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TMI Blog2018 (5) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... dry creditors and the unsecured loans. While the sundry creditors and the unsecured loans are the source for investment, the investment made by the assessee is application of funds. AO has not brought on record any asset or expenditure over and above the total investments outstanding of ₹ 18,00,288/- as at the end of the year. The addition representing unsecured creditors and the unsecured loans amounts to taxing the same source twice which amounts to double addition. Therefore we find merit in the argument of the AR that having brought the investment to tax, the liabilities representing the investments should not be treated as income once again. The unsecured loans and the unsecured creditors required to be given telescopic benefit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear of all expenses at 20% of the stock put to sale. On appeal, the Ld. CIT(A) granted a partial relief to the assessee by scaling down the percentage of profit from 20% to 10% and directed the A.O. to re-compute the income at 10% of purchase price. 2. Ground No.1 and 4 are general in nature which does not require specific adjudication. 3. Ground No. 2 is related to estimation of income from the business of IMFL Brief facts of the case are 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 declaring total income of ₹ 3,95,393/- on 13/09/2011. The return filed by the assessee was processed u/s 143(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the line of business and decided that 5% of purchase price is reasonable profit margin in the line of IMFL business and directed the A.O. to re-compute the profit of the assessee. The relevant portion of the order is extracted as under: decision of the coordinate bench of this Tribunal where the Tribunal has scaled down the estimation of profit from 10% to 5% in the case of Tangudu Jogisetty in ITA No.96/Vizag/2016 by order dated 2.6.2016. 5. On the other hand, the Ld. D.R. strongly supported the order passed by the authorities below. 6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The issue involved in this appeal is estimation of profit in respect of IMF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that IMFL trade was controlled by the State Government through A.P. State Beverages Corporation Ltd. and the prices of the products are fixed by the State Government. The assessee being a license holder of State Government cannot sell the products over and above the MRP fixed by the State Government. We find force in the arguments of the assessee for the reason that the A.O. has estimated the net profit by relying upon the decision of A.P. High Court in the case of CIT Vs. R. Narayana Rao in ITA No.3 of 2003 which is rendered under different facts. The A.P. High Court has considered the case of an arrack dealer, whereas, the assessee is into the business of dealing in IMFL. Therefore, we are of the view that the A.O. was not justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to estimate the profit from the wine business of the assessee by applying the rate of 5% of the purchases made net of all other deductions. The assessing officer should also bear in mind that in no case the income determined should be below the income returned. 9. Considering the facts and circumstances of this case and also respectfully following the ratios of coordinate bench, we are of the view that the net profit estimated by the A.O. by relying upon the decision of Hon ble A.P. High Court (supra), which was rendered under different facts is quite high. On the other hand, the assessee relied upon the decision of coordinate bench and the coordinate bench under similar circumstances estimated the net profit of 5% on total purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has withdrawn the additional evidence. Further with regard to the sundry creditors, the assessee did not furnish confirmation letters not even the names and addresses of the unsecured creditors or loans either before the AO or before the CIT(A), hence, the Ld.CIT(A) confirmed the addition made by the AO. 10. Aggrieved by the order of the CIT(A), the assessee is in appeal before this Tribunal. During the appeal hearing, the Ld.AR argued that the sum of ₹ 5,33,890/- was included in the sum of ₹ 20,53,921/- initial investment. The assessee submitted that the sum of ₹ 5,33,890/- is the source and its application was towards initial investment. By making the addition of investments as well as the creditors the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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