Mithra Restaurant and Bar, Hyderabad V. Income Tax Officer, Ward-9(5), Hyderabad

ITA 1813/Hyd/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8274 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 04-04-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 06-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Section: 143(3)

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. 1813 /HYD/201 7 ASSESSMENT YEAR: 20 1 3 - 1 4 MITHRA RESTAURANT AND BAR , HYDERABAD. PAN A AQFM6921J VS. INCOME - TAX OFFICER, W ARD 9 ( 5 ) , HYDERABAD. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : S MT. S. SANDHYA REVENUE BY : S HRI M.H. NAIK DATE OF HEARING : 0 4 / 0 4 /201 9 DATE OF PRONOUNCEMENT : 12 / 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 28 / 06 /201 7 FOR AY 20 1 3 - 1 4 . 2 . BRIEF FACTS OF THE CASE ARE, THE ASSESSEE FIRM ENGAGED IN THE BUSINESS OF RUNNING A WINE SHOP, FILED ITS RETURN OF INCOME FOR THE AY 2013 - 14 THROUGH E - FILING ON 01/10/2013 DECLARING INCOME OF RS. 1,75,650/ - . SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AN ACCORDINGLY NOTICES U/S 143(2) AND 14 2(1) WERE ISSUED TO THE ASSESSEE. THE AO COMPLETED THE ASSESSMENT U/S 143(3) BY ESTIMATING THE PROFITS AT 10% OF THE STOCK SOLD OR PUT FOR SALE ON THE GROUND THAT NON - PRODUCTION OF THE DOCUMENTARY EVIDENCE, BOOK PROFITS OFFERED BY THE ASSESSEE CANNOT BE RE LIED UPON AND TRUE AND CORRECT PROFITS CANNOT BE ARRIVED AT IN THE ABSENCE OF ANY SUPPORTING OR CORROBORATIVE MATERIAL , AND ACCORDINGLY, REJECTING THE BOOKS OF 2 ITA NO. 1813 /HYD/1 7 MITHRA RESTAURANT AND BAR, HYD. ACCOUNT, THE AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 28,94,770/ - . 3 . WHEN THE AS SESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ACTION OF AO. 5 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CONTENDING THAT ESTIMATION OF INCOME AT 10% IS TOO HIGH, WHICH IS AGAINST THE DECISIONS OF THE COORDINATE BENCH OF ITAT, WHEREIN THE ITAT HELD THAT THE NET PROFIT OF 3% IS REASONABLE IN THIS LINE OF BUSINESS. 6 . LD. DR, ON THE O THER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7 . 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 SO LD 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 REGARD 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 BEFO RE 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 AN D THE MATERIAL 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 EST IMATED AT 5% OF THE TOTAL TURNOVER BECAUSE 3 ITA NO. 1813 /HYD/1 7 MITHRA RESTAURANT AND BAR, HYD. 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 TRI BUNAL. 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. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL , 201 9 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 12 TH APRIL , 201 9 KV C OPY TO: - 1) MITHRA RESTAURANT AND BAR, H.NO. 8 - 2 - 125, ANUPAMA NAGAR, HASTHINAPURAM, HYD ERABAD 500 070. 2) ITO, WARD 9 ( 5 ) , IT TOWERS, MASAB TANK , HYDERABAD. 3) CIT(A) 7 , HYDERABAD. 4) PR. CIT - 7 , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE