G. Sudershan, Hyderabad V. Income Tax Officer, Ward -6(4), Hyderabad

ITA 126/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61875 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K VISHWANATHAM
• Assessee Lawyers: B SHANTI KUMAR
• Keywords: Gift; Business income
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.126/HYD/2012 (ASSESSMENT YEAR 2007-08) SHRI G.SUDARSHAN, HYDERABAD ( PAN - ADEPG 7471 J ) V/S INCOME TAX OFFICER, WARD-6(4), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.SHANTIKUMAR RESPONDENT BY : SHRI K.VISHWANATHAM DATE OF HEARING 2.5.2012 DATE OF PRONOUNCEMENT 4.5.2012 O R D E R PER D.KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-III, HYDERA BAD DATED 28.11.2011 FOR THE ASSESSMENT YEAR 2007-08. 2. THE FIRST ISSUE INVOLVED IN GROUND NO.1 OF THIS APPEAL RELATES TO ESTIMATION OF PROFIT OF THE ASSESSEES FROM THE B USINESS OF RETAIL TRADE IN LIQUOR. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS AN INDIVIDUAL, DERIVING INCOME FROM BUSINESS OF RUNNI NG A WINE SHOP IN THE NAME OF M/S. SRI SAI WINES. THE ASSESSING OFFICER , IN THE COURSE OF ASSESSMENT PROCEEDINGS UNDER S.143(3) OF THE ACT, F OUND THAT THAT THE ASSESSEE DURING THE PREVIOUS YEAR MADE PURCHASES OF RS.6,13,05,766 FROM APBCL AND HAS SHOWN SALES AT RS.6,35,67,253. HE FURTHER NOTED THAT AS PER G.O.MS. NO.184 DATED 7.2.2005 ISSUED BY THE REVENUE ITA NO.126/HYD/2012 SRI G.SUDERSHAN HYDERABAD 2 AUTHORITIES OF GOVERNMENT OF ANDHRA PRADESH, THE RE TAILERS MARGIN, I.E. GROSS PROFIT, ON SALE OF ORDINARY LIQUOR PRODUCTS I S 27% AND ON MEDIUM AND ON PREMIUM VARIETIES OF LIQUOR THE SAME IS 20%. HE FURTHER NOTED THAT SUCH MARGIN ON BEER IS 25%. HE ALSO NOTED THA T THE COST OF GOODS SOLD IN THE CASE OF THE ASSESSEE IS RS.5,71,93,637 AND THE GROSS PROFIT MARGIN SHOWN BY THE ASSESSEE ON SALE FIGURE IS 11. 14%, WHICH ACCORDING TO HIM IS VERY LOW. IN THE ABSENCE OF PROPER EVID ENCE FURNISHED BY THE ASSESSEE, OBSERVING THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE EVIDENCE FOR ITS TURNOVER IN THE FORM OF SALE BILLS , ETC., THE ASSESSING OFFICER REJECTED THE BOOK RESULTS AND APPLYING A RA TE OF 18% ON THE COST OF GOODS SOLD AMOUNTING TO RS.5,71,93,637, ESTIMATED T HE SALES MADE BY THE ASSESSEE AT RS.6,874,88,492. SINCE THE ASSESSEE HAS SHOWN SALES AT RS.6,35,67,253, HE ADDED THE DIFFERENCE OF RS.39,21 ,239 TOWARDS SUPPRESSION OF SALES TO THE RETURNED INCOME OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) CONFIRMED THE SAID ADDIT ION MADE BY THE ASSESSING OFFICER. HENCE, ASSESSEE IS IN SECON D APPEAL ON THIS ISSUE. 