Sai Yuva Bar & Restaurant, Hyderabad, Hyderabad V. Income Tax Officer, Ward-9(3), Hyderabad

ITA 1976/Hyd/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9189 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 21-01-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 01-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MOHANKUMAR
• Keywords: Gross profit estimation
• Section: 143(3); 147; 144

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. 1976/HYD/2017 ASSESSMENT YEAR: 2012-13 SAI YUVA BAR & RESTAURANT, HYDERABAD. PAN ABFFS6624J VS. ITO, WARD 9(3), HYDERABAD. (APPLICANT) (RES PONDENT) ASSESSEE BY : SHRI A. SRINIVAS, AR REVENUE BY : SHRI R. MOHAN KUMAR, DR DATE OF HEARING : 21-01-2019 DATE OF PRONOUNCEMENT : 27-03-2019 ORDER PER P. MADHAVI DEVI, J.M.: THIS IS ASSESSEES APPEAL FOR THE A.Y 2012-13 AGAI NST THE ORDER OF THE LD. CIT(A)-7, HYDERABAD DATED 20.0 9.2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, FILED ITS RETURN OF INCOME FOR TH E A.Y 2012-13 ON 02.10.2012, ADMITTING TAXABLE INCOME OF RS. 2,17,380/- AGAINST THE TOTAL SALE OF LIQUOR OF RS. 3,41,13,179/-. DURING THE ASSESSMENT PROCEEDINGS U /S 143(3) OF THE IT ACT, PURSUANT TO SELECTION OF THE RETURN OF INCOME FOR SCRUTINY UNDER CASS, THE ASSESSEE WAS DI RECTED 2 ITA.NO. 1976/HYD/2017 SAI YUVA BAR & RESTAURANT., HYD. TO PRODUCE THE BOOKS OF ACCOUNTS, PURCHASE BILLS, S ALE BILLS/ SALE INVOICES ETC. THE ASSESSEE FAILED TO S UBMIT ANY DETAILS. THEREFORE, THE A.O COMPLETED THE ASSESSMEN T EX- PARTE U/S 144 OF THE ACT. THE A.O OBSERVED THAT TH E HONBLE ANDHRA PRADESH HIGH COURT IN ITTA NO. 651/2 014 DATED 24.10.2014 IN THE CASE OF KANAKA DURGA WINES VS. ITO AND ALSO THE ITAT HYDERABAD IN THE CASE OF CIT VS. BAGGA WINES, HAVE ESTIMATED NET PROFIT @ 5% OF THE COST OF GOODS PUT TO SALE. SINCE, THE ASSESSEE DID NOT AP PEAR AND DID NOT PRODUCE THE BOOKS OF ACCOUNTS OR ANY MATERI AL IN SUPPORT OF THE ESTIMATION OF INCOME @ 3%, THE A.O ESTIMATED THE INCOME @ 5% OF THE COST OF GOODS PUT TO SALE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) SEEKING ESTIMATION OF INCOME @ 3% OF THE COS T OF GOODS PUT TO SALE. 3. THE CIT(A) CONFIRMED THE ORDER OF THE A.O BY OBSERVING THAT THE BUSINESS OF THE ASSESSEE IS SITU ATED IN VERY CROWDED MUNICIPAL LIMITS OF HYDERABAD, WHEREIN HUGE DEMAND EXISTED FOR LIQUOR PRODUCTS DEALT BY THE ASS ESSEE. AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE FILED APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEA L: 1. THE ORDER OF THE APPELLATE COMMISSIONER IS CONT RARY TO THE LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE APPELLATE COMMISSIONER ERRED IN CONFIRMING T HE NET PROFIT OF THE APPELLANT @ 5% OF THE COST OF GOODS S OLD. 3. THE APPELLATE COMMISSIONER ERRED IN NOT RELYING ON THE DECISIONS SUBMITTED BY THE ASSESSEE OF THE HONBLE ITAT, HYDERABAD. 3 ITA.NO. 1976/HYD/2017 SAI YUVA BAR & RESTAURANT., HYD. 4. ANY OTHER GROUNDS WHICH THE APPELLANT MAY URGE E ITHER BEFORE OR AT THE TIME OF HEARING. