2018 (5) TMI 510

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....n. 3. Ground No. 2 is related to estimation of income from the business of IMFL 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 filed return of income declaring total income of Rs. 3,95,393/- on 13/09/2011. The return filed by the assessee was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act'). Later, the assessment was completed u/s 143(3) of the Act and in the assessment order, the A.O. has observed that the assessee has not maintained any stock register and not produced sale bills, no quantitative details of sale effected and therefore, he has estimated the net p....

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....mitted 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. 5. On the other hand, the Ld. D.R. strongly supported the order passed by the authorities below. 6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The 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 leve....

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....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. High Court was that the assessee is into the business of trading in arrack, whereas it is in the business of dealing in IMFL. The assessee f....

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....he 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 assess....

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....d there were unsecured creditors of Rs. 3,05,890/- aggregating to Rs. 5,33,890/-. The AO requested to furnish the proof of credits and also confirmation from the unsecured creditors. The assessee did not furnish any evidence inspite of giving repeated opportunities and the show cause notice.. Since the assessee failed to establish the genuineness of the loans, the AO made addition u/s 68 of I.T.Act. 9. Aggrieved by the order of the AO, the assessee went on appeal before the Ld.CIT(A). Initially, the assessee filed additional evidence before the CIT(A) by way of MoU stating that the 4 partners contributed Rs. 20 lakhs to assist the assessee in the business which includes the unsecured loans of Rs. 5,33,890/-. Subsequently, the assessee ha....