2026 (8) TMI 1170

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....iquor, filed its return of income for A.Y. 2017-18 on 31.03.2018, admitting total income of Rs. 56,57,443/-. The case was selected for scrutiny and during the course of assessment proceedings, the A.O. issued a final show-cause notice on 11.12.2019 and called upon the assessee to file explanation/submissions in respect of admission of rental income as per Form 26AS statement and for estimation of income on cost of goods sold. In the absence of proper books of account maintained by the assessee, in response, the assessee submitted details of rental receipts from various parties for displaying IMFL products in the business premises and also the financial statements explaining the return of income filed for the year under consideration. The A.....

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....profit is incorrect. The Ld. CIT(A), after considering the relevant submissions of the assessee and also taking note of the decision of the ITAT, Visakhapatnam, in the case of Chitti Nagabhushanam vs. ITO in ITA No. 105/VIZ/2015, dated 12.01.2017, upheld the estimation of 3% profit on stock put to use by holding that, as per the decision of the jurisdictional High Court and the ITAT, net profit has been estimated ranging from 3% to 5%. Therefore, the profit estimated by the A.O. at 3% on stock put to use is well within the limits. The Ld. CIT(A) further held that the display charges paid to the assessee are in the nature of rent for hiring space in the liquor shops and the same has been correctly treated as separate business receipts from t....

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....ore, the A.O. has rightly rejected the books of account and estimated 3% profit on stock put to use, and made separate addition towards the rental receipts. Therefore, he submitted that the order of the Ld. CIT(A) should be upheld. 7. We have heard both parties, perused the material available on record and have gone through the orders of the authorities below. The assessee is in the business of trading in liquor. The assessee has also received rental receipts from Beam Global Spirits & Wine (India) Pvt. Ltd. and Prayag Enterprises Pvt. Ltd. for displaying their product advertisements in the business premises. The assessee considered rental receipts from the business as indirect income and part of business receipts. The A.O. had also trea....