Singapuram Srinivasa, Secunderabad V. Income Tax Officer, Ward-10(4), Hyderabad

ITA 1395/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6346 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 18-04-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 02-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PRASAD
• Section: 201; 143(2); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1 395 /HYD/201 8 ASSESSMENT YEAR: 20 1 5 - 16 SINGAPURAM SRINIVAS, SECUNDERABAD. PAN A JRPS 3624 A VS. INCOME - TAX OFFICER, W ARD 10 ( 4 ) , HYDERABAD. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : S HRI . PRASAD REVENUE BY : S HRI K.J. RAO DATE OF HEARING : 18 / 0 4 /201 9 DATE OF PRONOUNCEMENT : 26 / 0 4 / 201 9 O R D E R PER S . RIFAUR RAHMAN , A .M. : T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 6 , HYDERABAD , DATED 27 / 0 4 /201 8 FOR AY 20 1 5 - 16 . 2 . BRIEF FACTS OF THE CASE ARE, THE ASSESSEE , AN INDIVIDUAL, PROPRIETOR OF M/S SRI OM WINES, WHICH DEALS IN PURCHASE A ND SALE OF LIQUOR ON RETAIL BASIS NE BUSINESS, E - FILED HI S RETURN OF INCOME FOR THE AY 201 5 - 16 ON 20 / 09 /201 5 DECLARING INCOME OF RS. 18 , 47 , 7 5 0/ - . SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AN D ACCORDINGLY NOTICE U/S 143(2) W AS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE AR OF THE ASSESSEE FILED THE REQUIRED INFORMATION CALLED FOR. 2.1 THE AO OBSERVE D THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING A WINE SHOP. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNT, SALE 2 ITA NO. 1395 /HYD/1 8 SINGAPURAM SRINIVAS, SECUNDERABAD. BILLS/INVOICES/VOUCHERS FOR EXPENDITURE. IN RESPONSE, THE ASSESSEE SUBMITTED THAT IN THIS LINE OF BUSINESS, IT IS VERY DIFFICULT TO MAINTAIN THE SALE BILLS AND THE SALES WERE RECORDED BASED ON THE M OVEMENT OF STOCK AND STOCK REMAINING AT THE END OF THE DAY. THE AO , THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THE BOOKS RESULTS SHOWN BY THE ASSESSEE CAN BE ACCEPTED WHEN THE AMOUNT SHOWN UNDER THE HEAD SALES ACCOUNT IS NOT VERIFIABLE AND THE NET PROFIT SHOWN BY THE ASSESSEE AT RS. 18,47,750/ - ON THE GROSS TURNOVER OF RS. 10,70,74,717/ - WORKED OUT TO ONLY 1.73% WHICH IS EVEN LESS THAN 2% OF THE TURNOVER. 2.2 AFTER REJECTING THE SUBMISSIONS OF THE ASSESSEE, IN THE ABSENCE OF S ALES BILLS AND SALES REGISTER MAINTAINED BY THE ASSESSEE, THE AO ESTIMATED THE NET PROFIT @ 5 % ON THE VALUE OF STOCK PUT TO SALE. 3 . WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) DISCUSSED THE ISSUE AT LENGTH ELABORATELY WITH CASE LAW AND, CONFIRMED ORDER OF AO. 4 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: (1) THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] - VI / HYDERABAD HAS ERRED BOTH ON THE LAW AND ON THE FACTS OF THE CASE. (2) THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] - VI / HYDERABAD, ERRED IN CONFIRMING THE PROFIT PERCENTAGE F ROM WINES BUSINESS AT 4% ON THE COST OF SALES, WHEREAS THE JURISDICTIONAL INCOME TAX APPELLATE TRIBUNAL HAS DECIDED THAT, THE PROFIT PERCENTAGE FROM WINES BUSINESS AT 3% ON THE COST OF SALES OR GOODS PUT FOR SALES, PRONOUNCED IN RECENT WINES CASE APPEALS. (3) TO FILE ANY OTHER GROUND NOT FILED EARLIER OR TO MODIFY THE GROUNDS ALREADY FILED WITH THE PERMISSION OF THE HONOURABLE ITAT. 5 . LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 3 ITA NO. 1395 /HYD/1 8 SINGAPURAM SRINIVAS, SECUNDERABAD. 6 . CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. T HE COORDINATE BENCHES OF THIS TRIBUNAL CONSISTENTLY TAKING A VIEW THAT ESTIMATION OF INCOME AT 3% OF THE COST OF THE GOODS SOLD IS REASONABLE IN THIS LINE OF BUSINESS. IN THE CASE OF SRI VENKATESWARA WINES IN ITA NO. 1206/HYD/2015, DATED 27/11/2015 FOR AY 2011 - 12, THE COORDINATE BENCH HAS HELD AS UNDER: 5. HAVING R EGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND THEREFORE, THE ESTIMATION OF INCOME IS JUSTIFIED. IT IS ONLY THE RATE AT WHICH THE INCOME IS TO BE ESTIMATED 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 VENKATESWARA WINES, NIZAMABAD (SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL HAS TAKEN NOTE OF THE DECISION OF HON'BLE HIGH COURT OF TELANGANA AND ANDHRA PRADESH IN ITA.NO.1198/HYD/2015 SAI VENKATESWARA WINES, SECUNDERABAD THE CASE OF CIT VS. KAMLEKAR SHANKAR LAL (SUPRA) TO HOLD AS UNDER : '6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATER IAL 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' ASSESSEE AT 2.5% OF THE TURNOVER. THE CIT WANTS THE SAME TO BE ESTIMATED AT 5 % OF THE TOTAL TURNOVER BECAUSE THE TRIBUNAL IN THE CASE OF AN ASSESSEE CARRYING ON THE SAME BUSINESS OF SALE OF IMFL HAS ESTIMATED THE INCOME AT 5% OF THE TURNOVER. THIS, IN OUR VIEW, IS NOT JUSTIFIED AS HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL. THE UNIFORM NET PROFIT CANNOT BE ADOPTED IN EACH AND 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 AU IN ESTIMATING THE PROFIT AT 2.5% OF THE TOTAL TURNOVER. THUS GROUNDS OF APPEAL NO.2 & 3 ARE ALLOWED.' THEREFORE, WE DIRECT THE AO TO ADOPT 3% OF THE COST OF GOODS OF LIQUOR SOLD AS THE INCOME OF THE ASSESSEE. ACCORDINGLY, GROUND S RAISED BY THE ASSESSEE ON THIS ISSUE ARE PARTLY ALLOWED. 4 ITA NO. 1395 /HYD/1 8 SINGAPURAM SRINIVAS, SECUNDERABAD. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL , 201 9 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 26 TH APRIL , 201 9 KV C OPY TO: - 1) SINGAPURAM SRINIVAS , C/O SHARMA & SASTRY, CAS., NO. 5 - 3 - 318/1, JEERA, MG ROAD, SECUNDERABAD 500 003 2) ITO, WARD 10 ( 4 ) , 5 TH FLOOR, A BLOCK, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD. 3) CIT(A) 6 , HYDERABAD. 4) PR. CIT - 6 , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE