2024 (6) TMI 1409

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....are that facts of the case are that the assessee is carrying on the business of retail trading in Indian made foreign liquor. He filed his return of income for the assessment year 2017-18 on 07/11/2017 declaring a total income of Rs. 23,93,390/-. During scrutiny assessment, learned Assessing Officer found that the assessee was maintaining the sales bills and therefore it was difficult to determine the profit. Learned Assessing Officer, therefore, followed the decision of the Tribunal in the case of Kanakadurga Wines vs. ITO in ITA No. 462 /Hyd/ 2011 wherein the estimate of net profit was done at the rate of 3% of the purchases, but subsequently, in the Miscellaneous Application, it was revised to 5% of the purchase or stock put for sale dur....

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.... a wrong section for authority to act, will not vitiate the action taken and such mere mentioning of wrong section by the learned Assessing Officer would not ipso facto render the entire addition is illegal. He, however, directed the learned Assessing Officer to verify whether the quantum of the deposited SBNs was Rs. 34,47,500/- and not Rs. 1,04,79,650/- and allowed relief accordingly. 4. Assessee, therefore, preferred this appeal contending that the rate of estimation of the net profit in liquor trade varies from case to case and there is no rule that 5% of the turnover shall invariably be fixed in liquor trade de hors the variation in facts. He submitted that there are also judgements of the Tribunal where the net profit was estimated a....

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....ssing Officer placed reliance on the decision of the Tribunal rendered in the case of M/s. Kanakadurga Wines (supra) and other cases rendered in 2011 and 2012. As observed by the Hon'ble High Court, the profit percentage to be adopted differs from case to case. Apart from that fact, subsequently the privilege fees is introduced and according to the learned AR it reduced the profit margin. Having regard to the facts and circumstances of the case and taking a holistic view, we are of the considered opinion that the estimate of net profit of the assessee at 3% of the turnover would meet the ends of justice. We accordingly direct the learned Assessing Officer to recompute the income of the assessee. 7. Coming to the second issue of deposit....