ITO, Ward-1, Warangal V. Shri. M. Prabhakar, Warangal

ITA 195/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66165 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V V RAMANA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.195/HYD/2012 : ASSESSMENT YEAR 2008- 09 INCOME - TAX OFFICER, WARD - 1. WARANGAL. (APPELLANT) V/S SHRI M.PRABHAKAR, WARANGAL. ( PAN - AJWPM 1135 B) (RESPONDENT) APPELLANT BY : SHRI V.V.RAMANA RAO RESPONDENT BY : NONE DATE OF HEARING 09.08.2012 DATE OF PRONOUNCEMENT 24. 0 8.2012 O R D E R PER D.KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-VI, HYDERAB AD DATED 25.11.2011 FOR THE ASSESSMENT YEAR 2008-09. 2. AT THE OUTSET, WE MAY NOTE THAT DESPITE NOTICE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE-RESPONDENT. NOT EVEN AN ADJOURNMENT PETITION HAS BEEN RECEIVED. HENCE, WE PROCEED TO DISPOSE OFF THIS APPEAL EX-PARTE QUA THE ASSESSEE-RESPONDE NT. 3. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEA L READ AS FOLLOWS- 1. . 2. THE CIT(A) OUGHT TO HAVE UPHELD THE ESTIMATION O F SALES MADE BY THE ASSESSING OFFICER ADOPTING 24% PROFIT M ARGIN ON THE STOCKS SOLD, DULY ALLOWING DEDUCTIONS CLAIME D BY THE ASSESSEE. ITA NO.195/HYD/2012 SHRI M.PRABHAKAR, HYDERABAD 2 3. THE CIT(A) ERRED IN CONSIDERING THE FACTS OF THE CASE AND RELIED UPON THE CASE DECIDED BY THE ITAT IN ITA NO.591/HYD/2011 DATED 28.07.2011 IN THE CASE OF M/S . KANAKA DURGA WINES. 4. THE CIT(A) ERRED IN ESTIMATING THE NET PROFIT AT 3% OF THE PURCHASE OR STOCK PUT UP SALE. IN THIS CASE THE AS SESSEE HAS NOT PURCHASED ANY SALE BILLS ITEM WISE, DAY WISE AN D CATEGORY OF LIQUOR WISE TO PROVE THAT HE HAS SOLD T HE LIQUOR AT PRICES LESS THAN MRP. 4. THE PRINCIPLE THAT IT IS WELL SETTLED LAW THAT THE BEST GUIDE FOR ESTIMATION OF INCOM E AFTER REJECTING THE BOOKS OF ACCOUNT IS EITHER PAST HISTORY OF THE ASSESSEE OR A NY OTHER COMPARABLE CASE IS NOT APPLICABLE IN THE CASE OF T HE ASSESSEE IN THE LIGHT OF THE FACT THAT THE GROSS PR OFIT SHOWN BY OTHER RETAILERS IN THE WARANGAL DISTRICT IS VARY ING ACCORDING TO THE EXCISE FEE TO BE PAID TO THE GOVT. OF A.P. WHERE THERE IS HIGH INCIDENCE OF EXCISE TAX TO BE P AID THE GROSS PROFIT IS SHOWN AT HIGHER PERCENTAGE AND WHER E THE EXCISE TAX TO BE PAID IS LESS THE GROSS PROFITS IS SHOWN AT LESSER PERCENTAGE. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS CARRYING ON THE BUSINESS OF RETAIL TRADE IN LIQUOR. HE FILED R ETURN OF INCOME ON 29.7.20008 ADMITTING A TOTAL INCOME OF RS.2,44,530. THE ENTIRE PURCHASES OF THE ASSESSEE ARE FROM THE ANDHRA PRADE SH BEVERAGES CORPORATION LTD. THE ASSESSING OFFICER TAKING NOTE OF THE FACT THAT AS PER THE GOMS NO.184 DATED 7.2.2005 OF THE GOVERNMENT OF ANDHRA PRADESH, THE RETAILERS MARGIN WAS FIXED AT 27% FOR ORDINARY LIQUOR ITEMS, 20% FOR MEDIUM AND PREMIUM ITEMS AND 25% FOR BEER, AND FURT HER, OBSERVING THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE EVIDENC E FOR ITS TURNOVER IN THE FORM OF SALE BILLS, COMPUTED THE TURNOVER BY AD OPTING THE PROFIT MARGIN AS 24% AND ADDED THE DIFFERENCE TO THE INCOM E OF THE ASSESSEE AS SUPPRESSED TURNOVER. 