Sri Alla Siva Ramakrishna, Vatluru V. The CIT, Rajahmundry, Rajahmundry

ITA 192/VIZ/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0118 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 24-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Section: 143(3); 263

Judgement Text

ITA NO.192/VIZAG/2012 ALLA SIVA RAMAKRISHNA, VATLUR U ITA NO.199/VIZAG/2012 K. SURYA KRISHNA RAO, KAMAVAR APUKONDA ITA NO.200/VIZAG/2012 Y. SIVARAMAKRISHNAM RAJU, ELU RU 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , . . . . , $ $ $ $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.192/VIZAG/2012 ( / ASSESSMENT YEAR : 2007-08 ) ALLA SIVA RAMAKRISHNA VATLURU VS. CIT RAJAHMUNDRY [ PAN: AIGPA8361C ] ( & & & & / APPELLANT) ( '(& '(& '(& '(& / RESPONDENT ) ./ I.T.A.NO.199/VIZAG/2012 ( / ASSESSMENT YEAR : 2007-08 ) K. SURYA KRISHNA RAO KAMAVARAPUKOTA VS. CIT RAJAHMUNDRY [ PAN: AOKPK5746F ] ( & & & & / APPELLANT) ( '(& '(& '(& '(& / RESPONDENT ) ./ I.T.A.NO.200/VIZAG/2012 ( / ASSESSMENT YEAR : 2007-08 ) Y. SIVARAMKRISHNAM RAJU ELURU VS. CIT RAJAHMUNDRY [ PAN: AUXPK5437A ] ( & & & & / APPELLANT) ( '(& '(& '(& '(& / RESPONDENT ) & ) / APPELLANT BY : SHRI G.V.N. HARI, AR '(& ) / RESPONDENT BY : SHRI TH. LUCAS PETER, DR ) - / DATE OF HEARING : 16.11.2015 ) - / DATE OF PRONOUNCEMENT : 18.12.2015 ITA NO.192/VIZAG/2012 ALLA SIVA RAMAKRISHNA, VATLUR U ITA NO.199/VIZAG/2012 K. SURYA KRISHNA RAO, KAMAVAR APUKONDA ITA NO.200/VIZAG/2012 Y. SIVARAMAKRISHNAM RAJU, ELU RU 2 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE APPEALS ARE FILED BY DIFFERENT ASSESSEES AGAI NST THE COMMON ORDER OF CIT, RAJAHMUNDRY 21.2.2012 FOR THE ASSESSM ENT YEAR 2007-08. SINCE, THE ISSUE INVOLVED IN THESE APPEALS IS COMMO N, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS COMMO N ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.200/VIZAG/2012 : 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS AN INDIV IDUAL, ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF IMFL (WINES). THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION B Y DECLARING TOTAL INCOME AT NIL. THE RETURN FILED BY THE ASSESSEE WA S PROCESSED INITIALLY U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). THEREAFTER, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 19.6.2009, BY DETERMINING TOTAL INCOME OF RS.1,66,8 20/-. WHILE COMPUTING THE TOTAL INCOME, THE ASSESSING OFFICER H AS ESTIMATED THE INCOME OF THE ASSESSEE AT 5% OF PURCHASES IN RESPEC T OF WHICH SALES WERE MADE. ITA NO.192/VIZAG/2012 ALLA SIVA RAMAKRISHNA, VATLUR U ITA NO.199/VIZAG/2012 K. SURYA KRISHNA RAO, KAMAVAR APUKONDA ITA NO.200/VIZAG/2012 Y. SIVARAMAKRISHNAM RAJU, ELU RU 3 3. SUBSEQUENTLY, THE LD. COMMISSIONER WHILE EXERCIS ING THE POWER U/S 263 OF THE ACT ISSUED A SHOW CAUSE NOTICE TO TH E ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE HAS FILED WRITTE N SUBMISSIONS DATED 29.8.2011 ON 5.9.2011. THE LD. COMMISSIONER AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE IS OF THE OPINION THAT THE ASSESSMENT ORDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND DIRECTED THE A.O. TO ESTIMATE THE INCOM E OF THE ASSESSEE KEEPING IN VIEW OF THE ORDER OF HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS. M/S. V. RAMULU, KAKINADA IN ITT A NO.197/2003 DATED 21.6.2011. 