Secunderabad Wines, Secunderabad, Hyderabad V. ITO, Ward-10(4), Hyderabad, Hyderabad

ITA 181/HYD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6322 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 17-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P RAVI SESHAGIRI RAO
• Keywords: Gross profit estimation; Depreciation
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.181/HYD/2016 ASSESSMENT YEAR 2011-2012 SECUNDERABAD WINES, SECUNDERABAD. PAN AATFS9352C VS., THE INCOME TAX OFFICER, WARD-10(4), HYDERABAD. (APPLICANT (RESPONDENT) FOR ASSESSEE : MR. P. RAVISESHAGIRI RAO FOR REVENUE : MR. G.S.S.S. GOPINATH DATE OF HEARING : 13.07.2016 DATE OF PRONOUNCEMENT : 20.07.2016 ORDER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2011-2012 A GAINST THE ORDER OF THE CIT(A) IN CONFIRMING THE ACTION OF THE A.O. IN REJECTING THE BOOKS OF ACCOUNT AND IN ESTIMATING TH E NET PROFIT AT 5% OF THE COST OF THE GOODS SOLD. THE FURTHER GRIEVA NCE IS AGAINST THE DIRECTION OF THE CIT(A) THAT THE DEPRECIATION O N ASSETS IS DEDUCTIBLE EVEN AFTER ESTIMATION OF INCOME AND IN C ONFIRMING THE ACTION OF THE A.O. IN INCLUDING THE MISCELLANEOUS I NCOME AFTER RESORTING TO ESTIMATION OF INCOME AT 5%. 2 ITA.NO.181/HYD/2016 SECUNDERABAD WINES, SECUNDERABAD. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-F IRM WHICH IS IN THE BUSINESS OF WHOLESALE AND RETAIL SALE OF LIQUOR, FILED ITS RETURN OF INCOME FOR THE A.Y. 2011-2012 ON 28.09.201 1 ADMITTING INCOME OF RS.52,25,566. THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT WERE INITIA TED AND DURING THE SAID ASSESSMENT PROCEEDINGS AFTER VERIFICATION OF VARIOUS DETAILS FILED BY THE ASSESSEE, THE A.O. FOUND THAT THE ASSE SSEE HAS OFFERED LOW GROSS PROFIT OF 11.01% AS AGAINST THE GROSS PROF IT MARGIN OF RETAIL AT 24% AS PER THE G.O.MS. ISSUED BY THE GOVER NMENT OF A.P. THE ASSESSEE SUBMITTED THAT THE GROSS PROFIT MARGIN OF 24% AS PER G.O. OF GOVERNMENT OF A.P. IS ABSOLUTELY ON THE HIG HER SIDE. THE LD. A.R. CONTENDED THAT IN MAJORITY OF THE SIMILAR LIQU OR CASES, THE ITAT, HYDERABAD BENCH HAS BEEN TAKING THE TOTALITY OF THE FACTS INTO CONSIDERATION AND HOLDING THAT THE TOTAL INCOM E OF THE ASSESSEE SHALL BE 3 TO 5% OF THE GOODS PUT TO SALE AND THAT T HE SAME HAS BEEN UPHELD BY THE HONBLE HIGH COURT OF A.P. THE A.O. HOWEVER, OBSERVED THAT THE HONBLE A.P. HIGH COURT IN THE CA SE OF CIT VS. KAMLEKAR SHANKAR LAL IN ITTA.NO.21 OF 2013 DATED 23 .07.2013 HAS ESTIMATED THE NET PROFIT AT 5% OF THE PURCHASE OR ST OCK PUT TO SALE. HE THEREFORE, ESTIMATED THE INCOME AT 5% OF THE GOOD S PUT TO SALE AND BROUGHT IT TO TAX. SIMILARLY, HE ALSO MADE AN A DDITION OF MISCELLANEOUS RECEIPTS OF RS.3,39,064. AGGRIEVED, A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APPEAL BEFOR E US. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE 3 ITA.NO.181/HYD/2016 SECUNDERABAD WINES, SECUNDERABAD. DECISION OF A BENCH OF THIS TRIBUNAL IN THE CASE OF SRI VENKATESWARA WINES IN ITA.NO.1206/HYD/2015 DATED 27 .11.2015 FOR THE A.Y. 2011-2012 WHEREIN AFTER TAKING INTO CON SIDERATION SIMILAR CIRCUMSTANCES THE TRIBUNAL HAS UPHELD THE E STIMATION OF INCOME AT 3% OF THE COST OF THE GOODS SOLD. RESPECTF ULLY FOLLOWING THE SAME, TO WHICH BOTH OF US ARE SIGNATORIES, WE D IRECT THE A.O. TO ADOPT 3% OF THE COST OF GOODS SOLD AS THE INCOME OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE DID NOT ARGUE GROU ND NOS. 4 AND 5 AND THEREFORE, THE SAME ARE REJECTED AS NOT PRESSED . 4. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.07. 2016. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI ) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 20 TH JULY, 2016 VBP/- COPY TO : 1. SECUNDERABAD WINES, SECUNDERABAD. C/O. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE INCOME TAX OFFICER, WARD-10(4), HYDERABAD. 3. CIT(A)-VI, HYDERABAD. 4. PR. CIT-VI, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE