The ITO, Ward-2, Kakinada, Kakinada V. Sri Kodangi Ajay Kumar, Kakinada

ITA 172/VIZ/2012

• Counselvise Citation: 17225314 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-03-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 15-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA
• Keywords: Rejection of books of accounts
• Section: 147; 148; 144

Judgement Text

ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO S . 142 TO 147 /VIZAG/ 2012 ASSESSMENT YEARS : 1999-2000, 2000-01, 2002-03, 2003-04, 2004-05 & 2006-07 RESPECTIVELY KODANGI AJAY KUMAR KAKINADA VS. ITO WARD-2 KAKINADA (APPELLANT) (RESPONDENT) PAN NO.ABIPA 7279G ITA NOS.170 TO 172/VIZAG/2012 ASSESSMENT YEARS : 2006-07, 1999-2000 & 2004-05 RE SPECTIVELY ITO WARD-2 KAKINADA VS. KODANGI AJAY KUMAR KAKINADA (APPELLANT) (RESPONDENT) ITA NOS.148 TO 152/VIZAG/2012 ASSESSMENT YEARS : 2001-02, 2002-03, 2003-04, 2004-05 & 2006-07 RESPECTIVELY KODANGI VIJAY KUMAR KAKINADA VS. ITO WARD-2 KAKINADA (APPELLANT) (RESPONDENT) PAN NO.ACZPK 6112C ITA NOS.173/VIZAG/2012 ASSESSMENT YEARS : 2004-05 ITO WARD-2 KAKINADA VS. KODANGI VIJAY KUMAR KAKINADA (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SMT. KOMALI KRISHNA, ADDL. CIT DATE OF HEARING : 06.03.2014 DATE OF PRONOUNCEMENT : 07.03.2014 ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 2 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- THESE ARE BUNCH OF 15 APPEALS BY TWO ASSESSEES AND THE DEPARTMENT AGAINST DIFFERENT ORDERS OF THE CIT(A), VISAKHAPATN AM. SINCE ISSUES ARE COMMON IN ALL THESE APPEALS, THEY ARE CLUBBED TOGET HER AND TAKEN UP FOR DISPOSAL IN THIS COMMON ORDER FOR THE SAKE OF CONVE NIENCE. WE WILL FIRST TAKE UP APPEALS IN ITA NOS.142 TO 147/VIZAG/2012 RELATIN G TO K. AJAY KUMAR. 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GRO UNDS IN ALL THE APPEALS. 1. LD. CIT IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.2,16,870/- TOWARDS PACKING MATERIAL. 2. THE LD. CIT(A) SHOULD CONSIDERED THE FACT THAT WHEN PURCHASES AND SALES HAVE BEEN ACCEPTED AS PER ACCOUNTS HE SHOULD HAVE ACCEPTED THE EXPENDITURE OF PACKING MATERIAL AS CLAIMED BY T HE APPELLANT. 3. THE LD. CIT(A) SHOULD HAVE CONSIDERED THE FACT THAT THE EXPENDITURE INCLUDED COOLIES AND OTHER MATERIAL ALSO. 4. THE LD. CIT(A) SHOULD HAVE CONSIDERED THE FACT THAT HONBLE ITAT HYDERABAD IN SRI KODANGI SHANKAR VS. ITO, WARD-3, K AKINADA IN APPEAL NO.ITA NO.555/HYD/95 (AY 1991-92) WHERE IN THE NET INCOME IS ESTIMATED AT 1% OF THE TOTAL TURNOVER WHICH THE APP ELLANT FILED A COPY AT THE TIME OF HEARING, BEFORE THE CIT(A), VISAKHAP ATNAM. 3. SINCE FACTS ARE IDENTICAL IN ALL THE APPEALS FOR THE SAKE OF CONVENIENCE, WE WILL DEAL WITH THE FACTS IN ITA NO.142/VIZAG/201 2. BRIEFLY STATED, THE ASSESSEE AN INDIVIDUAL DERIVES INCOME FROM TRADING IN MANGO JELLY. