2024 (7) TMI 1140 - AT - Income Tax

Estimation of income/NP - Determination of net profit in liquor trade - HELD THAT - Insofar as the estimate is concerned AO placed reliance on the decision of M/s. Kanakadurga Wines 2012 (5) TMI 797 - ITAT HYDERABAD and other cases. As observed by the Hon'ble High Court, the profit percentage to be adopted differs from case to case. Apart from that fact, subsequently the privilege fees is introduced and according to the learned AR it reduced the profit margin. We are of the considered opinion that the estimate of net profit of the assessee at 3% of the turnover would meet the ends of justice. We accordingly direct the AO to recompute the income of the assessee. Appeal of assessee allowed.

Summary

The Appellate Tribunal ITAT Hyderabad allowed the assessee's appeal partially, directing the Assessing Officer to recompute income by estimating net profit at 3% of turnover in a liquor trading case. The decision was based on varying profit percentages in different cases and the impact of privilege fees introduced in 2012. The original decision estimated income at 5% of turnover due to lack of sales bills.