6. WE HEARD BOTH THE PARTIES. WE FIND THAT ON THE ISSUE OF ESTIMATION OF REASONABLE PROFIT IN THE CASE OF ASSE SSEES ENGAGED IN RETAIL TRADE IN LIQUOR, THE COORDINATE BENCHES OF THIS TRI BUNAL IN THE RECENT PAST, FOLLOWING THE DECISION OF THIS TRIBUNAL IN ITA NO.5 91/HYD/2011 AND C.O. THEREIN, IN THE CASE OF ITO WARD 9(3), HYDERABAD V/ S. KANAKADURGA WINES, HYDERABAD DATED 28.7.2011, HAVE BEEN CONSIST ENTLY HOLDING, AS IN ITA NO.1997/HYD/2011 & CO NO.28/HYD/2012 IN THE CAS E OF M/S. LAKSHMI SRINIVASA WINES, NALGONDA AND OTHERS, VIDE ORDER DATED 30.3.2012, TO WHICH ONE OF US, VIZ. THE ACCOUNTANT MEMBER, IS A PARTY THAT ESTIMATION OF NET PROFIT OF THE ASSESSEES IN T HIS LINE OF BUSINESS AT 3% OF THE PURCHASES OR STOCK PUT FOR SALE DURING TH E YEAR, WOULD BE REASONABLE. IN THIS VIEW OF THE MATTER, FOLLOWING THE CONSISTENT VIEW TAKEN BY THIS TRIBUNAL IN SIMILAR CAES, WE SET ASID E THE IMPUGNED ORDERS ITA NO.126/HYD/2012 SRI G.SUDERSHAN HYDERABAD 3 OF THE LOWER AUTHORITIES, AND DIRECT THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT OF THE ASSESSEE AT 3% OF THE PURCHASES O R STOCK PUT FOR SALE DURING THE YEAR, SUBJECT TO THE CONDITION THAT THE INCOME SO ESTIMATED SHALL NOT GO BELOW THE RETURNED INCOME. CONSEQUENTL Y, FIRST GROUND OF THE ASSESSEE IN THIS APPEAL IS PARTLY ALLOWED. 7. GROUNDS NO.2 OF THE ASSESSEE IN THIS APPEAL REA D AS FOLLOWS- 2. THE ASSESSING OFFICER AND CIT(A) BOTH ERRED ON FACTS AND LAW IN TREATING THE CASH GIFT OF RS.16,50,000 RECEI VED FROM THE ASSESSEES FATHER AS FROM UNEXPLAINED SOURCES O F INCOME TAXABLE U/S. 68 OF THE IT ACT 1961. 8. LEARNED COUNSEL FOR THE ASSESSEE, REITERATING T HE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBMITTED THAT T HE CASH GIFT IN QUESTION HAS BEEN RECEIVED BY THE ASSESSEE FORM HIS FATHER, AND IN VIEW OF THE FACT THAT THERE IS NO DISPUTE EITHER WITH REGARD TO THE IDENTITY OF THE PERSON GIVING THE GIFT OR THE SOURCE OF THE MONEY FOR THE ASSESSEE, THERE IS NO JUSTIFICATION FOR THE ADDITION MADE BY THE ASSESSIN G OFFICER, AND THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE SAME. HE ALSO PLACED RELIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF INDWELL CONSTRUCTIONS (232 ITR 776), AND SUBMITTED THAT THE INCOME OF THE ASSESSEE HAVING BEEN DETERMINED BY THE ASSESSING OF FICER, RESORTING TO ESTIMATION ON REJECTION OF BOOK RESULTS, THERE IS N O SCOPE FOR ANY OTHER ADDITION, BEING MADE SEPARATELY. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORIT IES, AND SUBMITTED THAT EXCEPT FOR THE IDENTITY OF THE PERSON GIVING THE GI FT, THE ASSESSEE HAS FAILED TO ESTABLISH EITHER THE CREDIT-WORTHINESS OF HIS FATHER OR THE GENUINENESS OF THE GIFT, AND AS SUCH, THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A), DESERVES TO BE UPHELD. HE ALSO ITA NO.126/HYD/2012 SRI G.SUDERSHAN HYDERABAD 4 PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT V/S. DEVI PRASAD VISWANATH PRASAD (72 ITR 19 4). 