9911796707
TMI Blog2016 (8) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year 2011-12. 2. Facts are in brief that the assessee is an individual carrying on business of purchase and sale of IMFL (Indian made Foreign Liquor) in Srikakulam district. The assessee had filed return of income by declaring ` Nil income. The return filed by the assessee was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act'). Later, after following the due procedure, assessment was completed u/s 143(3) of the Act. In the assessment order, the A.O. has observed that the assessee has not maintained any stock register and not produced sale bills, no quantitative details of sale effected and therefore, he has estimated the net profit, clear of all expenses at 20% of the stock put to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock put for sale. The A.O. was of the opinion that the assessee has not maintained proper books of accounts and vouchers in support of purchases and sales. The A.O. further observed that the assessee has failed to maintain stock registers and books of accounts maintained by the assessee are not susceptible for verification, therefore rejected the books of accounts and estimated net profit of 20% by relying upon the decision of Hon'ble A.P. High Court. It is the contention of the assessee that the net profit estimated by the A.O. is quite high when compared to the nature of business carried on by the assessee. It is further submitted that the case law relied upon by the assessee is not applicable to the facts of the present case. The case b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hereunder: "3. We have heard the parties, perused the orders of the revenue authorities as well as other materials on record. It is the contention of the Ld. A.R. that the estimation of profit at 16% is high and excessive considering the normal rate of profit in this line of business. Whereas, the Ld. D.R. supported the order of the CIT(A). Having considered the submissions of the assessee, we are of the view that the issue is no more res integra in view of a series of decisions of the ITAT Hyderabad bench in similar cases. The coordinate bench in case of ITA No.127/Hyd/12 and others dated 18.05.2012 as well as a number of other cases have held that profit in case of business in Indian made foreign liquor has to be estimated at 5% of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the A.O. has asked the assessee for the source of investment. It was submitted before the A.O. that the above investments were made from out of opening capital brought forward from earlier years and the balance sheet made out of the advance received from prospective customers and well wishers. Before the A.O., he has not brought anybody to substantiate his case. Accordingly, A.O. has treated the initial investment made by the assessee as unexplained income, accordingly, addition was made. 8. On appeal before the CIT(A), it was submitted that the assessee had entered into a memorandum of association along with 5 members for raising necessary funds and filed a copy of memorandum of association. The Ld. CIT(A) simply rejected the memorandum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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