Narasa Reddy Pala , Khammam V. Income Tax Officer, Ward-3, Khammam

ITA 1692/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6345 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 13 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: 22-04-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 13-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA
• Section: 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. 1 692 /HYD/201 8 ASSESSMENT YEAR: 20 1 4 - 1 5 NARASA REDDY PALA, KHAMMAM PAN BNBPP 1692 N VS. INCOME - TAX OFFICER, W ARD 3 , KHAMMAM ( APPELLANT ) (RESPONDENT) ASSESSEE BY : S MT. S. SANDHYA REVENUE BY : S MT. KOMALI KRISHNA DATE OF HEARING : 2 2 / 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) 7 , HYDERABAD , DATED 0 6 / 0 6 /201 8 FOR AY 20 1 4 - 1 5 . 2 . BRIEF FACTS OF THE CASE ARE, THE ASSESSEE , AN INDIVIDUAL, ENGAGED IN THE WINE BUSINESS, FILED HI S RETURN OF INCOME FOR THE AY 201 4 - 1 5 ON 18 / 0 3 /201 5 DECLARING INCOME OF RS. 9,72,190/ - , WHICH WAS PROCESSED U/S 143(1) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS AN D ACCORDINGLY NOTICE U/S 143(2) WAS ISSUED TO THE ASSESSEE. IN RESPONSE, TH E AR OF THE ASSESSEE F ILED THE INFORMATION AS CALLED FOR. 2.1 ON EXAMINATION OF THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, THE AO NOTICED DEFICIENCIES IN THE BOOKS OF ACCOUNT AND REJECTED THE SAME BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. ACCORDINGLY, THE AO ESTIMATED THE NET PROFIT @ 5% ON THE VALUE OF STOCK PUT TO SALE. 2 ITA NO. 1692 /HYD/1 8 NARASA REDDY PALA, KHAMMAM 3 . WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE 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 ORDER OF THE LEARNED COMMISSIONER OF INCOME - 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 GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 5 . LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 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 3 ITA NO. 1692 /HYD/1 8 NARASA REDDY PALA, KHAMMAM 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. 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) SRI NARASA REDDY PALA, 4 - 198, OPP. OLD PETROL BUNK, SATHUPALLY, KHAMMAM 507 303 . 2) ITO, WARD 3 , RAJEEV GUNT, NEAR KINNERASANI THEATRE, KHAMMAM 3) CIT(A) 7 , HYDERABAD. 4) PR. CIT - 7 , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE