Income Tax Officer, Ward-9(3), Hyderabad V. Saptagiri Wines, R.R.Dist

CO 78/HYD/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7198 (ITAT-HYDERABAD)
• Duration Of Justice: 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: M V RAJA SEKH AR RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI SKTIJIT DEY, JUDICIAL MEMBER ITA NO.03/HYD/2012 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, M/S. SAPTAGIRI WINES, WARD-9(3), HYDERABAD. V- MEERPET, SAROORNAGAR, HYDERABAD. PAN:ABDF S1657B APPELLANT RESPONDENT C.O. NO.78/HYD/12 (IN ITA NO.03/HYD/2012 ASST. YR. 2007-08) M/S.SAPTAGIRI WINES, INCOM E- TAX OFFICER, MEERPET, SAROORNAGAR, WARD-9 (3), HYDERABAD. HYDERABAD. PAN:ABDF S1657B (APPLICANT) (RESPONDENT) DEPARTMENT BY : SHRI V. SRI NIVAS ASSESSEE BY : SHRI M.V. RAJASEK HAR RAO DATE OF HEARING : 11-4-2012. DATE OF PRONOUNCEMENT : 04-05-2012 ORDER PER SAKTIJIT DEY, AM: THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDE R DATED 27- ITA NOS. 3/HYD/12 AND C.O 78/HYD/2012, SAPTAGIRI WINES, RR DISTRICT 2 10-2011 PASSED IN APPEAL NO.0663/10-11/CIT (A)-VI AND THEY PERTAIN TO THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS BEFORE US :- 1. THE CIT (A) OUGHT TO HAVE UPHELD THE TOTAL UNDERSTATEMENT OF SALES DETERMINED ON THE BASIS OF GROSS PROFIT @ 27% OVER THE PURCHASE PRICE FIXED BY THE APBCL. 2. THE CIT (A) OUGHT TO HAVE UPHELD THE TOTAL ADDITION SINCE THE PERCENTAGE OF GROSS PROFIT ADOPTED BY THE AO IS ON THE BASIS OF PROFIT RATES FIXED BY THE APBCL VIDE ITS MEMORANDUM NO.31690/EX.II/2/2000-2001, DATED 4-8-2000. 3. THE CIT (A) OUGHT NOT TO HAVE COMPARED WITH M/S KANAKA DURGA WINES. 4. THE COMPARISON OF NET PROFIT WITH THAT OF OTHER WINE SHOPS IS NOT CORRECT SINCE NO WINE SHOP IS MAINTAINING ANY SALE BILL AND IN THE HABIT OF ISSUE OF SALE BILLS. 5. THE ESTIMATION OF NET PROFIT J@3% ON THE COST OF PURCHASES OR COST OF GOODS SOLD IS NOT HAVING ANY BASE EXCEPT EARLIER TRIBUNAL DECISION IN THE CASE OF SRI MANJIT SING BAGGA. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IN QUESTION HAS BEE N DECIDED BY US VIDE ORDER DATED 13-4-2012 PASSED IN ITA NOS. 2191 AND OTHER GROUP CASES OF PITTALA YAKAIAH AND OTHERS WHEREIN THE TRIBUNAL HELD AS FOLLOWS:- WE FIND THAT THE ISSUE IN THE DEPARTMENTAL APPEAL REGARDING ESTIMATION OF PROFIT IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ITA ITA NOS. 3/HYD/12 AND C.O 78/HYD/2012, SAPTAGIRI WINES, RR DISTRICT 3 NO.591/HYD/2011 DATED 28.7.2011 IN THE CASE OF M/S KANAKA DURGA WINES ON IDENTICAL FACTS. IN THAT CASE THE CO-ORDINATE BENCH HAS DIRECTED AS UNDER: WE FIND THAT THE AO HAS RIGHTLY ADOPTED THE SALE PRICE AT 30% OVER THE COST OF PURCHASE TO ARRIVE AT THE UNDERSTATEMENT OF SALES OF RS.93,65,993/- BY THE ASSESSEE. BUT THE SAME TIME, THE ENTIRE UNDERSTATEMENT OF SALES CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. IT IS WELL SETTLED LAW THAT THE BEST GUIDE FOR ESTIMATION OF INCOME AFTER REJECTING THE BOOKS OF ACCOUNTS 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 TRIBUNAL IN THE CASE OF MANJIR SINGH BAGGA VS. ITO IN ITA NO.371 & OTHERS DATED 30 TH SEPTEM BER, 2010 HELD THAT THE ESTIMATION OF THE NET PROFIT AT 3% IS REASONABLE. IN VIEW OF THE MATTER, ENDS OF JUSTICE WOULD BE MET IF WE ESTIMATE THE NET PROFIT OF THE ASSESSEE AT 3% OF PURCHASES OR STOCK PUT FOR SALE DURING THE YEAR UNDER CONSIDERATION AS AGAINST THE ESTIMATION OF 5% MADE BY THE CIT(A). IN VIEW OF OUR AFORESAID DECISION, WE UPHOLD THE OR DER OF CIT (A) AND DIRECT THE AO TO ESTIMATE NET PROFIT AT 3% OF THE PURCHASES OR STOCK PUT FOR SALE DURING THE YEAR ITA NOS. 3/HYD/12 AND C.O 78/HYD/2012, SAPTAGIRI WINES, RR DISTRICT 4 SUBJECT TO THE ASSESSED INCOME NOT LESS THAN RETURN ED INCOME. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. 6. SINCE WE HAVE DISMISSED THE APPEAL FILED BY THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE WHI CH MERELY SUPPORTS THE FINDINGS OF THE CIT (A), HAS BEC OME INFRUCTUOUS AND THE SAME IS DISMISSED AS SUCH. ORDER WAS PRONOUNCED IN THE COURT ON 04-05-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER DATED THE 4 TH MAY, 2012 COPY FORWARDED TO: 1. THE INCOME-TAX OFFICER, WARD-9(3), 2 ND FLOOR, D- BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 2. M/S SAPTAGIRI WINES ,10-1, MEERPET, HYDERABAD. 3. THE CIT(A)-VI, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD JMR*