Assessee's business model as liquor procurement facilitator confirmed with 10% profit estimation on bank deposits

ITAT Hyderabad upheld CIT(A)'s decision treating assessee as facilitator providing services to liquor merchants for online applications and procurement from state corporation. Court confirmed assessee's business model of collecting cash from clients, transferring to corporation, and earning commission. CIT(A) correctly estimated 10% profit on total bank deposits as business receipts. Revenue's challenge regarding Rule 46A violation was rejected as evidences were already on record before AO. Appeal decided against revenue.

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The appeal in this case was filed by the Revenue against the order of the learned CIT(A)-National Faceless Appeal Centre relating to the assessment year 2016-2017. The assessee, an individual engaged in the business of providing bank facilities for liquor merchants, filed his income tax return showing a gross total income of Rs. 7,15,882/- and net income of Rs. 5,65,880/- earned through commission after claiming deductions under Chapter-VIA. The Assessing Officer, upon verifying bank statements, noted cash deposits totaling Rs. 3,44,85,085/- in two bank accounts of the assessee. As the assessee failed to prove the identity, genuineness, and creditworthiness of these cash deposits, the Assessing Officer treated them as unexplained cash credits under section 68 of the Income Tax Act, 1961.The assessee appealed to the CIT(A), who considered the nature of the assessee's business as trading in liquor and directed the Assessing Officer to treat 10% of the total purchases as business income. The Revenue appealed to the Tribunal with grounds related to the CIT(A)'s decision. The Revenue argued that the CIT(A) erred in granting relief to the assessee based on submissions without allowing examination of additional evidence, in directing the estimation of income at 100% of purchases without sufficient proof, and in treating the bank account entries as liquor purchases without valid evidence.During the hearing, the Revenue sought condonation of a 28-day delay in filing the appeal, which was granted by the Tribunal. The Revenue contended that the CIT(A)'s order should be set aside, relying on the Assessing Officer's findings. The assessee, on the other hand, provided evidence, including affidavits and ITR returns of parties, to support the nature of his business as providing services to liquor traders. The CIT(A) had considered these facts and estimated the profit at 10% of the total turnover.The Tribunal, after considering the arguments and evidence presented, upheld the CIT(A)'s decision. It found that the assessee acted as a facilitator for liquor dealers, providing services for obtaining licenses and purchasing liquor, and the cash deposits were treated as turnover from business. The Tribunal agreed with the CIT(A)'s reasoning and rejected the Revenue's grounds of appeal. Consequently, the appeal of the Revenue was dismissed.In conclusion, the Tribunal affirmed the CIT(A)'s order, emphasizing the nature of the assessee's business as a facilitator for liquor traders and supporting the estimation of profit at 10% of the total turnover. The Tribunal found no error in the CIT(A)'s decision and dismissed the Revenue's appeal.

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