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TMI Blog2018 (7) TMI 2270X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act by estimating net profit at 20% of the stock put to sale. 5. On appeal, the Ld. CIT(A) scaled down the percentage from 20% to 10% and directed the A.O. to re-compute the income at 10% of purchase price. 6. On being aggrieved, assessee carried matter in appeal before the Tribunal. At the time of hearing, the ld. counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the 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. 7. On the other hand, the Ld. D.R. strongly supported the orders passed by the authorities below. 8. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The only issue involved in this appeal is estimation of profit in respect of IMFL business carried by the assessee. In this respect, the coordinate bench of the Tribunal in the case of Tangudu Jogisetty (supra) has considered the profit level in the line of business and decided that 5% of purchase price is reasonable profit margin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coordinate bench of this Tribunal, under similar circumstances held that estimation of 5% net profit on purchases is reasonable. The relevant portion of the order is reproduced 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 the purchases made by the assessee. Therefore, following the decision of the ITAT Hyderabad bench, we set aside the order of the CIT(A) and direct the assessing officer to estimate the profit from the wine business of the assessee by applying the rate of 5% of the purchases m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,50,000/- to the assessee on 07/06/2010 vide Indian Bank DD No. 986188. The verification made by the Assessing Officer with Indian Bank revealed that the DD No. 986188 was issued for Rs. 10,000/- and the said DD was purchased by one N. Srinivasa Choudhary, the same was put to the assessee. As the assessee could not clarify the discrepancy, the Assessing Officer doubted the creditworthiness and genuineness of the transaction. 14. On appeal before the ld. CIT(A), the counsel for the assessee has submitted that the transaction is genuine. The ld. CIT(A) after considering the details and also explanation given by the assessee, observed that the loan creditor has mentioned that he had a hand loan of Rs. 4,50,000/- on 07/06/2010 vide DD No. 986188, but as per the verification with Indian Bank, it is seen that DD No. 986188 was purchased by one N. Srinivasa Choudhary for Rs. 10,000/- on 02/06/2010. Thus, there are discrepancies as to the date, DD Number and purchaser of the DD. The AR referred to copy of bank statement of Majji Govinda Rao wherein there was a debit of Rs. 4,60,695/- on 02/06/2010; and the break-up of this amount was recorded beneath as per which the EMD DD No. 986185 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on noted that the creditor's name was mentioned as M.Srinivasa Rao in the balance sheet, but confirmation letter was filed from Meka Srinivasa and this ambiguity could not be clarified. The Assessing Officer further noted that the said DDs were not credited into the assessee's bank account. Hence, the Assessing Officer doubted the genuineness and creditworthiness of the transaction. 18. On appeal before the ld. CIT(A), the assessee has submitted that M.Srinivasa is also called Meka Srinivas and that there is no ambiguity. It is further submitted that DDs were drawn in favour of Excise authority towards licence fee, and hence, it may not be reflected in the assessee's bank statement. The ld. CIT(A) considered the same and observed that ambiguity as to identify of the creditor could not be clarified with any supportive evidence. Even assuming that the credit transaction was from Meka Srinivas, the perusal of the ledger extract of Meka Srinivas filed as additional evidence indicate that an amount of Rs. 11,05,000/- was advanced to the account of the assessee on 03/06/2010 and there was repayment of Rs. 7,30,000/-; as against the averment in the confirmation letter that Rs. 8,75,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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