2014 (11) TMI 1171

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....ed 25.03.2013 passed under Section 144 of the Income-tax Act, 1961 ( for short, "the Act"), assessed the income of the assessee at Rs. 55,62,830/- applying net profit of 5%. By virtue of the impugned order, the learned CIT(A) directed this net profit rate to be reduced to 0.5%. Aggrieved, the Department is in appeal before us. 3. The learned DR has contended that the learned CIT(A) has erred in directing the A.O. to assess the income of the assessee at Rs. 5,56,300/- by applying net profit rate of 0.5% on the gross sales of Rs. 11,12,56,585/- in view of the net profit rate assessed u/s 143(3) of the Act at 0.506% on gross sales of Rs. 29,75,78,035/- in the case of 'M/s Bathinda Wine Traders, Bathinda' for the assessment year 2009-10; tha....

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....Excise and Taxation Department, for issuance of licence; that the business of retail trade of liquor can only be carried out by making purchases from the wholesalers on the basis of permits issued by the department; that the wholesalers are also issued licences by the Excise and Taxation Department; that further, even the quantity of purchase has to be in accordance with that approved in the permit; that not only this, even the name of the seller is in the permit and no purchase can be made from anyone else; that complete copies of accounts of the seller parties along with their complete names and addresses were also produced before the A.O.; that the A.O. did not carry out any inquiry despite thereof; that it was after taking into consider....

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....d by the assessee and so, its books of account were not correct and complete, observing that past history of the case was not available. The learned CIT(A) relied on the Tribunal's decision for A.Y. 2009-10 in the case of 'M/s Bathinda Wine Traders', where the net profit rate applied was 0.506%. 8. It is well settled that even if the results of the books of account are rejected and an estimate is to be made, such estimate of income has to be fair and reasonable and based on material available on record and there is no scope for guess-work while making such estimate. As such, the estimate cannot be either arbitrary, or capricious. The A.O., it is seen, while arriving at the net profit rate of 5%, has not given any basis for such rate. The....