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED H IS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.25,480/-. INITIALLY, T HE ASSESSMENT WAS COMPLETED U/S 144 R.W.S. 148 OF THE ACT VIDE ORDER DATED 8.6.2005 DETERMINING THE TOTAL INCOME AT RS.27,30,780/-.THOU GH THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE CIT(A), THE CIT(A) ALSO SUSTAINED THE ADDITION ONLY GRANTING PARTIAL RELIEF TO THE AS SESSEE. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A), THE ASSESSEE WENT IN FURTHER APPEAL BEFORE THE ITAT. THE DEPARTMENT ALSO WENT IN APPEAL BEFORE TH E ITAT AGAINST THE RELIEF GRANTED BY THE CIT(A). THE ITAT SET ASIDE THE ORDE R OF THE CIT(A) AND RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSI NG OFFICER FOR DECIDING ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 3 AFRESH. IN PURSUANCE TO THE ORDER PASSED BY THE ITA T, THE ASSESSING OFFICER INITIATED ASSESSMENT PROCEEDINGS AGAIN. THERE WAS A SURVEY IN CASE OF THE ASSESSEE ON 7.1.2004. DURING THE SURVEY OPERATIONS , SOME BOOKS OF ACCOUNTS AND OTHER MATERIALS WERE IMPOUNDED. AT THE TIME OF SURVEY, ON EXAMINATION OF THE LEDGER ACCOUNT, IT WAS NOTICED THAT THE ASSE SSEE WAS NOT RECORDING THE ACTUAL SALES SO FAR AS MANGO JELLY IS CONCERNED. T HEREFORE, DURING THE ORIGINAL ASSESSMENT PROCEEDING, THE ASSESSING OFFICER FELT T HAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR IS R EQUIRED TO BE AUDITED BY AN AUDITOR NOMINATED BY THE CIT IN TERMS OF SECTION 14 2 (2A) OF THE ACT. THE SPECIAL AUDIT AFTER EXAMINING THE LEDGER ACCOUNT SU BMITTED ITS REPORT. IN THE REASSESSMENT PROCEEDING PURSUANCE TO THE DIRECTION OF THE TRIBUNAL, THE ASSESSING OFFICER ON GOING THROUGH THE IMPOUNDED MA TERIAL, THE SPECIAL AUDIT REPORT AND THE OTHER MATERIALS ON RECORD WAS OF THE VIEW THAT THE ASSESSEE IS TRADING IN MANGO JELLY AND WAS NOT IN RECEIPT OF CO MMISSION ON SALE OF MANGO JELLY. HAVING SO INFERRED THE ASSESSING OFFICER CO MPLETED THE ASSESSMENT BY MERELY FOLLOWING THE EARLIER ASSESSMENT ORDER AND O RDER OF CIT(A) WHICH WERE SET ASIDE BY THE ITAT AND DETERMINED THE TOTAL INCO ME AT RS.25,25,480/-. AGAINST THE ASSESSMENT ORDER SO PASSED, THE ASSESSE E PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) ALSO SUSTAINED MOST OF THE ADDITIONS EXCEPT GRANTING PARTIAL RELIEF IN CASE OF SOME OF THE ADDI TIONS. DURING THE HEARING OF APPEAL BEFORE THE CIT(A), THE ASSESSEE ALSO MADE AN ALTERNATIVE PLEA THAT IN THE GIVEN FACTS AND CIRCUMSTANCES THE ASSESSING OFF ICER SHOULD HAVE REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED NET PROFIT @ 1% OF GROSS TURNOVER. IN THIS CONTEXT, THE ASSESSEE RELIED UPON A DECISION O F THE ITAT HYDERABAD K. SANKAR VS. ITO 555/HYD/95 DATED 17.7.2000, WHEREIN, THE TRIBUNAL WHILE CONSIDERING