TaxTMI 
TaxTMI 
2018 (1) TMI 181
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....stimating income at 20% of the stock put to sale. 4. On appeal, the Ld. CIT(A) scaled down the percentage from 20% to 10% and directed the A.O. to re-compute the income at 10% of purchase price. 5. On being aggrieved, assessee carried 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 squarely covered by the decision of the coordinate bench of this Tribunal where the Tribunal has scaled down the estimation of profit from 10% to 5% in the case of Tangudu Jogisetty in ITA No.96/Vizag/2016 by order dated 2.6.2016. 6. On the other hand, the Ld. D.R. strongly supported the orders passed by the authorities below. 7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The only issue involved in this appeal is estimation of profit in respect of IMFL business carried by the assessee. In this respect, the coordinate bench of the Tribunal in the case of Tangudu Jogisetty (supra) has considered the profit level in the line of business and decided that 5% of purchase price is reasonable profit margin in the li....
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....ordinate bench of this Tribunal, under similar circumstances 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 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 by the assessee. Therefore, following the decision of the ITAT Hyderabad bench, we set aside the order of the CIT(A) and direct the assessing officer to estimate the profit from the wine business of the assessee by applying the rate of 5% of the purchas....
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....that the assessee has credited case of Rs. 27,60,000/-. The perusal of profit and loss account showed net loss of Rs. 19,94,360/-. In the profit and loss adjustment account the net loss of Rs. 19,94,360/- was adjusted against "Unsecured loans offered to tax for want of strict proof' of Rs. 27,60,000/-, and the income from business was arrived at Rs. 7,65,639/-. It is also noted that the assessee had filed letter dated 08.11.2013 before the AO, stating, "I had offered unsecured loan of Rs. 26,70,000/- in the profit and loss adjustment account as I cannot prove them". The details of the impugned credits were said to be as follows: 15.05.2010 - Rs. 5,00,000/- 21.05.2010 - Rs. 6,00,000/- 11.06.2010 - Rs.5,00,000/- 17.06.2010 - Rs.6,00,000/- 19.06.2010 - Rs.5,00,000/- 05.07.2010 - Rs. 60,000/- These factual details dearly show that the impugned credits shown as unsecured loans and offered to tax have no nexus to the income from liquor business. Therefore, the plea that the impugned credits offered to tax is part of income estimated is without merits. The impugned credits in the capital account have no n....
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.... vide order dt.9.1.2013. The Hon'ble Tribunal took the view that unless, the assessee, by independent and satisfactory evidence, establishes that these amounts relate or referable to the undisclosed income from known or disclosed sources, i.e. the business, whose income had already been estimated, the ITO is entitled to treat unexplained cash credit as income from undisclosed sources. The Hon'ble Tribunal placed reliance on the judgment of jurisdictional High Court in the case of CIT v. Maduri Rajaiahgari Kistaiah(120 UR 294) and of the Apex Court in the case of Devi Prasad Viswanath Prasad 72 UR 194. The Hon'ble Tribunal also referred to the observation of Supreme Court in the case of Kale Khan Mohammed Hanif Vs. CIT (50 ITR 1 SC), "It cannot be said that the tax authorities were precluded from treating the amounts of the credit entries as income from undisclosed sources simply because the entries appear in the books of a business hose income they had previously computed on a percentage basis" while rendering the above decision. In the assessee's case the impugned credits offered ax cannot be considered as referable to the liquor business whose income has been esti....