Agamaiah Goud Pyata, Hyderabad V. Income Tax Officer, Ward-15(1), Hyderabad

ITA 1830/Hyd/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6065 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-05-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 09-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P PRASAD
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1830/HYD/2017 ASSESSMENT YEAR: 2014-15 AGAMAIAH GOUD PYATA, HYDERABAD. PAN AJNPP0329H VS. INCOME-TAX OFFICER, WARD 15(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. PRASAD REVENUE BY : SHRI PRABHAT KUMAR GUPTA DATE OF HEARING 25/05/2018 DATE OF PRONOUNCEMENT 08/06/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 01/08/2017 OF CIT(A) 7, HYDERABAD, FOR AY 2014-15. 2. BRIEFLY THE FACTS OF THE CASE ARE, ASSESSEE AN I NDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN LIQUOR, FILED HIS RETURN OF INCOME FOR THE AY 2014-15 ON 27/11/2014 DECLARING AN INCOM E OF RS. 5,12,060/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE, THE ASSESSEE FILED THE I NFORMATION AS CALLED FOR. 2.1 ON PERUSAL OF THE INFORMATION FILED BY THE ASSE SSEE, THE AO OBSERVED THAT AS PER THE RETURN OF INCOME FILED FOR AY 2014-15, THE ASSESSEE ADMITTED GROSS RECEIPTS FROM SALE OF LIQUO R AT RS. 2 ITA NO. 1830/HYD/17 AGAMAIAH GOUD PYATA, HYD. 6,92,80,813/- AND SHOWN NET PROFIT AT RS. 5,12,055/ -, WHICH COMES TO 0.74%. WHEN THE AR OF THE ASSESSEE WAS ASKED TO PRO DUCE BOOKS OF ACCOUNT, BILLS AND VOUCHERS, THE ASSESSEE COULD NOT PRODUCE SALE BILLS/INVOICES IN SUPPORT OF THE SALES MADE AND IN THE ABSENCE OF THE SAME, ACCORDING TO THE AO, THE PROFIT ADMITTED BY T HE ASSESSEE AT RS. 5,12,055/- WHICH WORKS OUT TO 0.74% OF THE TOTAL SA LES, CANNOT BE RELIED UPON. HENCE, VIDE ORDER SHEET NOTING DATED 2 2/11/2016, THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY PROFIT F ROM LIQUOR BUSINESS SHOULD NOT BE ADOPTED @ 5% ON COST OF GOOD S SOLD BASING ON VARIOUS DECISIONS OF ITAT, HYDERABAD IN THE ABSE NCE OF SALE BILLS/VOUCHERS. IN RESPONSE, AR OF THE ASSESSEE FIL ED A LETTER DATED 16/12/2016 AND THE CONTENTS OF WHICH WERE EXTRACTED BY THE AO IN HIS ORDER AT PAGES 2 TO 4. AFTER CONSIDERING THE OBJECT IONS OF THE ASSESSEE AS WELL AS RELYING ON THE DECISIONS OF THE ITAT, HYDERABAD, THE AO ESTIMATED THE NET PROFIT FROM THE SALE OF LI QUOR AT 5% OF THE GOODS PUT FOR SALE I.E. OPENING STOCK PLUS PURCHASE S MADE AND AS REDUCED BY THE CLOSING STOCK, AT RS. 30,18,701/- BY HOLDING THAT THE ASSESSEE HAS NOT PRODUCED SALE BILLS/VOUCHERS FOR V ERIFICATION ALONG WITH SALE LEDGER AND CASH BOOK, THE PROFIT ADMITTED BY THE ASSESSEE CANNOT BE ACCEPTED AND HENCE ESTIMATION OF PROFIT I S THE ONLY ALTERNATIVE. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF AO. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: (1) THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS ]-7/HYD ERRED ON FACTS AND LAW INVOLVED IN THE CASE. (2) THE LEARNED CIT[A] HAS ERRED IN CONFIRMING THE ESTIMATION OF INCOME FROM LIQUOR BUSINESS AT 5% ON COST OF SALES AS AGAINST 3% ON COST OF SALES OR GOODS PUT FOR SALES UPHELD B Y THE HONOURABLE ITAT IN RECENT WINE CASES. 3 ITA NO. 1830/HYD/17 AGAMAIAH GOUD PYATA, HYD. (3) TO MODIFY THE GROUNDS ALREADY FILED WITH THE PE RMISSION OF HONOURABLE ITAT. 5. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE COORDINATE BENCHES OF THIS TRIBUNAL CON SISTENTLY TAKING VIEW THAT ESTIMATION OF INCOME AT 3% OF THE COST OF THE GOODS SOLD IS REASONABLE IN THIS LINE OF BUSINESS. THEREFORE, WE DIRECT THE AO TO ADOPT 3% OF THE COST OF GOODS SOLD AS THE INCOME OF THE ASSESSEE. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS PARTL Y ALLOWED. FOR THE SAKE OF CLARITY, WE REPRODUCE THE FINDINGS OF THE C OORDINATE BENCH IN THE CASE OF SRI VENKATESWARA WINES IN ITA NO. 1206/ HYD/2015, DATED 27/11/2015 FOR AY 2011-12, WHICH ARE AS UNDER: 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF A CCOUNT AND THEREFORE, THE ESTIMATION OF INCOME IS JUSTIFIED. IT IS ONLY THE R ATE AT WHICH THE INCOME IS TO BE ESTIMATED IS BEFORE US. A.O. HAS ESTIMATED THE I NCOME AT 5% OF THE COST OF GOODS SOLD, WHILE THE ASSESSEE IS SEEKING THE ESTIM ATION AT 3% OF THE COST OF GOODS SOLD. WE FIND THAT IN THE CASE OF VENKATESWAR A WINES, NIZAMABAD (SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL HAS TAKEN NOTE OF THE DECISION OF HON'BLE HIGH COURT OF TELANGANA AND ANDHRA PRADE SH INITA.NO.1198/HYD/2015 SAI VENKATESWARA WINES, SECU NDERABAD THE CASE OF CIT VS. KAMLEKAR SHANKAR LAL (SUPRA) TO HOLD AS UNDER : '6. HAVING REGARD TO THE RIVAL CONTENTIONS AND 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. TH E CIT WANTS THE SAME TO BE ESTIMATED AT 5% OF THE TOTAL TURNOVER BECAUSE TH E TRIBUNAL IN THE CASE OF AN ASSESSEE CARRYING ON THE SAME BUSINESS OF SALE O F 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. ESTIMAT ION OF NET PROFIT MUST BE ON THE BASIS OF FACTS INVOLVED IN EACH AND EVERY CA SE. 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.' 4 ITA NO. 1830/HYD/17 AGAMAIAH GOUD PYATA, HYD. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 8 TH JUNE, 2018 KV COPY TO:- 1) SHRI AGAMAIAH GOUD PYATA, C/O SHARMA & SASTRY, C AS., NO. 5-3-318/1, JEERA, MG ROAD, SECUNDERABAD 5 00 003. 2) ITO, WARD 15(1), IT TOWERS, AC GUARDS, MASAB T ANK, HYDERABAD 500 004. 3) CIT(A) -7, HYD. 4) PR. CIT 7, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE