Satish Kumar Bollapelli , Warangal V. Income Tax Officer, Ward-3, Warangal

ITA 1248/Hyd/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5795 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 11-12-2019
• Assessment Year: 2016-2017
• Appeal Filed On: 09-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.S. ARVINDAKSHAN
• Keywords: FORM 26AS
• Section: 142(1); 234B; 143(2)

Judgement Text

ITA NO 1248 OF 2019 SATISH KUMAR BOLLAPELLI WARANGA L. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1248/HYD/2019 ASSESSMENT YEAR: 2016-17 SHRI SATISH KUMAR BOLLAPELLI, WARANGAL PAN:AIKPB8758J VS. INCOME TAX OFFICER WARD-3 WARANGAL (APPELLANT) (RESPONDENT) ASSESSEE BY: SMT. S. SANDHYA REVENUE BY : SRI R.S. ARVINDAKSHAN, DR DATE OF HEARING: 11/12/2019 DATE OF PRONOUNCEMENT: 31/01/2020 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2016-17 AGAIN ST THE ORDER OF THE CIT (A)-3, HYDERABAD, DATED 17.05. 2019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN DIVIDUAL, CARRYING ON RETAIL BUSINESS OF LIQUOR IN THE NAME & STYLE OF M/S. SRI LAXMI NARASIMHA WINES, FILED HIS RETURN OF INCO ME FOR THE A.Y 2016-17 ON 17.06.2016, DECLARING TOTAL INCOME OF RS .6,43,750/-. THE CASE HAS BEEN SELECTED FOR SCRUTINY UNDER CASS GUIDELINES AND ACCORDINGLY, NOTICES U/S 143(2) & 142(1) WERE I SSUED AND DULY SERVED ON THE ASSESSEE. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE THE PURCHASE AND SALES BILLS, P&L A/C, BALANCE SHEET, COPY OF BANK S TATEMENT, FORM 26AS STATEMENT AND BILLS AND VOUCHERS IN SUPPO RT OF EXPENDITURE OF THE PREVIOUS YEAR. THE ASSESSEE SUBM ITTED THE SOME INFORMATION AND EXPRESSED HIS INABILITY TO PR ODUCE THE SALE BILLS STATING THAT SALE BILLS ARE GENERALLY NOT ISS UED AND IT IS A ITA NO 1248 OF 2019 SATISH KUMAR BOLLAPELLI WARANGA L. PAGE 2 OF 4 COMMON PRACTICE IN THIS LINE OF BUSINESS AND SALES ARE ACCOUNTED ON DAILY STOCK REDUCTION BASIS. THE AO DID NOT ACCE PT THIS CONTENTION OF THE ASSESSEE AND ESTIMATED THE NET PR OFIT @5% OF THE STOCK PUT FOR SALE. AGGRIEVED, THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE A O AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS B OTH ON FACTS AND IN LAW. 2. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTI ON OF THE AO IN ESTIMATING THE INCOME FROM BUSINESS OF RETAIL TRADING OF LIQUOR AT 5% OF THE PURCHASES. 3. THE LEARNED CIT (A) OUGHT TO HAVE HELD THAT THE ESTIMATION OF INCOME AT 5% IS EXCESSIVE IN THE LINE OF BUSINES S ACTIVITY CARRIED ON BY THE APPELLANT. 4. THE LEARNED CIT (A) ERRED IN CONFIRMING LEVY OF INTEREST U/S 234B AND 234D OF THE I.T. ACT. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS IN THE BUSINESS OF RETAIL TRADE OF LIQU OR, AND IN SIMILAR CASES THIS TRIBUNAL WAS PLEASED TO RESTRICT THE ESTIMATE OF NET PROFIT AT 3% OF THE COST OF GOODS PUT TO SALE. 4. