Srinivasa Rao Meegada , Khammam V. Income Tax Officer, Ward-1, Khammam

ITA 1691/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6719 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 30-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 13-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S ATYA PRASANTH PINISETTY
• Section: 142(1); 143(1)

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. 16 91 /HYD/201 8 ASSESSMENT YEAR: 20 1 4 - 1 5 SRINIVASA RAO MEEGADA, KHAMMAM PAN BWAPM 0173P VS. INCOME - TAX OFFICER, WARD 1, KHAMMAM. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : SMT. S. SANDHYA REVENUE BY : S ATYA PRASANTH PINISETTY DATE OF HEARING : 30 /0 7 /201 9 DATE OF PRONOUNCEMENT : 31 / 0 7 / 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) - 7 , HYDERABAD, DATED 06 / 0 6 /201 8 FOR AY 20 14 - 15 . 2 . BRIEF FACTS OF THE CASE ARE, THE ASSESSEE , AN INDIVIDUAL DERIVING INCOME FROM BUSINESS IN PURCHASE AND SALE OF LIQUOR, FILED HI S RETURN OF INCOME FOR THE AY 20 14 - 15 ON 2 5 /1 1 /20 1 4 DECLARING A TOTAL INCOME OF RS. 5,80,410 / - , WHICH WAS PROCESSED U/S 143(1) OF THE INCOME - TAX ACT, 1961 ( IN SHORT THE ACT) . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AN D ACCORDINGLY NOTICE S U/S 142(1) AND 143(2) W ERE ISSUED TO THE ASSESSEE . IN RESPONSE TO THE SAID NOTICE S , THE AR OF THE ASSESSEE FILED THE REQUIRED INFORMATION CALLED FOR , NAMELY, BOOKS OF ACCOUNT ETC. 2.1 AFTER VERIFICATION OF THE BOOKS OF ACCOUNT, T HE AO NOTICED DEFICIENCIES IN MAINTENANCE OF BOOKS OF ACCOUNT AND REJECTED THE 2 ITA NO. 16 91 /HYD/1 8 SRINVASA RAO MEEGADA, KHAMMAM. SAME BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. ACCORDINGLY, HE ESTIMATED THE NET PROFIT AT 5% OF THE COST OF STOCK PUT FOR SALE BY RELYING ON THE DECISION OF THE HON BLE COURT IN THE CASE OF CIT VS. MEKALA BALREDDY IN ITTA NO. 28 & 29/2013, DATED 30/07/2013. 3 . WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A ) CONFIRMED THE ORDER OF THE AO. 4 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCO ME - TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE NET PROFIT AT 5% OF THE COST OF GOODS SOLD. 3) ANY OTHER GROUND OR GRO UNDS THAT MAY BE URGED AT THE TIME OF HEARING. 5 . 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 : 3 ITA NO. 16 91 /HYD/1 8 SRINVASA RAO MEEGADA, KHAMMAM. '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. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 31 ST JULY , 201 9 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 31 S T JULY , 201 9 K V C OPY TO: - 1. SRINIVASA RAO MEEGADA, 4 - 53/1, GOKENEPALLY (V), MUDIGONDA (M), KHAMMAM 507 303 2. IT O , WARD 1, RAJEEV GUNT, NEAR KINNERASANI THEATRE, KHAMMAM. 3. CIT(A) 7 , HYDERABAD 4. PR. CIT 7 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE