2012 (5) TMI 802 - AT - Income Tax

Summary

Issues involved: Determination of understatement of sales, comparison with other wine shops, estimation of net profit, applicability of past history or comparable cases for income estimation.

The Appellate Tribunal ITAT Hyderabad, in the case concerning the assessment year 2007-08, addressed the appeal by the Revenue and Cross Objection by the assessee. The Revenue contended that the CIT (A) should have upheld the total understatement of sales based on gross profit percentage fixed by APBCL and adopted by the AO. Additionally, the Revenue argued against the comparison with M/s Kanaka Durga Wines and the estimation of net profit at 3%. The Tribunal referred to a previous decision involving M/s Kanaka Durga Wines and held that the net profit should be estimated at 3% of purchases or stock put for sale during the year. The Tribunal upheld the CIT (A) order, directing the AO to estimate net profit at 3% of purchases or stock put for sale, ensuring the assessed income is not less than the returned income. Consequently, the appeal by the Revenue was dismissed, rendering the Cross Objection filed by the assessee supporting the CIT (A) findings as infructuous and dismissed accordingly.

Conclusion: The Tribunal upheld the CIT (A) order, directing the AO to estimate net profit at 3% of purchases or stock put for sale during the year, based on a previous decision involving M/s Kanaka Durga Wines, ensuring the assessed income is not less than the returned income.