2017 (4) TMI 1401 - AT - Income Tax

Estimating the profit at 5% of the stock put to sale - assessee, an individual and liquor dealer - assessee submitted that this Tribunal in similar cases has been restricting the profit at 3% of the goods put to sale - Held that - Having regard to the rival contentions and the material on record, we find that in similar cases, this Tribunal has restricted the profit at 3% of the goods put to sale - Assessee s appeal is treated as allowed by directing the AO to estimate the income at 3% of the cost of the goods put to sale.

Summary

Issues: Estimation of profit at 5% of stock put to sale by AO, CIT(A) confirmation, Comparison with Tribunal's previous judgments, Request for profit restriction at 3%, Decision based on similar cases.

In this judgment by the Appellate Tribunal ITAT Hyderabad, the appeal for the Assessment Year 2013-14 revolves around the estimation of profit at 5% of the stock put to sale by the Assessing Officer (AO), which was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee, an individual and liquor dealer, had filed a return of income admitting a total income of ?4,62,410. During the assessment proceedings, the AO found the assessee's books of account unverifiable and proceeded to estimate the income at 5% of the goods put to sale, citing a previous decision of the Tribunal. The CIT(A) upheld the AO's order, leading to the current appeal.

The counsel for the assessee argued that the Tribunal had previously restricted profit at 3% in similar cases and requested a similar direction for the present case. On the other hand, the Departmental Representative (DR) supported the orders of the authorities below. After considering the arguments and reviewing the material on record, the Tribunal noted its previous decision in a case involving Shri K.V.K.Kishore Babu, where the profit was restricted to 3% of the goods put to sale. Citing this precedent, the Tribunal allowed the assessee's appeal and directed the AO to estimate the income at 3% of the cost of goods put to sale, in line with its previous judgments.

Ultimately, the Tribunal allowed the assessee's appeal, emphasizing the consistent application of the 3% profit estimation in similar cases. The judgment highlights the importance of precedent and the Tribunal's authority to adjust profit estimations based on past decisions, ensuring fair treatment across cases. The order was pronounced in the Open Court on 28th April 2017, bringing a resolution to the dispute regarding the profit estimation methodology for the assessee in this case.