A CASE OF SIMILAR NATURE OF AN ASSESSEE ENGAGED IN SALES OF MANGO JELLY HAS UPHELD THE ORDER OF THE CIT(A) IN E STIMATING NET PROFIT OF 1%. THE CIT(A) HOWEVER REJECTED SUCH CONTENTION OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE NOT ONLY MAINTAINED BOOKS OF ACCOUNTS BUT ALSO GOT THEM AUDITED. AS A RESULT OF SURVEY, IT COULD BE FOUND OUT THAT THERE IS SUPPRESSION OF SALES AND CONSEQUENTIAL SUPPRESSION OF INCOME. THEREFORE, THE ASSESSEES BOOKS WERE REFERRED TO SPECIAL AUDIT. IN THE REPOR T OF THE SPECIAL AUDIT, SUPPRESSION OF SALES AND THE DESCREPANCIES IN THE B OOKS HAVE BEEN ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 4 CRYSTALISED. SINCE THE ASSESSING OFFICER CONSIDERI NG THE ISSUES RAISED IN THE SPECIAL AUDIT HAS DETERMINED THE INCOME OF THE ASSE SSEE BY MAKING SPECIFIC DISALLOWANCES WHERE IN NECESSARY. THE ASSESSEES C ONTENTION FOR REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF PROFIT AT A LES SER RATE CANNOT BE ACCEPTED. 4. BEING AGGRIEVED THE ASSESSEE IS BEFORE US. 5. THE LD. A.R. AT THE OUTSET DRAWING OUR ATTENTION TO GROUND NO.4 SUBMITTED THAT IF HIS CONTENTION REGARDING ESTIMATI ON OF PROFIT IS ACCEPTED, THEN THERE WILL BE NO NEED TO ADJUDICATE THE OTHER GROUNDS. THE LD. A.R. SUBMITTED THAT THE ASSESSEE WAS NOT MAINTAINING ANY REGULAR BOOKS OF ACCOUNTS AND DURING THE SURVEY ONLY A LEDGER ACCOUN T WAS FOUND. THE SPECIAL AUDITOR ONLY ON THE BASIS OF THE SAID LEDGER ACCOUN T RECASTED THE CASH BOOK AND ON THAT BASIS DISCREPANCIES/DIFFERENCES WERE PO INTED OUT. SOLELY RELYING ON SUCH DISCREPANCIES/DIFFERENCES POINTED OUT BY TH E SPECIAL AUDITOR THE ASSESSING OFFICER HAS MADE THE ADDITIONS. THE LD. A.R. REFERRING TO THE BALANCE SHEET PREPARED BY THE SPECIAL AUDITOR, A CO PY OF WHICH IS AT PAGE 24 OF THE PAPER BOOK SUBMITTED THAT EVEN THE SPECIAL A UDITOR ALSO COULD POINT OUT THE DIFFERENCE IN BOOKS TO THE EXTENT OF RS.27,197/ -. THE LD. A.R. SUBMITTED THAT THE ASSESSEE WAS ACTUALLY DOING THE BUSINESS O F MANGO JELLY ON COMMISSION BASIS, WHICH CAN BE EVIDENCED FROM THE D EPOSITION RECORDED FROM THE ASSESSEE IN COURSE OF SURVEY. THE LD. A.R. REF ERRING TO THE SAID DEPOSITION, A COPY OF WHICH IS AT PAGE 83 OF THE PA PER BOOK, SUBMITTED THAT IN THE SAID DEPOSITION ASSESSEE HAD STATED THAT HE WAS ONLY GETTING COMMISSION OF RS.16/- PER BOX. ONLY BECAUSE THE ASSESSEE HAS NO DOCUMENTARY EVIDENCE TO PROVE THE FACT THAT HE WAS DOING THE BUSINESS ON COMMISSION BASIS, THE ASSESSEE HAS ADMITTED THAT HE IS TRADING IN MANGO J ELLY. HOWEVER, CONSIDERING THE FACTS THAT NO REGULAR BOOKS OF ACCO UNTS ARE MAINTAINED AND WHATEVER BOOKS ARE THERE DOES NOT REFLECT THE CORRE CT STATE OF AFFAIRS, THE ASSESSING OFFICER SHOULD HAVE REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE PROFIT AT A