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT THE CASE O F THE REVENUE THAT THE ASSESSEE HAS ANY SOURCE OF INCOME, APART FROM HIS R ETAIL BUSINESS IN LIQUOR. THE BUSINESS INCOME OF THE ASSESSEE, HAVIN G BEEN DETERMINED BY THE ASSESSING OFFICER, BY RESORTING TO ESTIMATION, ON REJECTION OF BOOK RESULTS, AS HELD BY THE JURISDICTIONAL HIGH COURT I N THE CASE OF INDWELL CONSTRUCTIONS (SUPRA), THERE IS NO SCOPE FOR ANY OT HER ADDITION BEING MADE BY THE ASSESSING OFFICER SEPARATELY. NOTWITHS TANDING THAT, IT IS ALSO FOUND FROM THE IMPUGNED ORDERS OF THE LOWER AUTHORI TIES THAT THE PERSON FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED THE GIFT IS IDENTIFIABLE AND HAD A DISTINCT AND DEFINITE SOURCE OF INCOME. THE ONLY OBJECTION OF THE REVENUE, WHICH LED TO THE DISBELIE VING OF THE CLAIM OF THE ASSESSEE IS THAT SO MUCH OF CASH COULD NOT HAVE BEE N KEPT AT HOUSE FOR SUCH A LONG TIME. EVEN THOUGH KEEPING OF SO MUCH O F CASH FOR SUCH A LONG TIME COULD NOT BE PROVED BY THE ASSESSEE, IT I S NOT IMPOSSIBLE AND THEREFORE, ONE POSSIBLE EXPLANATION; CONSEQUENTLY, THE VERSION OF THE ASSESSEE COULD NOT BE DISBELIEVED. WE ACCORDINGLY D ELETE THE ADDITION OF RS.16,50,000, ALLOWING THE GROUND OF THE ASSESSEE O N THIS ISSUE. 11. GROUNDS NO.3 OF THE ASSESSEE IN THIS APPEAL RE AD AS FOLLOWS- 3. THE ASSESSING OFFICER AND CIT(A) BOTH ERRED ON FACTS AND LAW IN DISALLOWING THE EXPENDITURE OF RS.31,671 INC URRED IN PURCHASING OF CARRY BAGS. 12. WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. IN VIEW OF THE SETTLED POSITION OF LAW AS LAID DOWN BY THE JURISDICTIONAL HIGH COUR T IN THE CASE OF INDWELL CONSTRUCTIONS (SUPRA) THAT ONCE BUSINESS INCOME OF THE ASSESSEE IS DETERMINED BY THE ASSESSING OFFICER, BY RESORTING T O ESTIMATES, ON ITA NO.126/HYD/2012 SRI G.SUDERSHAN HYDERABAD 5 REJECTION OF BOOK RESULTS, THERE IS NO SCOPE FOR AN Y SEPARATE ADDITION, WE FIND NO JUSTIFICATION FOR THE DISALLOWANCE OF RS.31 ,671 MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). CON SEQUENTLY, THE ADDITION OF RS.31,671 IS DELETED AND THIS GROUND OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE COURT ON 4.5.2012 SD/- SD/- (SAKTIJIT DEY) ( D.KARU NAKARA RAO ) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 4 TH MAY, 2012 COPY FORWARDED TO: 1. 2. 3. SHRI G.SUDERSHAN, C/O. SHRI T. SHANKER, ADVOCATE & TAX CONSULTANT, H.NO.3-5-574, FLAT NO.101, CITY HOMES APARTMENTS, VITTALWADI LANE, NARAYANGUDA, HIMAYATNA GAR, HYDERABAD 29. INCOME-TAX OFFICER, WARD-6(4), HYDERABAD COMMISSIONER OF INCOME - TAX(APPEALS) III 4. COMMISSIONER OF INCOME-TAX II, HYDERABAD 6. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD B.V.S.