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT IN SIMILAR CASES THIS TRIBUNAL HAS BEEN ESTIMATING NET PROFIT IN THE SALE OF LIQUOR AT 3% OF THE COST OF G OODS PUT TO SALE. FOR THE SAKE OF CONVENIENCE AND READY REFERENCE, RELEVANT P ARAS IN THE CASE OF M/S. SAI VENKATESWARA WINES IN ITA NO. 1198/HYD/201 5, DT. 20-11- 2015 ARE REPRODUCED HERE: ITA NO 1248 OF 2019 SATISH KUMAR BOLLAPELLI WARANGA L. PAGE 3 OF 4 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT MAINTAINE D ANY BOOKS OF ACCOUNT AND THEREFORE, THE ESTIMATION OF INCOME IS JUSTIFIED. IT IS ONLY THE RATE AT WHICH THE INCOME IS TO BE ESTIM ATED IS BEFORE US. A.O. HAS ESTIMATED THE INCOME AT 5% OF THE COST OF GOODS SOLD, WHILE THE ASSESSEE IS SEEKING THE ESTIMATION AT 3% OF THE COST OF GOODS SOLD. WE FIND THAT IN THE CASE OF VENKATESWAR A WINES, NIZAMABAD (SUPRA), THE COORDINATE BENCH OF THIS TRI BUNAL HAS TAKEN NOTE OF THE DECISION OF HONBLE HIGH COURT OF TELANGANA AND ANDHRA PRADESH IN THE CASE OF CIT VS. KAMLEKAR SHANKAR LAL (SUPRA) TO HOLD AS UNDER : 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE AO HAS CALLED FOR BOOKS OF ACCOUNT OF THE ASSESSEE BUT THE ASSESSEE HAD FAILED TO PRODUCE THE SAME. THEREFORE, AO HAD ESTIMATED THE INCOME OF THE ASSES SEE AT 2.5% OF THE TURNOVER. THE CIT WANTS THE SAME TO BE ESTIM ATED AT 5% OF THE TOTAL TURNOVER BECAUSE THE TRIBUNAL IN THE CASE OF AN ASSESSEE CARRYING ON THE SAME BUSINESS OF SALE OF I MFL HAS ESTIMATED THE INCOME AT 5% OF THE TURNOVER. THIS, I N OUR VIEW, IS NOT JUSTIFIED AS HELD BY THE COORDINATE BENCH OF TH IS TRIBUNAL. THE UNIFORM NET PROFIT CANNOT BE ADOPTED IN EACH AN D EVERY CASE OF SIMILAR BUSINESS. ESTIMATION OF NET PROFIT MUST BE ON THE BASIS OF FACTS INVOLVED IN EACH AND EVERY CASE. THEREFORE , IN OUR VIEW, THERE IS NO ERROR COMMITTED BY THE AO IN ESTIMATING THE PROFIT AT 2.5% OF THE TOTAL TURNOVER. THUS, GROUNDS OF APPEAL NO.2 & 3 ARE ALLOWED. 5.1. IN THE CASE BEFORE US, THE ASSESSEE IS AGREEAB LE TO THE ESTIMATION OF INCOME AT 3% OF THE COST OF GOODS SOL D. AS THE FACTS BEFORE US ARE SIMILAR TO THE FACTS BEFORE THE TRIBU NAL IN THE CASE OF VENKATESWARA WINES, NIZAMABAD (SUPRA) AND THE UN IFORM RATE OF PROFIT CANNOT BE ADOPTED IN THE CASE OF EVERY AS SESSEE IN SIMILAR BUSINESS, WE ALLOW GROUND NO.2 OF THE ASSES SEE. 6. RESPECTFULLY FOLLOWING THE SAME, I DIRECT THE AO TO ESTIMATE NET PROFIT AT 3% OF THE COST OF GOODS PUT TO SALE. 7. AS REGARDS GROUND NO.4 RELATING TO CHARGING OF I NTEREST U/S 234B AND 234D OF THE ACT IS CONCERNED, I FIND THAT IT IS CONSEQUENTIAL IN NATURE AND THE AO IS DIRECTED TO GIVE CONSEQUENTIAL RELIEF, IF ANY, TO THE ASSESSEE. ITA NO 1248 OF 2019 SATISH KUMAR BOLLAPELLI WARANGA L. PAGE 4 OF 4 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2020. SD/- HYDERABAD, DATED 31 ST JANUARY, 2020. VINODAN/SPS COPY TO: 1 SHRI SATISH KUMAR BOLLAPELLI, 5-64 SHYAMPET, WARA NGAL 506319 2 ITO WARD-3 WARANGAL 3 CIT (A)-3, HYDERABAD 4 PR. CIT -3, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER (P. MADHAVI DEVI) JUDICIAL MEMBER