Pandu Vadda Baojna, Hyd, Hyderabad V. ITO, Ward-6(4), Hyd, Hyderabad

ITA 1092/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2625 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 15-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 17-08-2016
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: K HANMANDLOO
• Section: 143(3)

Judgement Text

ITA NOS 1092 AND 1093 OF 2016 PANDU VADDA BAOJNA HY DERABAD PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NOS.1092 & 1093/HYD/2016 (ASSESSMENT YEARS: 2012-13 & 2013-14) SRI PANDU VADDA BAOJNA PROP. VLN WINES HYDERABAD PAN: ADCPV 8458 J VS INCOME TAX OFFICER WARD 6(4) HYDERABAD FOR ASSESSEE : SHRI K. HANMANDLOO FOR REVENUE : SMT. U. MINI CHANDRAN, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH THE APPEALS ARE FILED BY THE ASSESSEE FOR THE A.Y 2012-13 & 2013-14 RESPECTIVELY. IN BOTH THE YEARS, THE ASSESSEE IS AGGRIEVED BY THE ORDERS OF THE CIT (A) IN CONFIR MING THE ASSESSMENT OF INCOME BY THE AO AT 5% OF THE COST OF THE GOODS SOLD. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, W HO IS RUNNING A RETAIL LIQUOR OUTLET, HAS FILED HIS RETUR NS OF INCOME FOR THE RESPECTIVE A.YS. DURING THE ASSESSMENT PROCEEDIN GS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT THE SALE RE CORDS ARE NOT EVIDENCED BY ANY PROPER SALE BILL AND THEREFORE, IT IS IMPOSSIBLE TO ARRIVE AT THE REAL PROFITS OF THE ASSESSEE. HE THER EFORE, PROCEEDED DATE OF HEARING : 15.02.2017 DATE OF PRONOUNCEMENT : 21.04.2017 ITA NOS 1092 AND 1093 OF 2016 PANDU VADDA BAOJNA HY DERABAD PAGE 2 OF 3 TO ESTIMATE THE NET PROFIT FROM THE SALE OF LIQUOR @ 5% OF THE STOCK PUT FOR SALE. FOR COMING TO THIS CONCLUSION, HE PLAC ED RELIANCE UPON THE DECISION OF THE HYDERABAD BENCH IN THE CAS E OF AMARAVATHI WINES IN ITA NO.23/HYD/2013. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) WHO CON FIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEA L BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS MAINTAINED THE BOOKS OF ACCOUNT PR OPERLY BUT THE AO HAS ESTIMATED THE INCOME WITHOUT REJECTING T HE ASSESSEES BOOKS OF ACCOUNT AND THEREFORE, THE ESTIMATION IS N OT SUSTAINABLE. FURTHER, HE ALSO SUBMITTED THAT THE ASSESSMENT OF IN COME AT 5% OF THE STOCK OF THE GOODS SOLD IS ON A HIGHER SIDE AND PRAYED FOR A LOWER RATE OF PROFIT TO BE ESTIMATED. 4. THE LEARNED DR HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THOUGH THE ASSESSEE IS MAIN TAINING THE BOOKS OF ACCOUNT, THE AO HAS CLEARLY BROUGHT OUT TH AT THEY ARE NOT RELIABLE AS THE SALE BILLS DID NOT CONTAIN THE DETAILS OF WHAT IS SOLD, HOW MUCH IS SOLD AND TO WHOM IT IS SOLD AND M OST OF THEM ARE SELF MADE VOUCHERS. THEREFORE, THOUGH THE AO HA S NOT SPECIFICALLY MENTIONED THAT THE BOOKS OF ACCOUNT HA VE BEEN REJECTED, THE FACT THAT HE HAS PROCEEDED TO ESTIMAT E THE INCOME AFTER RECORDING A FINDING THAT IT IS IMPOSSIBLE TO ARRIVE AT THE REAL PROFIT OF THE BUSINESS PRACTICALLY AMOUNTS TO HIS R EJECTION OF THE BOOKS OF ACCOUNT. THEREFORE, WE DO NOT FIND ANY IRR EGULARITY IN THE ITA NOS 1092 AND 1093 OF 2016 PANDU VADDA BAOJNA HY DERABAD PAGE 3 OF 3 ESTIMATION OF THE INCOME. WE THEREFORE, CONFIRM THE ORDER OF THE AO AS REGARDS THE ESTIMATION OF INCOME IS CONCERNED . HOWEVER, THE RATE OF THE ESTIMATION AT 5% TO THE COST OF THE GOODS SOLD, IN OUR OPINION IS ON A HIGHER SIDE. THE COORDINATE BEN CH OF THIS TRIBUNAL IN A NUMBER OF CASES, TO WHICH J.M. IS A S IGNATORY, HAVE BEEN FOLLOWING THE JUDGMENT OF THE HON'BLE HIGH COU RT OF ANDHRA PRADESH IN THE CASE OF CIT VS. SHRI KAMLEKAR SHANKA R LAL IN ITTA NO.21 OF 2013 DATED 23.07.2013 WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT A UNIFORM PROFIT RATE OF 5% OF THE COS T OF GOODS SOLD CANNOT BE ADOPTED IN EACH AND EVERY CASE. IN SIMILA R CASES SUCH AS THE ASSESSEE BEFORE US, THE TRIBUNAL HAS ESTIMAT ED THE NET PROFIT AT 3% OF THE COST OF THE GOODS SOLD. RESPECTF ULLY FOLLOWING THE SAME, WE DIRECT THE AO TO ADOPT 3% OF THE COST O F GOODS SOLD AS THE NET PROFIT AND COMPUTE THE TAX ACCORDINGLY. 6. IN THE RESULT, ASSESSEES APPEALS FOR BOTH THE A .YS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2017. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST APRIL, 2017. VINODAN/SPS COPY TO: 1 PANDU VADDA BAOJNA, C/O K. HANMANDLOO, CA, FLAT NO .404 MOUNT NASIR APARTMENTS, BESIDE RAVINDRA BHARATHI, S AIFABAD, HYDERABAD 500004 2 INCOME TAX OFFICER WARD 6(4) HYDERABAD 3 CIT (A)-6 HYDERABAD 4 PR. CIT 6 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER