Manne Baswa Reddy, Hyderabad V. Income Tax Officer, Ward-9(1), Hyderabad

ITA 1873/Hyd/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6071 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-05-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 16-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SITHARAM
• Keywords: Source of fund
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1873/HYD/2017 ASSESSMENT YEAR: 2012-13 SRI MANNE BASWA REDDY, HYDERABAD [PAN: AIPPM0116Q] VS INCOME TAX OFFICER, WARD-9(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A. SRINIVAS, AR FOR REVENUE : SHRI M. SITHARAM, DR DATE OF HEARING : 24-05-2018 DATE OF PRONOUNCEMENT : 08-06-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-7, HYDERABAD, DATED 02-08-2017. ASSESSEE IS AGGRIEVED ON ESTIMATION OF I NCOME IN THE LIQUOR BUSINESS AS WELL AS SUSTAINING ADDITION OF RS. 1,60,000/- U/S. 68 OF THE INCOME TAX ACT [ACT]. ITA NO. 1873/HYD/2017 :- 2 - : 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM RETAIN TRADING IN IMFL UNDER THE TRADE NAME OF M/ S. SRI DURGA WINES. ASSESSEES BOOKS OF ACCOUNT WERE REJEC TED AND INCOME WAS ESTIMATED AT 5% ON THE LIQUOR PUT TO SALE. 3. LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE AND VARIOUS CASE LAW RELIED UPON, CONSIDERED THE LOC ATION OF THE BUSINESS AND DETERMINED THE NET PROFIT AT 4.5% OF CO ST OF GOODS SOLD AS REASONABLE PROFIT. 4. IT WAS THE SUBMISSION THAT ITAT IS CONFIRMING THE ESTIMATION OF INCOME AT 3% AND REQUESTED FOR ESTIMATION OF INCOME AT 3% AND RELIED ON THE CASE OF SHRI SRIDHAR R AMAGIRI VS. ITO IN ITA NO. 1924/HYD/2017, DT. 23-05-2018. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF TH E OPINION THAT INCOME CAN BE ESTIMATED AT 3% ON COST OF GOO DS SOLD ON THE BASIS OF CO-ORDINATE BENCH DECISION IN TH E CASE OF SHRI SRIDHAR RAMAGIRI VS. ITO (SUPRA), WHERE IN IT W AS HELD AS UNDER: 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THIS TRIBUNAL, IN THE CASE OF SECUNDERABAD WINES (SUPRA) VIDE ORDERS DATED 20.07.2016 (TO WHICH BOTH OF US ARE SIGNATORIES) HAVE HELD 3% OF THE COST OF GOODS PUT TO SALE TO BE REASONABLE ESTIMATION OF INCOME. FOR THE SAKE OF CL ARITY AND READY REFERENCE, RELEVANT PARAGRAPHS ARE REPRODUCED HEREU NDER: 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 AY. 2011-2012 ON 28.09.2011 ADMITTIN G INCOME OF RS. 52,25,566. THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WITH ITA NO. 1873/HYD/2017 :- 3 - : SECTION 147 OF THE ACT WERE INITIATED AND DURING TH E SAID ASSESSMENT PROCEEDINGS AFTER VERIFICATION OF VARIOUS DETAILS F ILED BY THE ASSESSEE, THE A O. FOUND THAT THE ASSESSEE HAS OFFERED LOW GR OSS PROFIT OF 11.01% AS AGAINST THE GROSS PROFIT MARGIN OF RETAIL AT 24% AS PER THE G.O.MS. ISSUED BY THE GOVERNMENT OF AP. THE ASSESSEE SUBMIT TED THAT THE GROSS PROFIT MARGIN OF 24% AS PER G.O. OF GOVERNMENT OF A P. IS ABSOLUTELY ON THE HIGHER SIDE. THE LD. AR. CONTENDED THAT IN MAJO RITY OF THE SIMILAR LIQUOR CASES, THE 1TAT, HYDERABAD BENCH HAS BEEN TA KING THE TOTALITY OF THE FACTS INTO CONSIDERATION AND HOLDING THAT THE T OTAL INCOME OF THE ASSESSEE SHALL BE 3 TO 5% OF THE GOODS PUT TO SALE AND THAT THE SAME HAS BEEN UPHELD BY THE HON'BLE HIGH COURT OF AP. TH E A.O. HOWEVER, OBSERVED THAT THE HON'BLE AP. HIGH COURT IN THE CAS E OF CIT VS. KAMLEKAR SHANKAR LAL IN ITTANO.21 OF 2013 DATED 23. 