TaxTMI 
TaxTMI 
2015 (9) TMI 1779
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....n of the sale'. 2. Brief facts of the case are that the assessee, an individual, who is in the business of purchase and sale of liquor, filed his return of income for the relevant A.Y 2008-09 on 1.4.2009 declaring income of Rs.5,75,280 which was processed u/s 143(1) of the Act. Subsequently, AO observed that as per the Govt. of A.P, Revenue (Excise-II) Deptt. order in GOMS No.184 dated 7.02.2005, the retailers margin i.e the gross profit is 27% on sale of ordinary liquor products, 20% on sale of medium and premium branded Indian Liquor and 25% on sale of Beers and based on this G.O, the sales should be at a margin of 24% of cost of goods sold. Therefore, AO was of the opinion that the income of the assessee chargeable to tax has escaped ....
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....in a slum area, as the shop was located in Road No.12, Banjara Hills, Hyderabad which is a prime locality in Hyderabad. He observed that in the State of Andhra Pradesh, the liquor shops are allotted by the State Govt. on auction basis and on perusal of the purchases made by the assessee during the year, it is seen that the wine shop is running in good condition and made a total turnover of Rs.4,75,90,534. He therefore, held that the assessee's explanation is not acceptable and there appears to be no mitigating factors to deserve any consideration to take a lenient view. He therefore, adopted the figure of Rs.5,07,24,503 as the turnover of the assessee. Further, he brought the difference in the turnover estimated by the AO and the turnover r....
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....ered this submission of the assessee to hold that the income of the assessee is to be estimated at 5% of Rs.4,75,90,534 i.e. the sale reported by the assessee. We find that the AO has estimated the sales to be at 124% of the cost of goods sold and therefore, has arrived at a figure of Rs. 5,07,24,503 as the turnover of the assessee. The Hon'ble High Court of Andhra Pradesh in the case of CIT vs. Mekala Bal Reddy (Supra) in a similar set of facts has held that the income of the assessee is to be estimated at 5% of the goods put to sale. The assessee has reported an actual sale of Rs.4,75,90,534, whereas the figure of Rs.5,07,24,503 is the estimated turnover at 124% of the cost of goods sold. In both the cases, the issue is of estimation ....