Vijaya Durga Wines, Hyderabad V. ITO, Ward-9(3), Hyderabad

CO 47/HYD/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6406 (ITAT-HYDERABAD)
• Duration Of Justice: 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 28-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: M V RAJA SEKH AR RAO
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO. 864/HYD/2011 (ASSESSMENT YEAR : 2006-07) INCOME-TAX OFFICER WARD- 9(3) HYDERABAD. VS M/S. VIJAYA DURGA WINES HYDERABAD PAN: AAFFV4741A APPELLANT RESPONDENT C.O. NO. 47/HYD/2011 (ARISING OUT OF ITA NO. 864/HYD/2011) (ASSESSMENT YEAR : 2006-07) M/S. VIJAYA DURGA WINES HYDERABAD PAN: AAFFV4741A VS INCOME-TAX OFFICER WARD- 9(3) HYDERABAD. APPELLANT RESPONDENT REVENUE BY: SHRI T. DIWAKAR PRASAD ASSESSEE BY: SHRI M.V. RAJA SEKHAR RAO ORDER DATE OF HEARING: 11.8.2011 DATE OF PRONOUNCEMENT: 26.8.2011 PER CHANDRA POOJARI, A.M. THE APPEAL BY THE REVENUE AND CROSS OBJECTIO N (CO) BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT( A)-VI, HYDERABAD DATED 31 ST JANUARY, 2011 FOR ASSESSMENT YEAR 2006-07. SINCE COMMON ISSUE IS INVOLVED IN THE APPEAL AND THE CO, THE SAME ARE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUND RAISED BY THE REVENUE IN ITS APPEAL I S WITH REGARD TO ESTIMATION OF INCOME AT 5% REJECTING THE COMPUTATIO N OF INCOME MADE BY THE ASSESSING OFFICER. THE ASSESSEE FILED THE C .O. CONTESTING THE ITA NO. 864 & CO. NO. 47 /HYD/2011 M/S. VIJAYA DURGA WINES ========================= 2 ESTIMATION OF INCOME AT 5% OF THE STOCK PUT TO SALE INSTEAD OF 3% AS DECIDED IN OTHER CASES OF SIMILAR NATURE. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. SIMILAR ISSUE CAME FOR CONSID ERATION BEFORE THIS TRIBUNAL IN THE CASE OF M/S. KANAKA DURGA WINES, HY DERABAD IN ITA NO. 591/HYD/2011 AND CO NO. 40/HYD/2011. THE TRIBU NAL VIDE ITS ORDER DATED 28 TH JULY, 2011 HELD AS FOLLOWS: 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. IT IS AN ADMITTED FACT THAT THE MAXIMUM RETAIL PRICE OF T HE LIQUOR PRODUCTS IS FIXED AT 30% OVER THE COST PRICE OF THE ASSESSEE AS PER THE UNDERSTANDING WITH APBCL. IT I S ALSO AN ADMITTED FACT ABOUT ITS INABILITY TO MAINTA IN THE CASH SALES BILLS AND ACCORDINGLY ONE BOOKS OF ACCOU NTS MAINTAINED BY THE ASSESSEE CANNOT BE RELIED UPON. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE LOWER AUTHORITIES ARE CORRECT AND JUS TIFIED IN REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. WE FIND THAT THE ASSESSING OFFICER HAS RIGHTL Y ADOPTED THE SALE PRICE AT 30% OVER THE COST OF PURC HASE TO ARRIVE AT THE UNDERSTATEMENT OF SALES OF RS. 93, 65,993/- BY THE ASSESSEE. BUT AT THE SAME TIME, THE ENTIRE UNDERSTATEMENT OF SALES CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UND ER CONSIDERATION. IT IS WELL SETTLED LAW THAT THE BES T GUIDE FOR ESTIMATION OF INCOME AFTER REJECTING THE BOOKS OF A CCOUNT IS EITHER PAST HISTORY OF THE ASSESSEE OR ANY OTHER COMPARABLE CASES. THE LEARNED COUNSEL FOR THE ASSESSEE CLEARLY DEMONSTRATED BEFORE US THAT THE ASSESSEES NET PROFIT IN THE PAST IS BETWEEN 0.12% TO 0.28% OF SALES. THE CO-ORDINATE BENCH OF THE TRIBU NAL IN THE CASE OF MANJIT SINGH BAGGA VS. ITO IN ITA NO. 3 71 AND OTHERS DATED 30 TH SEPTEMBER, 2010 HELD THAT THE ESTIMATION OF NET PROFIT AT 3% IS REASONABLE. IN VI EW OF THIS MATTER, ENDS OF JUSTICE WOULD BE MET IF WE ESTIMATE THE NET PROFIT OF THE ASSESSEE AT 3% OF THE PURCHASES O R STOCK PUT FOR SALE DURING THE YEAR UNDER CONSIDERATION AS AGAINST THE ESTIMATION OF 5% MADE BY THE CIT(A). ACCORDINGLY, THE GROUND RAISED BY THE REVENUE ON TH IS ISSUE IS REJECTED AND CROSS OBJECTION FILED BY THE ASSESSEE ON THIS ISSUE IS ALLOWED. 4. SINCE THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO THE FACTS AND CIRCUMSTANCES OF THE ABOVE CASE, WE ARE ITA NO. 864 & CO. NO. 47 /HYD/2011 M/S. VIJAYA DURGA WINES ========================= 3 INCLINED TO FOLLOW THE RATIO LAID DOWN BY THE TRIBU NAL IN THE ABOVE ORDER. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO COM PUTE INCOME OF THE ASSESSEE AT 3% OF STOCK PUT FOR SALE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CO OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2011. SD/- (G.C. GUPTA) SD/- (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED THE 26 TH AUGUST, 2011 COPY FORWARDED TO: 1. THE INCOME-TAX OFFICER, WARD-9(3), BLOCK NO. 2D, INCOME TAX TOWERS, A.C. GUARDS, HYDERABAD-4. 2. M/S. VIJAYA DURGA WINES, SHOP NO. 3, P NO. 19, M EERPET, SAROORNAGAR, HYDERABAD. 3. THE CIT(A)-VI, HYDERABAD 4. THE CIT-VI, HYDERABAD 5. THE DR, A-BENCH, ITAT, HYDERABAD. TPRAO