AI Drafter 
TaxTMI 
TaxTMI 
2018 (3) TMI 888
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.... to 1.3 are relating to the estimation of income @8% of purchase price. 3. Brief facts of the case are that the assessee is an individual carrying on business of purchase and sale of IMFL (Indian made Foreign Liquor) in Srikakulam district. The assessee had e- filed the return of income by declaring income of Rs. 2,51,910/- on 29.09.2011 for the assessment year 2011-12. The return filed by the assessee was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act'). Later, assessment was completed u/s 143(3) of the Act. In the assessment order, the Assessing Officer (AO) has observed that the assessee has not maintained any stock register and not produced sale bills, no quantitative details of sale effected....
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.... We have heard both the parties, perused the materials 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....
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....dinate 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....
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....the income of the assessee at 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is partly allowed. 8. Ground Nos.1.4 and 1.5 are related to the unexplained investment u/s 69 of I.T.Act. During the assessment proceedings, the AO found that the assessee made investment of Rs. 31,63,321/-, out of which the assessee failed to explain and furnish any evidence in respect of the advances amounting to Rs. 8,50,165/-. Though the assessee stated to have received advances, the assessee failed to submit the list of persons from whom the advances were received. Therefore, the AO made the addition of Rs. 8,50,165/- as income from unexplained sources. 9. Aggrieved by the order of the AO, the assessee went on appeal befo....
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....se or Smt. Shoba Gupta(ITA No.461/Hyd/2013, dt.10.07.2013), wherein it was held that even if the income is estimated, the AO may invoke the provisions of Sec.68/69 of the Act The Hon'be Tribunal followed the decision in the case or PV.Sitaramaswamy Naidu in ITA No.26/Hyd/12 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 C....