4. ON APPEAL, THE CIT(A), FOLLOWING THE DECISION O F THE TRIBUNAL IN THE CASE OF M/S. KANAKA DURGA WINES IN ITA NO.59 1/HYD/2011 DATED 28.7.2011, DIRECTED THE ASSESSING OFFICER TO ESTIMA TE THE NET PROFIT OF THE ASSESSEE AT 3% OF THE PURCHASES OR STOCK PUT FOR SA LE, DURING THE YEAR, ITA NO.195/HYD/2012 SHRI M.PRABHAKAR, HYDERABAD 3 SUBJECT TO THE INCOME THUS ASSESSED, BEING NOT LESS THAN THE RETURNED INCOME. 5. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESEN TATIVE AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHORIT IES AND OTHER MATERIAL AVAILABLE ON RECORD. EVEN THOUGH THE IMPU GNED ORDER OF THE CIT(A) IS BASED ON THE ORDER OF THIS TRIBUNAL IN TH E CASE OF KANAKA DURGA WINES, SUPRA, COORDINATE BENCH OF THIS TRIBUNAL, VI DE ITS ORDER DATED 10.8.2012, IN THE CASE OF ITO VS/. MANJIT SINGH BAG GA, HYDERABAD IN ITA NO.1861/HYD/2011, CONSIDERING SIMILAR FACTS AND CIR CUMSTANCES, SET ASIDE THE ORDER OF THE CIT(A) WHICH DIRECTED ESTIMATION O F NET INCOME AT 3% OF THE PURCHASES DURING THE YEAR OR STOCK PUT FOR SALE , AND RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR REC ONSIDERATION OF THE MATTER WITH CERTAIN DIRECTIONS, AS FOLLOWS- 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IT IS A FACT THAT FOR THE ASSE SSMENT YEAR 2004-05, THE ITAT HAS ACCEPTED THE GROSS PROFI T RATE AT 3% BY THE ASSESSEE IN ITA 371/HYD/2009 DATED 30 TH SEPT. 2010. SUBSEQUENTLY, ITAT, HYDERABAD BENCH IN ITA NO.591/HYD/2011 DATED 28-7-2011 IN CASE OF KANAKA DURGA WINES HAS ALSO HELD THAT ESTIMATION OF NET PR OFIT AT 3% ON PURCHASES OR STOCK PUT FOR SALE TO BE REASONA BLE. HOWEVER, ITAT, HYDERABAD BENCH SUBSEQUENTLY, IN CAS E OF RAVINDRA REDDY IN ITA NO.127/HYD/2012 AFTER CONSIDE RING THE DEPARTMENTS ADDITIONAL CONTENTIONS HAS BEEN CONSISTENTLY HOLDING THAT ESTIMATION OF PROFIT FOR RETAIL TRADE OF LIQUOR SHOULD BE MADE AT 5% OF THE PURCHAS ES OR OF STOCK PUT FOR SALE. IN THE CHANGED SCENARIO FOL LOWING THE AFORESAID CONSISTENT VIEW OF THE TRIBUNAL AS DI SCUSSED IN THE COURT, WE DIRECT THE AO TO ESTIMATE THE NET PROFIT RATE AT 5% OF THE PURCHASES OR STOCK PUT FOR SALE D URING THE ASSESSMENT YEAR SUBJECT TO THE ASSESSED INCOME NOT LESS THAN THE RETURNED INCOME. HENCE THIS GROUND N O.2 IS PARTLY ALLOWED. IN VIEW OF THE ABOVE, CONSISTENT WITH THE VIEW TAKE N OF LATE BY THE COORDINATE BENCHES OF THIS TRIBUNAL IN SIMILAR MATTERS, AS IN ITA NO.195/HYD/2012 SHRI M.PRABHAKAR, HYDERABAD 4 THE CASE OF SHRI MANJIT SINGH BAGGA, NOTED ABOVE, W E SET ASIDE THE IMPUGNED ORDER OF THE CIT(A), AND DIRECT THE AS SESSING OFFICER TO ESTIMATE THE NET PROFIT OF THE ASSESSEE, AT 5% O F THE PURCHASES OR STOCK PUT FOR SALE DURING THE ASSESSMENT YEAR UN DER APPEAL, SUBJECT TO THE CONDITION THAT THE ASSESSED INCOME T HUS DETERMINED, IS NOT LESS THAN THE RETURNED INCOME. ACCORDINGLY, GROUNDS OF THE REVENUE IN THIS APPEAL ARE PARTLY ALLOWED. 7. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE COURT ON 24.08.2012 SD/- SD/- (ASHA VIJAYARAGHAVAN) (D.KARUNAKARA RAO) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 24 TH AUGUST, 2012 COPY FORWARDED TO: 1. SHRI M.PRABHAKAR, H.NO.13 - 4 - 70, M.G.ROAD, HNAMKONDA, WARANGAL. 2. 3. INCOME TAX OFFICER, WARD - 1 , WARANGAL COMMISSIONER OF INCOME-TAX(APPEALS)-VI, HYDERABAD 4. COMMISSIONER OF INCOME - TAX V , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.