Income Tax Officer, Ward-1, Nalgonda V. Sri Pullemla Yadagiri, Nalgonda

ITA 1681/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77846 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1681/HYD/2013 ASSESSMENT YEAR 2009-2010 ITO, WARD-1 NALGONDA VS. SRI PULLEMLA YADAGIRI PROP. LAXMI WINES NALGONDA PAN AGFPP 2939Q (APPELLANT) (RESPONDENT) FOR REVENUE : MR. B. YADAGIRI FOR ASSESSEE : -NONE- DATE OF HEARING : 03.04.2014 DATE OF PRONOUNCEMENT : 16.04.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 28.08.2013 FOR THE A.Y. 2009-2010. THE REVENUE IN ITS APPEAL HAS RAISE D 6 GROUNDS ON TWO ISSUES I.E., REJECTION OF BOOKS OF A CCOUNTS AND ESTIMATION OF PROFITS. THE CASE IS POSTED FOR HEARI NG AND NOTICE WAS SENT THROUGH RPAD TO ASSESSEE, BUT THE SAME IS RETURNED UN-SERVED WITH A POSTAL REMARK ADDRESSEE LEFT. TH ERE IS NO INTIMATION ABOUT CHANGE OF ADDRESS. ACCORDINGLY, AF TER HEARING THE LEARNED D.R. THE CASE WAS DECIDED EX-PARTE ASSE SSEE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF RETAIL TRADE IN LIQU OR UNDER THE NAME AND STYLE OF LAXMI WINES. THE ASSESSEE FILED ITS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.3,38,870/-. DURING THE COURSE OF SCRUT INY 2 ITA.NO.1681/HYD/2013 MR. PULLEMLA YADAGIRI, NALGONDA PROCEEDINGS, THE A.O. REJECTED THE BOOKS OF ACCOUNT S OF THE ASSESSEE ON THE GROUND THAT THE SALE FIGURES SHOWN BY THE ASSESSEE ARE NOT SUPPORTED BY ANY SALE BILLS/RECEIP TS AND APPLIED THE PROVISIONS OF SECTION 145 OF THE ACT. THE A.O. ESTIMATED THE PROFITS AT THE RATE OF 27% OF THE STO CK PUT TO SALE I.E., RS.1,47,76,105/-, WHICH WORKED OUT TO RS.1,87,65,653/- AND THEREAFTER REDUCED THE SALES A DMITTED OF RS.1,71,21,127/- AND ARRIVED AT THE SUPPRESSED S ALES AT RS.16,44,526/- AND ULTIMATELY DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.19,83,400/-. 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE TH E LD. CIT(A). ON THE ISSUE OF REJECTION OF BOOKS THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. IN REJECTING THE B OOKS. WITH RESPECT OF ESTIMATION OF PROFIT, THE LD. CIT(A) OBS ERVED THAT IT IS AN ESTABLISHED FACT THAT WHERE BOOKS ARE NOT RELIABLE, THE ESTIMATION MAY BE RESORTED BUT SUCH ESTIMATION SHOULD BE BASED ON REASONABLE AND COMPARABLE BASIS. HENCE, BY FOLLOWING THE ORDER OF THE ITAT IN THE CASE OF M/S. AMARAVATHI WINE SHOP IN ITA.NO.1196/HYD/2011 DATED 08.06.2012, THE LD. CIT(A) DIRECTED THE A.O. TO EST IMATE THE NET PROFIT AT 5% ON THE PURCHASES OR STOCK PUT FOR SALE DURING THE YEAR, WHICHEVER IS MORE. FURTHER, IN EST IMATING THE PROFITS, HE DIRECTED THAT THE INCOME ALREADY OF FERED BY THE ASSESSEE ON SUCH SALES, MAY BE TAKEN INTO CONSIDERATION, TO AVOID THE DUPLICATION OF INCOME. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL RAISIN G THE FOLLOWING GROUNDS : 1. THE ORDER OF LD. CIT(A) IS ERRONEOUS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 3 ITA.NO.1681/HYD/2013 MR. PULLEMLA YADAGIRI, NALGONDA 2. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ESTIMATION OF SALES @ 27% OF THE COST OF LIQUOR PUT TO SALE AS PER GOVERNMENT OF A.P. PROHIBITION & EXCISE GOMS.184 DATED 07.02.2005 AND ASSESSMENT OF UNDERSTATEMENT OF SALES. 