4. ON BEING AGGRIEVED, ASSESSEE FILED AN APPEAL BEF ORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE ASSESSEE HAS FILED THE DETAILS AND THE ASSESSING OFFICER AFT ER EXAMINING ALL THE DETAILS ESTIMATED THE NET INCOME OF THE ASSESSEE. THEREFORE, HE HAS SUBMITTED THAT ONCE THE ASSESSING OFFICER HAS TAKEN A CONSCIOUS VIEW, IT CANNOT BE SUBSTITUTED WITH ANOTHER VIEW BY THE LD. COMMISSIONER WHILE EXERCISING THE POWER U/S 263 OF THE ACT. HE FURTHE R SUBMITTED THAT WHERE TWO VIEWS ARE POSSIBLE, THE VIEW TAKEN BY THE A.O. HAS TO BE ACCEPTED AND THE ORDER PASSED BY THE LD. COMMISSION ER U/S 263 OF THE ACT HAS TO BE QUASHED. ITA NO.192/VIZAG/2012 ALLA SIVA RAMAKRISHNA, VATLUR U ITA NO.199/VIZAG/2012 K. SURYA KRISHNA RAO, KAMAVAR APUKONDA ITA NO.200/VIZAG/2012 Y. SIVARAMAKRISHNAM RAJU, ELU RU 4 6. SO FAR AS MERITS OF THE CASE IS CONCERNED, THE L D. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN A SERIES OF CASES TAKEN A VIEW THAT IN THE SIMILAR LINE OF THE BUSINESS DIRECTED THE A.O. TO ESTIMATE THE PROFIT FROM IMFL BUSINESS BY ADOPTING THE RATE OF 5% ON THE COST OF SALE AND THE SAME MAY BE ACCEPTED IN THIS CASE ALSO. 7. ON THE OTHER HAND, THE LD. D.R. HAS STRONGLY SUP PORTED THE ORDER PASSED BY THE LD. COMMISSIONER. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 9. IN THIS CASE, THE ASSESSEE IS ENGAGED IN THE BUS INESS OF PURCHASE AND SALE OF IMFL LIQUOR. THE RETURN FILED BY THE A SSESSEE WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT, SUBSEQUENTLY AFTER FOLLOWING DUE PROCESS, ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. WHEN THIS CASE WAS FIXED FOR HEARING BEFORE THE A.O. ON 16.10 .2008, ASSESSEES CHARTERED ACCOUNTANT APPEARED AND FILED BOOKS OF AC COUNTS, BILLS & VOUCHERS AND ACCORDINGLY, CASE WAS ADJOURNED. THER EAFTER, A NOTICE U/S 143(2) OF THE ACT WAS ISSUED. IN THE ASSESSMENT OR DER, THE A.O. HAS OBSERVED THAT DURING THE COURSE OF SCRUTINY, IT IS NOTICED THAT THE SALES ARE NOT COMPLETELY AND PROPERLY SUPPORTED BY SALE B ILLS, SUSCEPTIBLE FOR ITA NO.192/VIZAG/2012 ALLA SIVA RAMAKRISHNA, VATLUR U ITA NO.199/VIZAG/2012 K. SURYA KRISHNA RAO, KAMAVAR APUKONDA ITA NO.200/VIZAG/2012 Y. SIVARAMAKRISHNAM RAJU, ELU RU 5 VERIFICATION OF THE SALES RECORDED IN THE BOOKS OF ACCOUNTS. THE A.O. HAS CALLED THE EXPLANATION FROM THE ASSESSEE, WHY THE N ET INCOME COULD NOT BE ESTIMATED, TAKING INTO CONSIDERATION THE VERIFIA BLE PURCHASES MADE WITH A.P. BEVERAGES CORPORATION, THE COUNSEL FOR TH E ASSESSEE PRESENT AND CLARIFIED THAT THE DAY TO DAY SALES ARE PROPERL Y RECORDED IN THE BOOKS OF ACCOUNTS AND IT IS NOT PRACTICABLE IN THIS LINE OF BUSINESS TO WRITE THE NAMES OF THE PERSONS TO WHOM SALES ARE MADE SINCE T HE CUSTOMERS ARE RELUCTANT TO DISCLOSE THEIR IDENTITY BECAUSE OF THE IR SOCIAL STATUS ETC. SINCE THE SALES ARE PROPERLY RECORDED IN THE BOOKS, THE COUNSEL FOR THE ASSESSEE CONTENDED THAT THE BOOK RESULTS MAY BE ACC EPTED. THE A.O. AFTER CONSIDERING THE ABOVE SUBMISSION OF THE ASSES SEE, HE HAS ESTIMATED THE NET INCOME OF THE ASSESSEE AT 5%. 