Sneha Restaurant & Bar, Warangal V. Income Tax Officer, Ward-1, Warangal

ITA 1658/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9842 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 27-03-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 08-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 1658/HYD/2018 ASSESSMENT YEAR: 2015-16 SNEHA RESTAURANT & BAR, HANMKONDA, WARANGAL [PAN: ACNFS1378J] VS INCOME TAX OFFICER, WARD-I, WARANGAL (APPELLANT) (RESPONDENT) FOR ASSESSEE : SMT. S. SANDHYA, AR FOR REVENUE : SHRI KIRAN KATTA, DR DATE OF HEARING : 27-03-2019 DATE OF PRONOUNCEMENT : 03-04-2019 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : THIS IS ASSESSEES APPEAL FOR THE AY. 2015-16, AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, HYDERABAD, DATED 12-06-2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-FIRM, IN THE BUSINESS OF RUNNING BAR AND RESTAURANT, FILED ITS RETU RN OF INCOME FOR THE AY. 2015-16 ON 16-08-2015, DECLARING TOTAL ITA. NO. 1658/HYD/2018 :- 2 -: INCOME OF RS. 3,70,740/-. THE CASE WAS SELECTED FO R SCRUTINY UNDER CASS AND ACCORDINGLY, VARIOUS DETAILS WERE CAL LED FOR FROM THE ASSESSEE. THE ASSESSEE COULD NOT PRODUCE THE VOUCHERS AND SALE BILLS BUT SUBMITTED ONLY THE PROFIT & LOSS A/C, BALANCE SHEET AND 3CD REPORT ALONG WITH COPY OF THE PARTNERSHIP DEED. SINCE THE ASSESSEE DID NOT PRODUCE TH E RELEVANT DETAILS, THE BOOK RESULTS WERE REJECTED U/S. 145 OF THE INCOME TAX ACT [ACT] AND THE ASSESSING OFFICER ESTIMATE D THE INCOME FROM LIQUOR BUSINESS AT 5% OF THE PURCHASES AN D AT 15% OF SALES OF FOOD ITEMS, AS INCOME FROM RESTAURANT . 2.1. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OFF ICER AND ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. IN THIS APPEAL, THE ASSESSEE IS ONLY CHALLENGING T HE ESTIMATION OF INCOME FROM LIQUOR BUSINESS AT 5%. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ESTIMATION OF INCOME AT 5% OF PURCHASES IS VERY HIGH. CONSIDERING THE NATURE AND EXTENT OF BUSINESS, SHE PRAYED FOR ESTIMATION OF INCOME AT 3% O F PURCHASES AS IS DONE BY THE CO-ORDINATE BENCHES OF THI S TRIBUNAL IN VARIOUS DECISIONS. COPIES OF THE DECISIO NS IN SIMILAR FACTS AND CIRCUMSTANCES ARE ALSO FILED BEFORE US. 4. LD.DR WAS ALSO HEARD. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATER IAL ON RECORD, WE FIND THAT IN SIMILAR CASES, THIS TRIBUNA L HAS BEEN ITA. NO. 1658/HYD/2018 :- 3 -: HOLDING THAT THE ESTIMATION OF INCOME AT 3% OF THE COST O F GOODS PUT TO SALE, IS REASONABLE AND BOTH OF US ARE SIGNATORIES TO VARIOUS DECISIONS HOLDING AS ABOVE. FOR THE SAKE O F CONVENIENCE AND READY REFERENCE, RELEVANT PARAS IN TH E CASE OF M/S. SAI VENKATESWARA WINES IN ITA NO. 1198/HYD/201 5, DT. 20-11-2015 ARE REPRODUCED HERE: 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BO OKS OF ACCOUNT AND THEREFORE, THE ESTIMATION OF INCOME IS JUSTIFIE D. 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 SOL D, WHILE THE ASSESSEE IS SEEKING THE ESTIMATION AT 3% OF THE COS T OF GOODS SOLD. WE FIND THAT IN THE CASE OF VENKATESWARA WINES, NIZAMA BAD (SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL 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 UND ER : 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 ASSES SEE BUT THE ASSESSEE HAD FAILED TO PRODUCE THE SAME. THEREFORE, AO HAD ESTIMATED T HE 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 ASS ESSEE CARRYING ON THE SAME BUSINESS OF SALE OF IMFL HAS ESTIMATED THE INCOME A T 5% OF THE TURNOVER. THIS, IN OUR VIEW, IS NOT JUSTIFIED AS HELD BY THE COORDINAT E BENCH OF THIS TRIBUNAL. THE UNIFORM NET PROFIT CANNOT BE ADOPTED IN EACH AND EV ERY CASE OF SIMILAR BUSINESS. ESTIMATION OF NET PROFIT MUST BE ON THE BASIS OF FA CTS INVOLVED IN EACH AND EVERY CASE. THEREFORE, IN OUR VIEW, THERE IS NO ERROR COM MITTED BY THE AO IN ESTIMATING THE PROFIT AT 2.5% OF THE TOTAL TURNOVER. THUS GROU NDS 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 SOLD. AS THE F ACTS BEFORE US ARE SIMILAR TO THE FACTS BEFORE THE TRIBUNAL IN THE CAS E OF VENKATESWARA WINES, NIZAMABAD (SUPRA) AND THE UNIFORM RATE OF PR OFIT CANNOT BE ADOPTED IN THE CASE OF EVERY ASSESSEE IN SIMILAR BU SINESS, WE ALLOW GROUND NO.2 OF THE ASSESSEE. ITA. NO. 1658/HYD/2018 :- 4 -: 5.1. RESPECTFULLY FOLLOWING THE ABOVE, WE DIRECT THE AS SESSING OFFICER TO ESTIMATE THE INCOME FROM LIQUOR BUSINESS AT 3% OF THE COST OF GOODS PUT TO SALE. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD APRIL, 2019 SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMB ER HYDERABAD, DATED 3 RD APRIL, 2019 TNMM ITA. NO. 1658/HYD/2018 :- 5 -: COPY TO : 1. SNEHA RESTAURANT & BAR, 3-3-134, 135 & 119, KUMARPALLY, HANMKONDA, WARANGAL. 2. INCOME TAX OFFICER, WARD-1, WARANGAL. 3. CIT(APPEALS)-3, HYDERABAD. 4. PR.CIT-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.