3. THE LD. CIT(A) ERRED IN RELYING ON THE DECISION OF ITAT IN THE CASE OF M/S. AMARAVATHI WINES, HYDERABAD THE NET PROFIT HAS BEEN ESTIMATED @ 5% OF THE COST OF LIQUOR PUT TO SALE TAKING THE PREVIOUS HISTORY OF PROFIT WHEREAS THE ASSESSEE HAS NO PAST HISTORY AND THE LIQUOR TRADERS IN NALGONDA DISTRICT ARE SELLING THE LIQUOR AS PER MRP OR EVEN MORE THAN MRP. 4. THE LD. CIT(A) ERRED IN RELYING UPON THE DECISION OF ITAT-B BENCH, HYDERABAD, IN THE CASE OF M/S. AMARAVATHI WINES, HYDERABAD IN ITA.NO.1196/HYD/2011, DATED 08.06.2012, SINCE THE VOLUME OF BUSINESS, LOCATION OF BUSINESS AND PROFITS IN THE CASE OF VENKATESWARA WINES, HYDERABAD CANNOT BE COMPARED WITH THAT OF THE ASSESSEE AND ALSO THAT EACH ASSESSMENT PROCEEDINGS ARE INDEPENDENT 5. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE UNDERSTATEMENT OF SALES DETERMINED IN THE ASSESSMENT ORDER INSTEAD OF DIRECTING TO ESTIMATE THE NET PROFIT @ 5% OF COST OF LIQUOR PUT TO SALE. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING WITH THE PERMISSION OF THE BENCH. 5. GROUND NOS. 1 AND 6 ARE GENERAL IN NATURE AND THEREFORE, IT NEED NOT BE ADJUDICATED. 6. GROUND NOS. 2 TO 5 PERTAINS TO DETERMINATION OF PROFITS IN THE BUSINESS OF WINES. 7. AFTER CONSIDERING THE ARGUMENTS OF THE LEARNED D.R. WE DO NOT FIND ANY REASON TO INTERFERE WITH TH E ORDER OF THE CIT(A) WHO FOLLOWED THE DECISIONS OF THE COORDI NATE BENCH 4 ITA.NO.1681/HYD/2013 MR. PULLEMLA YADAGIRI, NALGONDA AS STATED ABOVE. IN SIMILAR MATTERS, THE COORDINATE BENCHES OF THE TRIBUNAL HAVE BEEN CONSISTENTLY DIRECTING ADOPT ION OF RATE OF 5% OF THE PURCHASE VALUE OR STOCK PUT TO USE WHI CHEVER IS MORE. THE DECISION IN THE CASE OF ITO, WARANGAL VS. SHRI P. RAMAIAH AND OTHERS IN ITA.NO.1739/HYD/2012 DATED 21.03.2013 IS AS FOLLOWS : '4. WE HAVE HEARD THE PARTIES PRESENT AND PERUSED T HE MATERIAL ON RECORD IN THE LIGHT OF THE IMPUGNED ORD ERS OF THE CIT(A). WE FIND THAT THE ISSUE INVOLVED IN THE PRES ENT APPEAL IS SQUARELY COVERED BY THE CONSISTENT VIEW TAKEN BY THE COORDINATE BENCHES OF THIS TRIBUNAL IN SIMILAR MATT ERS, AS IN THE CASE OF ITO V/S. SHRI PITTALA YAKAIAH, NALGONDA & ORS. IN ITA NO. 2191/HYD/2011 & ORS., WHEREIN THIS TRIBU NAL VIDE DATED 13 TH APRIL, 2012, HELD THAT INCOME OF T HE ASSESSEES IN THE LINE OF LIQUOR BUSINESS HAS TO BE ESTIMATED AT 5% COST OF SALES MADE BY THEM. IN FACT, THE CIT( A) DIRECTED THE ASSESSING OFFICER TO DETERMINE THE PROFIT @ 5% OF THE COST OF THE GOODS SOLD RELYING ON THE ORDER OF THE TRIBU NAL IN THE CASE OF M/S. AMARAVATI WINE SHOP, IN ITA NO. 1196/HYD/2011 DATED 8.6.2012. SINCE THE IMPUGNED OR DER OF THE CIT(A) IS IN CONSONANCE WITH THE CONSISTENT VIE W TAKEN BY THE COORDINATE BENCHES OF THE TRIBUNAL IN SIMILAR MATTERS, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGN ED ORDERS OF THE CIT(A). WE ACCORDINGLY UPHOLD THE SAME, REJE CTING THE GROUNDS OF THE REVENUE IN THESE APPEALS'. 8. CONSISTENT WITH THE STAND TAKEN BY THE TRIBUNA L IN SIMILAR MATTERS, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) AND WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) A ND REJECT THE GROUNDS OF THE REVENUE IN THIS APPEAL. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 5 ITA.NO.1681/HYD/2013 MR. PULLEMLA YADAGIRI, NALGONDA ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2 014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 16 TH APRIL, 2014 VBP/- COPY TO : 1. ITO, WARD-1, NALGONDA 2. SRI PULLEMLA YADAGIRI, PROP. LAXMI WINES, OPP. B HASKER TALKIES, NALGONDA. 3. CIT(A)-VI, HYDERABAD 4. CIT-VI, HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.