10. FROM THE ABOVE, IT IS VERY CLEAR THAT BEFORE TH E A.O., THE LD. COUNSEL FOR THE ASSESSEE APPEARED, FILED THE BOOKS OF ACCOUNTS, BILLS & VOUCHERS AND THE NAMES OF THE PURCHASERS WAS NOT CL EARLY MENTIONED FOR THE REASON WHICH HE EXPLAINED BEFORE THE A.O. THE A.O. AFTER CONSIDERING ALL THE DETAILS AFTER DISCUSSING THE IS SUE CAME TO A CONCLUSION THAT NET INCOME HAS TO BE ESTIMATED AT 5%. ACCORDI NGLY HE HAS ESTIMATED THE INCOME. ONCE A.O. AFTER EXAMINING TH E DETAILS OF BOOKS OF ACCOUNTS ESTIMATED THE INCOME, THE LD. COMMISSIO NER WHILE EXERCISING THE POWER U/S 263 OF THE ACT AGAIN DIREC TING HIM TO ESTIMATE ITA NO.192/VIZAG/2012 ALLA SIVA RAMAKRISHNA, VATLUR U ITA NO.199/VIZAG/2012 K. SURYA KRISHNA RAO, KAMAVAR APUKONDA ITA NO.200/VIZAG/2012 Y. SIVARAMAKRISHNAM RAJU, ELU RU 6 THE INCOME, IN OUR OPINION, IS NOT JUSTIFIED FOR TH E REASON THAT THE ASSESSING OFFICER AFTER EXAMINING THE FACTS AND CIR CUMSTANCES OF THE CASE AND BOOKS OF ACCOUNT HAS ALREADY CAME TO A CONCLUSI ON THAT THIS IS THE CASE WHERE PROPER ESTIMATION HAS TO BE MADE. ACCOR DINGLY, INCOME IS ESTIMATED. THE LD. COMMISSIONER CANNOT SUBSTITUTE FURTHER ESTIMATION. 11. SO FAR AS THE MERITS OF THE CASE IS CONCERNED, IN ITA NOS.31, 70, 78, 95, 104, 114 & 190/VIZAG/2015 IN THE CASE OF CH . RAMANJANEYULU AND OTHERS DATED 22.7.2015 THE COORDINATE BENCH OF THE TRIBUNAL ALREADY CONSIDERED THE ISSUE RELATING TO ESTIMATION OF THE PROFIT FROM IMFL BUSINESS AND DIRECTED THE A.O. TO ADOPT 5% ON THE COST OF SALES. 12. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THA T THE ORDER PASSED BY THE A.O. IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. THUS, THE ORDER PASSED BY THE LD. COMMISS IONER IS QUASHED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 14. IN SO FAR AS ITA NOS.192 & 199/VIZAG/2012, FACT S ARE SIMILAR. THE ISSUE IS ALSO SIMILAR. KEEPING IN VIEW OF OUR ORDE R IN THE ABOVE APPEAL, THE ORDER PASSED BY THE LD. COMMISSIONER IN THESE A PPEALS ARE ALSO QUASHED. ITA NO.192/VIZAG/2012 ALLA SIVA RAMAKRISHNA, VATLUR U ITA NO.199/VIZAG/2012 K. SURYA KRISHNA RAO, KAMAVAR APUKONDA ITA NO.200/VIZAG/2012 Y. SIVARAMAKRISHNAM RAJU, ELU RU 7 15. IN THE RESULT, THE APPEALS FILED BY DIFFERENT A SSESSEES IN ITA NOS.192, 199 & 200/VIZAG/2012 ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH DEC15. SD/- SD/- ( . . . . ) ( . ) ( G. MANJUNATHA) ( (( ( V. DURGA RAO ) )) ) / // / ACCOUNTANT MEMBER / // / JUDICIAL MEMBER /VISAKHAPATNAM: 3 / DATED : 18.12.2015 VG/SPS ) ' 4 / COPY OF THE ORDER FORWARDED TO :- 1. & / THE APPELLANTS I. ALLA SIVA RAMAKRISHNA, PROP: SATYA KRISHNA WINES, V ATLURU II. KANDIMALLA SURYA KRISHNA RAO, PROP: LAKSHMI MOHANA WINES, KAMAVARAPUKOTA III. YERAKARAJU SIVARAMA KRISHNAM RAJU, PROP: DWARAKA WI NES, SEKHAR STREET, KOTHAPET, ELURU 2. '(& / THE RESPONDENT THE CIT, RAJAHMUNDRY 3. 5 () / THE CIT(A), RAJAHMUNDRY 4. ' , , / // / DR, ITAT, VISAKHAPATNAM 5 . . . . / GUARD FILE / BY ORDER // TRUE COPY // 9: ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM