Parklane Wines, Warangal vs Department Of Income Tax

This appeal is preferred by the Revenue against the Order of the Ld. CIT(A)-VI, Hyderabad dated 25.08.2014 whereby he directed the A.O. to estimate the income of the assessee from liquor business by applying net profit rate of 5% on purchase or stock put for sale during the year under consideration as against the profit rate of 25% applied by the Assessing Officer.

2. Assessee in the present case is a partnership firm which is engaged in the retail business of liquor trade. The return of income for the year under consideration was filed by it on 12.10.2010 declaring total income of Rs.2,28,821. Although the assessee during the course of assessment proceedings produced the books of accounts, purchase 2 ITA.No.1822/Hyd/2014 M/s. Parklane Wines, Warangal.

invoices and expenses vouchers, the sales bills could not be produced by it on the ground that no such bills were regularly maintained/issued. In the absence of the sale bills, the total sales declared by the assessee was found to be not verifiable by the Assessing Officer. He accordingly rejected the books of account and estimated the income of the assessee by applying gross profit rate of 25% on purchase value of sales after deducting expenditure of Rs.37,80,773 claimed by the assessee. Accordingly, total income of the assessee was determined by the A.O. at Rs.1,26,77,485 in the assessment completed under section 143(3) vide order dated 20.03.2013.

3. Against the order passed by the A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) who followed the decision of the Tribunal in the case of M/s. Amaravati Wine Shop rendered vide its order dated 08.06.2012 in ITA.No.1196/Hyd/2011 and directed the A.O. to estimate the income of the assessee by applying a net profit rate of 5% on the value of purchase or stock put for sale during the year under consideration. He also directed the A.O. that if the income of the assessee so estimated is found to be less than the income returned by it, the income returned be computed as total income of the assessee. Aggrieved by the order of the Ld. CIT(A), Revenue has preferred this appeal before the Tribunal.

4. We have heard the learned Departmental Representative and also perused the relevant material on record. As agreed by the learned Departmental Representative the issue involved in this appeal is squarely covered in favour of the assessee inter alia by the decision of Coordinate Bench of this Tribunal in the case of M/s.

3 ITA.No.1822/Hyd/2014 M/s. Parklane Wines, Warangal.

Amaravati Wines (supra) wherein a similar issue was decided by the Tribunal in favour of the assessee in identical facts and circumstances holding that the income of the assessee from liquor business could reasonably be estimated by applying the net profit rate of 5% on the value of purchase and stock put for sale during the relevant year. Respectfully following the said decision of the Coordinate Bench of this Tribunal in the case of M/s. Amaravati Wines (supra), we uphold the impugned order of the Ld. CIT(A) directing the A.O. to estimate the income of the assessee from liquor business by applying the net profit rate of 5% on the value of purchase and stock put to use during the year under consideration.

5. In the result, appeal of the Revenue is dismissed.

Order pronounced in the open Court on 22.04.2015.

Sd/- Sd/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 22nd April, 2015.

VBP/-

Copy to

1. The Income Tax Officer, Ward-1, Warangal

2. M/s. Parklane Wines, H.No.9-2-4, J.P.N. Road, Warangal.

3. CIT(A)-VI, Hyderabad

4. CIT-VI, Hyderabad.

5. D.R. I.T.A.T. "A" Bench, Hyderabad.