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2014 (4) TMI 704 - AT - Income TaxDetermination of profits in the business of wines Rejection of books of accounts Held that - There was no reason to interfere with the order of the CIT(A), following Income-tax Officer, Ward 1, Warangal Versus Shri P. Ramaiah, Warangal and others 2013 (12) TMI 1001 - ITAT HYDERABAD - consistent directions has been made to adopt the rate of 5% of the purchase value or stock put to use whichever is more thus, the order of the CIT(A) upheld Decided against Revenue.
Issues Involved:
1. Rejection of books of accounts 2. Estimation of profits Analysis: Issue 1: Rejection of books of accounts The appeal by Revenue was directed against the Order of the CIT(A)-VI, Hyderabad for the A.Y. 2009-2010, raising grounds on the rejection of books of accounts and estimation of profits. The AO rejected the books of accounts of the assessee during scrutiny proceedings, citing lack of support for sale figures shown by the assessee. The AO estimated profits at 27% of the stock put to sale, leading to a determination of total income at Rs.19,83,400. The Ld. CIT(A) confirmed the rejection of books but directed the AO to estimate net profit at 5% on purchases or stock put for sale, considering the income already offered by the assessee to avoid duplication. Issue 2: Estimation of profits The Revenue appealed the CIT(A)'s order, arguing against the estimation of profits at 5% and the reliance on previous decisions. The Tribunal, after considering arguments, found no reason to interfere with the CIT(A)'s decision. The Tribunal noted that the Coordinate Benches consistently directed the adoption of a 5% rate for profit estimation in similar liquor business cases. Citing the decision in a similar matter, the Tribunal upheld the CIT(A)'s order, rejecting the Revenue's grounds and dismissing the appeal. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order regarding the rejection of books of accounts and the estimation of profits based on a 5% rate. The decision was in line with consistent views taken by Coordinate Benches in similar matters, emphasizing the importance of reasonable and comparable estimation in cases where books of accounts are rejected.
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