M/s. Gurusimran Distilleries Private Limited, Hyderabad V. ITO, Ward-2(2), Hyderabad

ITA 172/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69796 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJYAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 172/HYD/2013 ASSESSMENT YEAR : 2008-09 M/S GURUSIMRAN DISTELLERIES PVT. LTD., HYDERABAD. PAN AACCG7428D ... APPELLANT VS. INCOME TAX OFFICER, WARD 2(2), HYDERABAD ... RESPONDENT APPELLANT BY: SHRI P. MURALI MOHAN RAO RESPONDENT BY: SHRI D. SUDHAKAR RAO DATE OF HEARING: 05/09/2013 DATE OF PRONOUNCEMENT: 05/09/2013 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-III, HYDERAB AD ON 01/09/2012, FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) ERRED WHILE COMPARING THE APPELLANT WITH THE KHASA DISTILLERIES WHICH IS A LOCAL DISTILLERY AND ADOPTING THE GP RATE @ 18.77%. THE POINTS OF DIFFERENCE IN TERMS OF PURCHASE OF CHEMICALS AND WASHING BOTTLES AND TARGET AUDIENCE. 2 ITA NO. 172/H/13 M/S GURUSIMRAN DISTILLERIES PVT. LTD. ================================= 2. THE CIT(A) ERRED WHILE IGNORING THE FACT THAT, THE APPELLANT COMPANY WAS INCORPORATED ON 08/10/2009 AND WHERE KHASA DISTILLERIES WAS IN EXISTENCE FOR LONG TIME WHICH SHALL NOT BE COMPARABLE. 3. THE CIT(A) ERRED WHILE IGNORING THE CIRCULAR NO. 29D XIX-14 ISSUED BY CBDT AND FAILED TO GIVE A DIRECTION TO ALLOW THE DEPRECIATION FROM THE ESTIMATED INCOME. 4. THE CIT(A) ERRED WHILE ADOPTING THE GP RATE OF KHASA DISTILLERIES AT 18.77%, WHEREAS THE GP RATE OF THE APPELLANT IS AT 16.31%. THE CIT(A) OUGHT TO GIVE PROPORTIONATE DEDUCTION FOR EXPENDITURE. 5. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT IS LIABLE TO TAX AUDIT U/S 44AB AND MAINTENANCE OF BOOKS OF ACCOUNT U/S 44AA, HENCE, THE REJECTION OF BOOKS WITHOUT ASSIGNING ANY SPECIFIC REASONS IS NOT JUSTIFIED. 6. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT, THE ASSESSEE HAS OFFERED AT THE RATE OF 0.02% WHICH SHOULD BE ACCEPTABLE AND WHICH SHALL NOT BE COMPARED WITH OTHER COMPANY THE ASSESSEE IS HAVING BOOKS OF ACCOUNT. 3. THE ASSESSEE ALSO FILED THE FOLLOWING ADDITIONAL GROUNDS REQUESTING US TO ADMIT THE SAME, WHICH GOES TO THE ROOT OF THE MATTER: 16. THE CIT(A) ERRED WHILE PASSING THE APPELLANT ORDER WHEREIN THE ENHANCEMENT TO INCOME HAS BEEN MADE AND FOR WHICH THE OPPORTUNITY HAS NOT BEEN GIVEN TO THE ASSESSEE FOR THE ENHANCEMENT MADE WHICH IS NOT CORRECT AND NOT JUSTIFIED AND BAD IN LAW. 17. THE CIT(A) ERRED AS WHILE PASSING THE ORDER WHEREIN THE COMPARISON OF OUR SMALL COMPANY HAS BEEN MADE WITH KHASA DISTILLERIES WHICH IS EXISTING FOR A LONG TIME AND HENCE COMPARING OF THE PROFITS ARE NOT JUSTIFIED FROM ANY POINT OF VIEW. 3 ITA NO. 172/H/13 M/S GURUSIMRAN DISTILLERIES PVT. LTD. ================================= 4. THE DR HAS NOT OBJECTED TO THE ADMISSION OF THE SAID ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. 5. IN THE INTEREST OF JUSTICE, WE ARE INCLINED TO A DMIT THE ADDITIONAL GROUNDS, WHICH GOES TO THE ROOT OF T HE MATTER AND DOES NOT INVOLVE ANY FURTHER/ADDITIONAL INVESTIGATION INTO FACTS OTHER THAN WHICH ARE ALREA DY ON RECORD, RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE NATIONAL THERMAL POWER CORPORATI ON LTD. VS. CIT, 229 ITR 383 (SC). 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. IN THIS CASE THERE IS ONLY ONE ISSUE RELATING TO REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF NET PROFIT AT 1% BY THE ASSESSING OFF ICER ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE THE RELEVANT BILLS AND, THEREFORE, COMPARED THE GROSS PROFITS OF THE ASSESSEE WITH THAT OF A SIMILA R CASE AND MADE THE ADDITIONS. 7. WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL CHALLENGING THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE NET PROFIT AT 1% OF GROSS SALES ON T HE LIQUOR BUSINESS, THE CIT(A) ESTIMATED THE INCOME OF THE ASSESSEE AT 18.77% OF THE GROSS SALES FOLLOWING THE GROSS PROFIT DISCLOSED BY KHASA DISTILLERIES, WHICH IS IN THE SAME LINE OF BUSINESS AND ALSO LOCATED NEARBY T HE ASSESSEE COMPANY. 8. THE CONTENTION OF THE ASSESSEES COUNSEL BEFOR E US THAT HE APPEALED BEFORE THE CIT(A) FOR GETTING R ELIEF 4 ITA NO. 172/H/13 M/S GURUSIMRAN DISTILLERIES PVT. LTD. ================================= AGAINST THE ASSESSMENT ORDER, HOWEVER THE CIT(A) ENHANCED THE INCOME WITHOUT GIVING AN OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. 9. WE FIND MERIT IN THE ARGUMENT OF THE ASSESSEES COUNSEL AS THE CIT(A) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE BEFORE ENHANCING THE INCOME AT 18.77% OF GROSS SALES AS AGAINST AT 1% MADE BY THE ASSESSING OFFICER, WHEN HE WAS OF THE OPINION THAT THE ESTIMATION ARRIVED AT 1% BY THE ASSESSING OFFICER IS NOT PROPER. AFTER CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT TO ME ET THE ENDS OF JUSTICE, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE ISSUE BACK TO HIM TO DECIDE TH E SAME AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. BEFORE DECIDING THE ISSUE, T HE CIT(A) IS DIRECTED TO FURNISH THE REASONS/DOCUMENTS FOR ARRIVING ESTIMATION OF NET PROFIT AT 18.77% OF GROS S SALES TO THE ASSESSEE, ON WHICH, THE ASSESSEE IS AGITATED. 10. AS WE HAVE REMITTED THE ISSUES RAISED IN ADDITIONAL GROUNDS TO THE FILE OF THE CIT(A) FOR DE CIDING THE SAME DE-NOVO, WE REFRAIN FROM GOING TO ADJUDICA TE THE OTHER GROUNDS RAISED BY THE ASSESSEE. 5 ITA NO. 172/H/13 M/S GURUSIMRAN DISTILLERIES PVT. LTD. ================================= 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2013. SD/- SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 5 TH SEPTEMBER, 2013 KV COPY TO:- 1. M/S GURUSIMRAN DISTILLERIES PVT. LTD., C/O P. MURAL I & CO., CAS., 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082. 2. ITO, WARD 2(2), HYDERABAD. 3. THE CIT (A)-III, HYDERABAD 4. THE CIT-II, HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.