REASONABLE RATE. THE LD. A.R. SUBM ITTED, THAT IN A SIMILAR CASE OF TRADING IN MANGO JELLY IN CASE OF ANOTHER ASSESS EE K. SANKAR (SUPRA), THE ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 5 CIT(A), VISAKHAPATNAM AFTER REJECTING THE BOOKS OF ACCOUNTS HAS ESTIMATED THE PROFIT AT 1%. WHEN THE DEPARTMENT CHALLENGED T HE SAID ORDER OF THE CIT(A) BEFORE THE TRIBUNAL, THE TRIBUNAL ALSO UPHEL D THE ESTIMATION OF PROFIT AT 1% VIDE ITA NO.155/HYD/95 DATED 17.7.2000. IT W AS THEREFORE, CONTENDED BY THE LD. A.R. THAT FACTS BEING IDENTICA L, IN ASSESSEES CASE ALSO THE NET PROFIT RATE OF 1% MAY BE ADOPTED. THE LD. A.R. CONTENDED THAT IF THE COMMISSION AMOUNT OF RS.16/- PER BOX IS CONSIDERED THE GROSS MARGIN WOULD ALSO WORK OUT TO ABOUT 1.3%. THEREFORE, ESTIMATING NET PROFIT AT 1% WOULD BE FAIR AND REASONABLE. 6. THE LD. D.R. HOWEVER OBJECTING TO SUCH CONTENTIO N PUT ON BEHALF OF ASSESSEE SUBMITTED THAT WHEN THE ASSESSEE HAS HIMSE LF ADMITTED THAT THERE ARE NO SUNDRY CREDITORS AND SUNDRY DEBTORS THEN THE ADDITIONS MADE ON THE BASIS OF ENTRIES MADE IN THE BOOKS OF ACCOUNTS IS J USTIFIED. HOWEVER, THE LD. D.R. FAIRLY SUBMITTED THAT A REASONABLE RATE CAN BE APPLIED FOR ESTIMATING THE NET PROFIT OF THE ASSESSEE IF BOOKS OF ACCOUNTS ARE TO BE REJECTED. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD AS WELL AS ORDERS OF THE REVENUE AUTHORITIES. 8. IT IS VERY MUCH CLEAR FROM THE ASSESSMENT ORDER T HAT ASSESSEE WAS HAVING ONLY A LEDGER ACCOUNT. THIS FACT IS ALSO CO RROBORATED BY THE OBSERVATION MADE BY THE SPECIAL AUDITOR IN HIS REPO RT, A COPY OF WHICH IS AT PAGE 19. FOR THE SAKE OF CONVENIENCE WE REPRODUCE HEREUNDER THE REMARK OF THE SPECIAL AUDITOR: ONLY LEDGER WAS PRODUCED FOR OUR VERIFICATION, CAS H BOOK WAS RECASTED BASED ON LEDGER. THE PURCHASE BILL & SALES INVOICE S WERE NOT PRODUCED FOR OUR VERIFICATION. THE VOUCHERS FOR EXPENSES WERE N OT PRODUCED FOR OUR VERIFICATION. THE CONFIRMATION OF BALANCES FROM DE BTORS & CREDITORS WERE NOT PRODUCED FOR OUR VERIFICATION. 9. FROM THIS IT IS APPARENT THAT APART FROM THE LED GER ACCOUNT, THE ASSESSEE HAS NOT MAINTAINED ANY OTHER BOOKS OF ACCO UNTS LIKE CASH BOOK, ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 6 STOCK BOOK ETC. ONLY ON THE BASIS OF THE LEDGER AC COUNT, THE SPECIAL AUDITOR HAS RECASTED THE CASH BOOK. ON A PERUSAL OF THE DE POSITION OF THE ASSESSEE A COPY OF WHICH IS AT PAGE 83 OF THE PAPER BOOK, IT I S QUITE OBVIOUS THAT THE ASSESSEE HAS CONSISTENTLY STATED THAT THE ENTIRE BU SINESS BELONGS TO SOME OTHER PARTIES AT NORTH INDIA AND HE IS ONLY DOING TH E BUSINESS ON COMMISSION BASIS ON BEHALF OF THOSE PARTIES AND GETTING COMMIS SION AT RS.16/- PER BOX. FOR CLARITY, WE REPRODUCE THE QUESTIONS AND ANSWERS FROM THE DEPOSITION OF THE ASSESSEE: Q.5 YOU ARE SAYING THAT YOU ARE DOING BUSINESS IN MANGO JELLY ON COMMISSION BASIS. IN THE CASE, WHY YOU ARE MAINTAI NING, TRADING ACCOUNTS AND SHOWING THE SUNDRY CREDITORS AND DEBTORS IN THE BALANCE SHEET? A.5 IN FACT THE ENTIRE BUSINESS BELONGS TO PARTIES A T NORTH INDIA. IF THEY SHOW THE BUSINESS AS THEIR OWN, THEY HAVE TO PAY SA LES-TAX AT 10%. I AM A REGISTERED DEALER. TO REDUCE THE SALES-TAX PAYABLE BY THE PARTIES AT NORTH INDIA I AM ACTING AS MIDDLEMAN, TRANSPORTING THE MANG O JELLY TO PARTIES AT NORTH INDIA, AS IF THE BUSINESS BELONGS TO ME AND F OR THIS ARRANGEMENT IN TURN I GETS COMMISSION AT RS.16/- PER BOX. ALSO MY DUTY IS TO ENCASH THE DDS/CHEQUES RECEIVED FROM THE PARTIES FROM NORTH IND IA, AND PAY THE SAME TO THE COMMISSION AGENTS WHO INTURN PAY THE AMOUNTS TO THE RESPECTIVE RYOTS. I AM NOTHING TO DO WITH THE SUNDRY CREDITORS AND DEBTORS APPEARING IN MY BOOKS OF ACCOUNTS. I HEREBY CONFIRM THAT I DO NOT GET COMMISSION EITHER FROM RYOTS OR COMMISSION AGENTS. Q.6 FROM THE BOOKS OF ACCOUNTS, IT IS FOUND THAT TH E STOCK OF MANGO JELLY AT QTS.932.40 AS ON 7.1.2004 IS AVAILABLE. WHERE THIS STOCK IS KEPT? A.6 THIS STOCK IS LYING IN COLD STORAGE AT TADEPALL IGUDEM IN MY NAME. THE STOCK IS KEPT IN COLD STORAGE BY COMMISSION AGENTS WHO PROCURED FROM RYOTS ON BEHALF OF THE PARTIES AT NORTH INDIA. I AM NOTHIN G TO DO WITH THIS STOCK. Q.7 YOU ARE MAINTAINING TRADING ACCOUNT, P&L A/C AN D BALANCE SHEET. ALSO SUNDRY CREDITORS AND DEBTORS ARE SHOWN IN THE BALAN CE SHEET. WHY THE BUSINESS SHOULD NOT BE TREATED A TRADE OF YOUR OWN. A.7 AS STATED EARLIER ALL THE TRANSACTIONS RECORDED IN THE BOOKS OF ACCOUNTS RELATING TO MANGO JELLY BUSINESS DOES NOT BELONG TO ME. THIS HAS BEEN DONE ONLY TO FACILITATE THE PARTIES AT NORTH INDIA AND FO R THIS PURPOSE I GET A COMMISSION OF RS.16/- PER BOX FROM THEM OUT OF WHIC H I HAVE TO BEAR OVERHEAD EXPENDITURE. 10. FROM THE DEPOSITION OF THE ASSESSEE AS EXTRACTE D HEREIN ABOVE, THE FACT WHICH EMANATES IS THE ASSESSEE NEVER ALL ALONG HAS TAKEN THE STAND THAT THE MANGO JELLY BUSINESS IS ACTUALLY DONE BY SOME O THER PARTIES IN NORTH INDIA ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 7 AND HE IS ONLY GETTING COMMISSION OF RS.16/- PER BO X. BE THAT AS IT MAY, THE FACT WHICH IS VERY MUCH EVIDENT IS THAT THE ASSESSE E IS NOT MAINTAINING ANY REGULAR BOOKS OF ACCOUNTS AND THE LEDGER ACCOUNT MA INTAINED CANNOT BE SAID TO BE REFLECTING THE ACTUAL STATE OF AFFAIRS. THER EFORE, THE CASH BOOK RECASTED BY THE SPECIAL AUDITOR ON THE BASIS OF THE SAID LED GER CANNOT BE CONSIDERED TO BE AUTHENTIC OR REFLECTING THE ACTUAL TRANSACTION. THEREFORE, IN THE AFORESAID CIRCUMSTANCES, PROFIT CANNOT BE DERIVED ON THE BASI S OF THE SO CALLED BOOKS OF ACCOUNTS. THEREFORE, THE ONLY COURSE WHICH REMAINS IS NOT TO RELY UPON THE SO CALLED BOOKS OF ACCOUNTS BUT TO PROCEED FOR ESTI MATION OF PROFIT AT A REASONABLE PERCENTAGE OF THE GROSS RECEIPTS. ON A PERUSAL OF THE ORDER PASSED BY THE CIT(A) IN A CASE OF SIMILAR NATURE OF TRADE IN MANGO JELLY IN CASE OF K. SANKAR (SUPRA) IT IS SEEN THAT WHILE CON SIDERING IDENTICAL FACTS, THE CIT(A) HAS CONSIDERED THE NET PROFIT RATE OF 1% ON GROSS TURNOVER TO BE REASONABLE, THE ITAT ALSO AFFIRMED THE ORDER OF THE CIT(A) BY HOLDING AS UNDER: 4. WE CONSIDERED THE MATTER AND PERUSED THE IMPUGN ED ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE ABOVE CONTENTIONS OF THE ASSESSEE. ASSESSEE DEALS IN PUR CHASE AND SALE OF MANGO JELLY. FOR THE DETAILED REASONS DISCUSSED AT LENGTH IN THE IMPUGNED ASSESSMENT ORDER DATED 24.9.1992, THE ASSESSING OFFICER REJECTING THE TURN OVER DISCLOSED BY THE ASSESSEE AT RS.51,45,913 ESTIMATED THE SAME AT RS.1 CRORE AND ESTIMATED INCOME OF THE ASSE SSEE THEREFROM AT 1 %. DEDUCTING THEREFROM INCIDENTAL EXPENDITURE TO THE EXTENT OF RS.50,000/- HE ESTIMAT ED THE NET INCOME OF THE ASSESSEE FOR ASSESSMENT AT RS.1,0 0,000/- WHEN THE MATTER WAS CARRIED IN FIRST APPEAL, THE COMMISSIONER (APPEALS) HELD IT REASONABLE TO ESTIMA TE THE COMMISSION OF THE ASSESSEE AT 1% OF THE TURNOVER OF RS.1 CRORE, AND ACCORDINGLY SUSTAINED AN ADDITION OF RS. 50,000/- AS AGAINST RS.1 LAKH MADE BY THE ASSESSING OFFICER, AFTER ALLOWING DEDUCTION OF RS.50,000/- TOWARDS EXPENDITU RE. THE ADDITION SUSTAINED BY THE CIT(A) IS QUITE REASO NABLE AND WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE W ITH HIS ORDER ON THIS BEHALF. WE ACCORDINGLY CONFIRM THE V IEW TAKEN BY THE CIT(A) AND REJECT THE CONTENTIONS OF T HE ASSESSEE IN THIS APPEAL. ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 8 11. AS THE ASSESSEES CASE IS IDENTICAL TO THE FACTS CONSI DERED BY THE ITAT HYDERABAD BENCH IN CASE OF K. SANKAR (SUPRA), APPLY ING THE SAME PRINCIPLES, WE ARE OF THE VIEW, THAT IN ASSESSEES CASE ALSO CO NSIDERING THE FACT THAT THE BOOKS OF ACCOUNTS CANNOT BE RELIED UPON THE PROFIT HAS TO BE ESTIMATED @ 1% ON THE GROSS SALES. FROM THE FACTS ON RECORD IT AP PEARS THAT THERE IS ALSO DIFFERENCE IN GROSS RECEIPTS AS SHOWN IN LEDGER AND DISCLOSED IN THE RETURN OF INCOME. HOWEVER, SINCE THE ASSESSEE HAS NOT DISPUT ED THE SALES RECORDED IN THE LEDGER, THE SALE FIGURES RECORDED IN THE LEDGER SHOULD BE ADOPTED FOR ESTIMATION OF PROFIT. WE THEREFORE, DIRECT THE ASS ESSING OFFICER TO ESTIMATE THE NET PROFIT @ 1% ON THE SALES AS RECORDED IN THE LED GER ACCOUNT MAINTAINED BY THE ASSESSEE. THIS GROUND IS PARTLY ALLOWED. 12. SINCE WE HAVE DIRECTED FOR ESTIMATION OF THE PR OFIT ON GROSS SALES, SUCH PROFIT ARRIVED AT ON ESTIMATION TAKES CARE OF ALL O THER DEFICIENCIES. HENCE, NO SEPARATE ADDITIONS/DISALLOWANCES HAS TO BE MADE. 13. