2019 (3) TMI 57

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....s the case was selected for scrutiny, statutory notices were issued u/s 143(2) and 142(1) of the Income-tax Act, 1961 (in short 'the Act') and in response the assessee submitted the necessary information. 2.1 Since there were deficiencies noticed in the books of account maintained by the assessee, the AO rejected the books of account and estimated the net profit @ 5% of the cost of purchases put for sale from the business of income relying on the decision of the ITAT in the case of ITO Vs. Sri Amaravathi Wine Shop vide ITA No. 1196/Hyd/2011, dated 08/06/2012. 2.2 In the case of Ramakrishna Bar & Restaurant estimated the net profit at 10% of the cost of sales put to use following the decision of the ITAT in the case of Mallkharjuna Bar....

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....the present Assessment year. 4. On the facts and in the circumstances of the case, the Ld. commissioner erred in sustaining the estimation of income from sale of food items in the restaurant at a very high rate @25% of the food sales. He ought to have considered that the Appellant has correctly declared the income from food sales. 5. Such other ground/grounds that may be raised during the hearing of the appeal." 5. Ground Nos. 1 & 5 are general in nature, hence, need no adjudication. 6. As regards ground Nos. 2, 3 & 4, the ld. AR submits that the AO rejected the books of account of the assessee on the ground that the majority of the expenditure claimed under the heads freight and hamali, printing and stationery break....

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.... sold is reasonable in this line of business. In the case of Sri Venkateswara Wines in ITA No. 1206/Hyd/2015, dated 27/11/2015 for AY 2011-12, the coordinate bench has held as under: "5. Having regard to the rival contentions and the material on record, we find that the assessee has not maintained any books of account and therefore, the estimation of income is justified. It is only the rate at which the income is to be estimated is before us. A.O. has estimated the income at 5% of the cost of goods sold, while the assessee is seeking the estimation at 3% of the cost of goods sold. We find that in the case of Venkateswara Wines, Nizamabad (supra), the Coordinate Bench of this Tribunal has taken note of the decision of Hon'ble Hi....