Ramzan Ali Gowlani, Hyderabad V. ACIT, CIRCLE-1, Nizamabad

ITA 1566/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69901 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 11-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1566/HYD/2012 ASSESSMENT YEAR 2009-10 SRI RAMZAN ALI GOWLANI ADILABAD PAN: ABFPG4410N VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1 NIZAMABAD APPELLANT RESPONDENT APPELLANT BY: SRI A.V. RAGHURAM RESPONDENT BY: SRI JEEVAN LAL LAVIDIYA DATE OF HEARING: 05.11.2013 DATE OF PRONOUNCEMENT: 05.11.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 2.7.2012 FOR A.Y. 2009-10. 2. THE ASSESSEE CHALLENGED THE DIRECTION OF THE CIT(A) TO THE AO TO ESTIMATE THE NET PROFIT OF THE ASSESSEE BUSINESS AT 5% OF THE GROSS FREIGHT RECEIPTS, NET OF ALL EXPENSES (INCLUDING DE PRECIATION) ALLOWABLE U/SS. 30 TO 38 OF INCOME-TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO HAS EARNED INCOME FROM HOUSE PROPERTY AND PROFI TS AND GAINS FROM THE BUSINESS OF TRANSPORT CONTRACTS. THE ASSES SING OFFICER FOUND THAT IN RESPECT OF THE EXPENSES DEBITED TO TH E PROFIT AND LOSS A/C. , THE VOUCHERS WERE NOT PROPERLY MAINTAINED AND MOST OF THESE VOUCHERS WERE FOUND TO BE SELF MADE. PAYMENTS WERE MADE IN CASH AND COMPLETE DETAILS OF THE RECIPIENTS WERE NOT REC ORDED ON THE VOUCHERS. THEREFORE, THE VOUCHERS WERE NOT AMENABL E TO VERIFICATION. SINCE GENUINENESS AND CORRECTNESS O F THE EXPENSES ITA NO. 1566/HYD/2012 SRI RAMZAN ALI GOWLANI ================== 2 COULD NOT BE ESTABLISHED FROM THESE VOUCHERS, THE AO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED INCOME OF THE ASSESS EE AT 5% OF THE GROSS FREIGHT RECEIPTS OF RS. 5,67,33,405. 4. ON APPEAL, THE CIT(A) CONFIRMED REJECTION OF BOOKS O F ACCOUNT AND DIRECTED THE AO TO ESTIMATE THE INCOME OF ASSESS EE AT 5% INSTEAD OF 6% MADE BY THE AO. AGAINST THIS, THE ASSE SSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AR SUBMITTED THAT THE ASSESSEE'S FINANCI AL RESULTS FOR EARLIER YEAR AS WELL AS SUBSEQUENT YEARS ARE AS FOLLOWS: A.Y. 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12 2012 - 13 TURNOVER 3 ,48,14,603 5,41,12,047 5,67,33,405 3,46,20,343 4,32,20,084 4,69,24,755 GROSS PROFIT 7,38,725 90,10,913 80,52,368 59,14,158 82,49,946 75,07,065 OTHER INCOME 84,91,106 15 293 13,457 4,32,898 NET PROFIT 10,62,786 15,60,338 9,19,451 7,12,246 9,92,874 7,00,704 NET PROFIT % TO SALES 3.053 2.8835 1.6207 2.0573 2.297251 1.49325 6. HE SUBMITTED THAT THE AVERAGE NET PROFIT FOR THE AB OVE ASSESSMENT YEARS IS TO BE CONSIDERED AND INCOME HAS TO BE DECIDED INSTEAD OF ESTIMATING THE INCOME AT 5% OF THE GROSS RECEIPTS. 7. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THE PRESENT CASE, THE ASSESSEE'S BOOKS OF ACCOUNT ARE NOT RELIABLE AND WOULD NOT REFLECT CORRECT FINANCIAL RE SULTS OF THE ASSESSEE. BEING SO, INCOME OF THE ASSESSEE IS TO B E ESTIMATED. WE FIND SIMILAR ISSUE CAME BEFORE THE TRIBUNAL IN THE CASE OF SRI RAM NIVAS PANDIT VS. ADDL. CIT, IN ITA NO. 1172/HYD/2012 FOR A.Y. 2009- 10. THE TRIBUNAL VIDE ORDER DATED 15.7.2013 HELD AS FOLLOWS: '14. AS SEEN FROM THE ABOVE TABLE, THE HIGHEST NET PROFIT IS 2.43 FOR THIS ASSESSMENT YEAR UNDER CONSIDERATION. THE BOOKS OF ACCOUNTS ARE NOT RELIAB LE AS OBSERVED BY US IN EARLIER PARA. BEING SO, WE ARE OF THE OPINION THAT ASSESSEE'S INCOME IS TO BE ESTIMATED CONSIDERING THE EARLIER ORDER OF THE TRIBUNAL CITED ITA NO. 1566/HYD/2012 SRI RAMZAN ALI GOWLANI ================== 3 (SUPRA). ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ESTIMATE THE INCOME OF THE ASSESSEE AT 3% OF THE GR OSS TRANSPORT RECEIPTS. THEREAFTER, THE ASSESSEE IS NOT ENTITLED FOR ANY OTHER DEDUCTIONS IN VIEW OF JUDGME NT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWEL L CONSTRUCTIONS VS. CIT (1998) 232 ITR 776 (A.P.) WHEREIN IT HAS BEEN HELD THAT NO DEDUCTIONS SPECIFI ED IN SECTIONS 29 TO 40 OF THE INCOME TAX ACT, 1961 ARE DEEMED TO BE ALLOWED AGAINST THE INCOME ESTIMATED B Y REJECTING THE BOOKS OF ACCOUNTS UNDER SECTION 145 O F THE INCOME TAX ACT, 1961. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED.' 9. ACCORDINGLY, WE DIRECT THE AO TO ESTIMATE INCOME OF T HE ASSESSEE AT 3% INSTEAD OF 5% AND THE ASSESSEE IS NO T ENTITLED FOR ANY DEDUCTION TOWARDS ANY EXPENDITURE INCLUDING DEPRECI ATION. 10. IN THE RESULT, ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH NOVEMBER, 2013 SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 5 TH NOVEMBER, 2013 TPRAO COPY FORWARDED TO: 1. SRI RAMZAN ALI GOWLANI, C/O. M/S. DIAMOND TRANSPORT CORPORATION, NH-7, BHOKTAPUR, ADILABAD. 2. THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 1 , HYDERABAD. 3. THE CIT(A) - V I , HYDERABAD . 4. THE CIT - V , HYDERABAD. 5. THE DR ' B ' BENCH, ITAT, HYDERABAD . .