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED. ITA NOS.170 TO 172/VIZAG/2012: 14. ALL THE DEPARTMENTS APPEALS ARE AGAINST THE OR DER OF THE CIT(A) GRANTING PARTIAL RELIEF AGAINST CERTAIN DISALLOWANC ES MADE BY THE ASSESSING OFFICER. SINCE WHILE DECIDING THE ASSESSEES APPEA L, WE HAVE DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE PROFIT AT 1% ON G ROSS SALES RECORDED IN THE LEDGER, THERE IS NO NEED FOR SEPARATE DISALLOWANCES ON INDIVIDUAL ITEMS. HENCE DEPARTMENTS GROUNDS HAVE BECOME INFRUCTUOUS. 15. IN THE RESULT, ALL THE APPEALS OF THE DEPARTMENT ARE DISMISSED. ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 9 ITA NOS.148 TO 152/VIZAG/2012 IN CASE OF K. VIJAY K UMAR: 16. FACTS AND ISSUES IN THESE APPEALS OF THE ASSESS EE ARE IDENTICAL TO THE ASSESSEES APPEAL IN ITA NOS.142 TO 147/VIZAG/2012 (SUPRA). IN VIEW OF OUR DECISION HEREIN ABOVE, WE DIRECT THE ASSESSING OFFI CER TO ESTIMATE THE NET PROFIT FROM TRADING IN MANGO JELLY AT 1% OF THE GRO SS SALES RECORDED IN THE LEDGER. IN ADDITION TO THE ABOVE, THE ASSESSEE HAS ALSO REPORTED SALES FROM TRACTOR SPARES AND COCONUT. CONSIDERING THE FACT T HAT THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS AND WHATEVER B OOKS OF ACCOUNTS ARE MAINTAINED BY THE ASSESSEE ARE NOT AUTHENTIC AND RE LIABLE, WE DIRECT THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT @ 5% O N THE GROSS RECEIPTS FROM RETAIL TRADE IN TRACTOR SPARES AND COCONUT AS PER T HE PROVISION CONTAINED U/S 44AF OF THE ACT. ITA NO.173/VIZAG/2012: 17. DEPARTMENT HAS FILED ITS APPEAL CHALLENGING THE PARTIAL RELIEF GRANTED BY THE CIT(A) IN RESPECT OF CERTAIN ADDITIONS MADE BY THE ASSESSING OFFICER. SINCE WHILE DECIDING ASSESSEES APPEAL, WE HAVE DIR ECTED TO ESTIMATE THE NET PROFIT IN CASE OF THE ASSESSEE BY REJECTING THE BOO KS OF ACCOUNTS, NO SEPARATE ADDITION OF INDIVIDUAL ITEMS IS TO BE MADE. THEREF ORE, WE DISMISS THE GROUNDS AS WELL AS THE APPEAL OF THE DEPARTMENT. 18. TO SUM UP, ASSESSEES APPEALS IN ITA NOS.142 TO 147/VIZAG/2012 & 148 TO 152/VIZAG/2012 ARE PARTLY ALLOWED , DEPARTMENTS APPEALS IN ITA NOS.170 TO 172/VIZAG/2012 AND ITA NO.173/VIZAG/2012 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 7 TH MAR14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 7 TH MARCH, 2014 ITA NOS.142TO 147/VIZAG/2012 & ITA NOS.170TO 172 /V IZAG/2012 KODANGI AJAY KUMAR, KAKINADA ITA NOS.148 TO 152/VIZAG/2012 & ITA NO.173/VIZAG/20 12 KODANGI VIJAY KUMAR, KAKINADA ` 10 COPY TO 1 KODANGI AJAY KUMAR, DR.NO.23-5-13, AVSARALAVARI S TREET, FRAZAERPETA, KAKINADA 2 KODANGI VIJAY KUMAR, DR.NO.23-5-13, AVSARALAVARI STREET, FRAZAERPETA, KAKINADA 3 ITO WARD-2, KAKINADA 4 THE CI T, VI SAKHAPATNAM 5 THE CIT(A), VISAKHAPATNAM. 6 THE DR, ITAT, VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM