2012 (5) TMI 755

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....ut any reference or keeping reliance on any comparable case that of assessee's business in its surrounding area." 3. Facts of the case in brief are that the assessee is an individual, deriving income from business of running a wine shop in the name of M/s. Kanaka Durga Wines. The assessing officer, in the course of assessment proceedings u/s 143(3) of the Act, found that that the assessee during the previous year made purchases of Rs. 3,73,69,701/-/- from APBCL and has shown sales at Rs. 4,59,03,906/-. He further noted that as per G.O.Ms. No.184 dated 7.2.2005 issued by the Revenue authorities of Government of Andhra Pradesh, the retailer's margin, i.e. gross profit, on sale of ordinary liquor products is 27% and on medium and on premium....

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....e learned DR Mr. B.V. Prasad Reddy has filed written submissions, wherein it was stated as under:- "1. In the case of M/s Kanakadurga Wines Vs. ITO, Ward- 9(3), Hyderabad(591/Hyd/2011, the Hon'ble ITAT had upheld the rejection of books of account and also estimation of GP@30% of sales. 2. The Hon'ble ITAT had directed that the net prof it be estimated @ 3% of purchases. This was done af ter verifying the previous history of business done by the assessee. The Hon'ble ITAT had followed the same decision in some other cases. 3. However, in these cases, there is no previous business done by the assessee to verify. The Assessing Off icer has relied on the business practices in this trade where the sale price is much ab....

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....o direct that the estimate of net prof it above 5% of the purchases made by the assessee." 7. We have heard arguments of both the parties and perused the record as well as gone through the orders of the authorities below. Similar issue came up before us in the cases of Beeravelli Venkat Reddy, Nemmikal (V&M) and others vide ITA Nos. 148 to 177/Hyd/2012 order dated 07/05/2012, where the JM was the author of the order. In the said cases, the Bench after taking into the submissions of the DR that estimate of net profit above 5% of the purchases made by the assessee is to be adopted, directed the Assessing Officer to estimate net profit at 5% of the purchases or stock put for sale during the year subject to the assessed income not less than ....

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....he addition u/s 68 of the Act treating the same as unexplained credits. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 10. Before the CIT(A), a document was filed stated to be signed by three daughters of shri B. Sathaiah and Smt. kamalamma on 08/06/06 with a request to admit the said document as additional evidence under rule 46A of the IT Rules, 1962. The CIT(A) held that the assessee failed to prove the source of such cash receipts of Rs. 17.00 lakh 13.00 lakh shown in the names of the said two persons in the balance sheet. The CIT(A) observed that to the query raised by the Assessing Officer vide letter 04/10/09, the assessee merely submitted that he had received such amounts from those two persons and had no....