2016 (7) TMI 1286

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....y determining total income of Rs. 43,73,007/- by estimating the income at 20% of the stock put to sale after deduction of the income offered by the assessee of Rs. 7,94,000/-. In the assessment order, the A.O. has observed that the assessee has made purchases to the tune of Rs. 2,18,65,033/- and declared sales of Rs. 2,90,12,606/- and admitted net profit of Rs. 7,94,000/-. The A.O. called upon the assessee to produce the bills and vouchers for the liquor sales supporting the evidences for the expenditure claimed. The assessee failed to produce the sale bills and stock register, therefore, the A.O. rejected the books of accounts as unreliable and estimated the net profit at 20% of the stock put for sale. 3. Assessee carried matter in appeal....

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....aterials available on record and gone through the orders of the authorities below. The A.O. estimated net profit of 20% on stock put for sale. The A.O. was of the opinion that the assessee has not maintained proper books of accounts and vouchers in support of purchases and sales. The A.O. further observed that the assessee has failed to maintain stock registers and books of accounts maintained by the assessee are not susceptible for verification, therefore rejected the books of accounts and estimated net profit of 20% by relying upon the decision of Hon'ble A.P. High Court. It is the contention of the assessee that the net profit estimated by the A.O. is quite high when compared to the nature of business carried on by the assessee. It is fu....

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....ircumstances held that estimation of 5% net profit on purchases is reasonable. The relevant portion of the order is reproduced hereunder: "3. We have heard the parties, perused the orders of the revenue authorities as well as other materials on record. It is the contention of the Ld. A.R. that the estimation of profit at 16% is high and excessive considering the normal rate of profit in this line of business. Whereas, the Ld. D.R. supported the order of the CIT(A). Having considered the submissions of the assessee, we are of the view that the issue is no more res integra in view of a series of decisions of the ITAT Hyderabad bench in similar cases. The coordinate bench in case of ITA No.127/Hyd/12 and others dated 18.05.2012 as well as a ....