances, the disclosed results were considered reliable and the addition sustained by the first appellate authority was found unwarranted.

Conclusion: The addition was deleted and the assessee succeeded.

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