07.2013 HAS ESTIMATED THE NET PROFIT AT 5% OF THE PURCHASE OR S TOCK PUT TO SALE. HE THEREFORE, ESTIMATED THE INCOME AT 5% OF THE GOODS PUT TO SALE AND BROUGHT IT TO TAX. SIMILARLY, HE ALSO MADE AN ADDIT ION OF MISCELLANEOUS RECEIPTS OF RS.3,39,064. AGGRIEVED, ASSESSEE PREFER RED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF 'A' BENCH OF THIS TRIBUNAL IN THE CASE OF SRI VENKATESW ARA WINES IN ITA NO. 1206/HYD/2015 DATED 27.11.2015 FOR THE AY. 2011-201 2 WHEREIN AFTER TAKING INTO CONSIDERATION SIMILAR CIRCUMSTANCES THE TRIBUNAL HAS UPHELD THE ESTIMATION OF INCOME AT 3% OF THE COST OF THE G OODS SOLD. RESPECTFULLY FOLLOWING THE SAME, TO WHICH BOTH OF U S ARE SIGNATORIES, WE DIRECT THE A.O. TO ADOPT 3% OF THE COST OF GOODS SOLD AS THE INCOME OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE D ID NOT ARGUE GROUND NOS. 4 AND 5 AND THEREFORE, THE SAME ARE REJECTED A S NOT PRESSED. 5.1. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO CONSIDER 3% OF THE INCOME OF ASSESSEE SUBJECT TO THE AB OVE AMOUNT NOT BEING LESS THAN THE PROFIT ALREADY DISCLOSED BY ASSESSEE. IN THAT EVENT, THE INCOME DISCLOSED BY ASSES SEE SHOULD BE ACCEPTED. ITA NO. 1873/HYD/2017 :- 4 - : 6. THE OTHER ISSUE CONTESTED IS ABOUT ADDITION OF RS. 1,60,000/-. AO FOUND THAT ASSESSEE HAS MAINTAINED THE BANK ACCOUNT WITH ANDHRA BANK AND DURING THE PERIOD FROM 01-04- 2011 TO 31-03-2012, RS. 1,60,000/- WAS FOUND TO BE D EPOSITED BY ASSESSEE. AO WAS OF THE OPINION THAT THE SAID BANK ACCOUNT DOES NOT APPEAR TO BE USED FOR IMFL BUSINESS AND AS SESSEE WAS ASKED TO EXPLAIN THE SOURCES FOR CASH DEPOSITS M ADE. IN THE ABSENCE OF ANY REPLY, THE AMOUNT WAS TREATED AS UNEXPLAINED CASH DEPOSIT. IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE AMOUNT ALSO PERTAINS TO ASSESSEE AND DEPOSITS ARE OUT OF KNOWN SOURCES OF INCOME. LD.CIT(A), HOWEVER, RE JECTED THE CONTENTIONS, STATING THAT ASSESSEE HAS NOT PROVED THAT THE BANK ACCOUNT ALSO PERTAINS TO BUSINESS. 6.1. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT THE CONFIRMATION BY THE CIT(A) IS NOT PROPE R WHETHER THE ACCOUNT IS USED FOR BUSINESS PURPOSES OR N OT. THE DEPOSITS IN THE BANK ACCOUNT PERTAIN TO ASSESSEE. ASSESSEE HAD SUBSTANTIAL INCOME DURING THE YEAR AND TH AT TOO HE IS DOING RETAIN BUSINESS IN IMFL. THERE IS NO ALL EGATION THAT THESE AMOUNTS ALSO PERTAIN TO THE BUSINESS BY THE AO. S INCE THE DEPOSITS ARE THROUGH-OUT THE YEAR IN SMALL AMOUNTS A ND SINCE THE CORRESPONDING CREDITS IN THE BOOKS OF ACCOUN T ARE NOT VERIFIED BY THE AO AND THE BOOKS OF ACCOUNT HAVING BE EN REJECTED, WE ARE OF THE OPINION THAT THE DEPOSITS CAN BE TELESCOPED TO THE INCOME ESTIMATED ON THE BUSINESS. IN VIEW OF THAT WE ARE OF THE OPINION THAT THE DEPOSITS IN THE BANK ACCOUNT NEED NOT BE SEPARATELY ASSESSED, WHEN INCOME WAS ITA NO. 1873/HYD/2017 :- 5 - : ESTIMATED MORE THAN WHAT ASSESSEE HAS DISCLOSED. IN V IEW OF THAT, WE DIRECT THE AO TO DELETE THE ADDITION. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2018 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 8 TH JUNE, 2018 TNMM ITA NO. 1873/HYD/2017 :- 6 - : COPY TO : 1. SRI MANNE BASWA REDDY, # 4-12-93, ROAD NO. 6, ARUNODAYANAGAR, BHAGYALATHA COLONY, HAYATNAGAR, HYDERABAD. 2. INCOME TAX OFFICER, WARD-9(1), HYDERABAD. 3. CIT(APPEALS)-7, HYDERABAD. 4. PR.CIT-7, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.