145(3) Upheld but 1% NP Excessive; Beer Trader’s Margin Rationalised to 0.50%

KNP Associates Vs ACIT (ITAT Agra) The ITAT, Agra Bench upheld rejection of books u/s 145(3) due to material deficiencies—unexplained cash deposits, rent mismatch vis-à-vis agreement (194I exposure) and inconsistencies from 133(6) replies—but held that estimating NP @ 1% was excessive for a wholesale beer trader. While sustaining book rejection in principle, the Tribunal noted that the AO misconstrued beer business as liquor business (where margins are higher) and that inflated sales cannot logically reduce profits. Considering the business realities, audited records, and deficiencies on ...