2017 (9) TMI 818

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....re in brief that the assessee is the proprietor of M/s. Ganesh Wines and is carrying on business of Indian made foreign liquor (IMFL) had filed a return of income by declaring total income of 4,73,270/-. The case of the assessee was selected for scrutiny and the A.O. has not accepted the income declared by the assessee and estimated the profit from the business at 20% of the stock put to sale. On appeal, the CIT(A) has scaled down the percentage of profit from 20% to 10% and directed the A.O. to re-compute the income at 10% of purchase price. 4. On being aggrieved, assessee carried the matter in appeal before the Tribunal. At the time of hearing, the Ld. Counsel for the assessee has submitted that the issue involved in this appeal is squ....

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..... 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 further submitted that the case law relied upon by the assessee is not applicable to the facts of the present case. The case before the Hon'ble A.P. Hig....

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.... 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 number of other cases have held that profit in case of business in Indian made foreign liquor has to be estimated at 5% of the purchases made b....

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....nt of Rs. 12,17,723/-. In the assessment order, the A.O. has observed that the assessee has paid first instalment tender amount (1/6th of the tender amount) of Rs. 24,000/- on the day of auction. Further, the assessee has made a purchase of liquor stock worth Rs. 1,97,222/- on 1.7.2010 and Rs. 3,26,362/- on 2.7.2010 at the beginning of the operations. Further, the assessee has made bank guarantee deposit of Rs. 6,95,000/- and bank guarantee commission of Rs. 2,49,539/-. The total amount of Rs. 38,68,123/- which is more than the opening capital of Rs. 19,05,800/- and unsecured loans of Rs. 7,44,600/- by Rs. 12,17,723/-. In this connection, the A.O. has asked the assessee to explain why such amount of Rs. 12,17,723/- should not be treated as ....

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....onsisting near about 59 parties and submitted that these are the people from whom he has received the advances and the same may be admitted for remitting the matter back to the A.O. for fresh adjudication after according an opportunity of being heard. 8. On the other hand, the Ld. D.R. opposed the admission of the additional evidence filed by the assessee. 9. I have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The issue before me is for consideration of unexplained amount of Rs. 12,17,723/-. The assessee has submitted before the A.O. that this amount was received by him from prospective buyers and no details were filed. Therefore, the A.O. confirmed the additio....

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.... the A.O. that the said loans were taken by cheque or demand drafts and therefore requested that the addition proposed by A.O. may be dropped. The A.O. after verifying the same and also after verifying the bank account of the assessee, he came to know that the amount of Rs. 5 lakhs was not reflected in the assesee's bank account. The A.O. again asked the assessee why this amount should not be treated as unexplained unsecured loan and why it should not be brought to tax under the head "income from other sources". The assessee vide reply dated 31.12.2013 submitted that the unsecured loans of Rs. 5 lakhs be treated as unsecured because the loan entries are not available in the bank account and the assessee claims that these transactions are ge....