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF VARIOUS BENCHES OF THIS TRIBUNAL AND IN SUPPORT THE REOF, HE FILED COPIES OF THE SAID ORDERS BEFORE US. 5. ON THE OTHER HAND, THE LD. DR, HOWEVER RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL PLACED ON RECORD, WE FIND THAT THE COORDIN ATE A BENCH OF THIS TRIBUNAL IN ITA NO. 1873/HYD/2017 IN THE CASE OF SHRI MANNE PASAWA REDDY HAS CONSIDERED THE SIMILAR ISSUE AND AT PARA 5 TO 5.1 OF ITS ORDER HAS HELD AS UNDER: 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT INCOME CAN BE ESTIMATED AT 3% ON COST OF GOODS SOLD ON THE BASIS OF CO- ORDINATE BENCH DECISION IN THE CASE OF SHRI SRIDHAR RAMAGIRI VS. ITO (SUPRA), WHERE IN IT WAS 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 WHIC H 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 ADMITTING INCOME OF RS. 52,25,566. THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WI TH 4 ITA.NO. 1976/HYD/2017 SAI YUVA BAR & RESTAURANT., HYD. SECTION 147 OF THE ACT WERE INITIATED AND DURING TH E SAID ASSESSMENT PROCEEDINGS AFTER VERIFICATION OF VARIOU S DETAILS FILED BY THE ASSESSEE, THE A O. FOUND THAT THE ASSE SSEE HAS OFFERED LOW GROSS PROFIT OF 11.01% AS AGAINST THE G ROSS PROFIT MARGIN OF RETAIL AT 24% AS PER THE G.O.MS. I SSUED BY THE GOVERNMENT OF AP. THE ASSESSEE SUBMITTED THAT T HE GROSS PROFIT MARGIN OF 24% AS PER G.O. OF GOVERNMEN T OF AP. IS ABSOLUTELY ON THE HIGHER SIDE. THE LD. AR. CONTE NDED THAT IN MAJORITY OF THE SIMILAR LIQUOR CASES, THE 1TAT, HYDERABAD BENCH HAS BEEN TAKING THE TOTALITY OF THE FACTS INT O CONSIDERATION AND HOLDING THAT THE TOTAL 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. THE A.O. HOWEVER, OBSERVED THAT THE HON'BLE AP. HIG H COURT IN THE CASE OF CIT VS. KAMLEKAR SHANKAR LAL IN ITTA NO.21 OF 2013 DATED 23.07.2013 HAS ESTIMATED THE NET PROF IT AT 5% OF THE PURCHASE OR STOCK PUT TO SALE. HE THEREFO RE, 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, A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APP EAL BEFORE US. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF 'A' BENCH OF THIS TRIBU NAL IN THE CASE OF SRI VENKATESWARA 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 ESTIMATIO N OF INCOME AT 3% OF THE COST OF THE GOODS SOLD. RESPECT FULLY FOLLOWING THE SAME, TO WHICH BOTH OF US ARE SIGNATO RIES, WE DIRECT THE A.O. TO ADOPT 3% OF THE COST OF GOODS SO LD AS THE INCOME OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASS ESSEE DID NOT ARGUE GROUND NOS. 4 AND 5 AND THEREFORE, TH E SAME ARE REJECTED AS NOT PRESSED. 5.1. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO CONSIDER 3% OF THE INCOME OF ASSESSEE SUBJECT TO THE ABOVE AMOUNT NOT BEING LESS THAN THE PROFIT ALREADY DISCLOSED BY ASSESSEE. IN THAT E VENT, THE INCOME DISCLOSED BY ASSESSEE SHOULD BE ACCEPTED. 6.1 AS THE FACTS AND CIRCUMSTANCES IN THE CASE BEFO RE US ARE SIMILAR, RESPECTFULLY FOLLOWING THE DECISIONS O F THE 5 ITA.NO. 1976/HYD/2017 SAI YUVA BAR & RESTAURANT., HYD. COORDINATE BENCHES OF THIS TRIBUNAL, WE DIRECT THE A.O TO TREAT 3% OF THE COST OF GOODS PUT TO SALE AS NET IN COME OF THE ASSESSEE. ACCORDINGLY, THE ASSESSEE APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2019. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEV I) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 27 TH MARCH, 2019 KRK 1) SAI YUVA BAR & RESTAURANT, C/O. SJR & ASSOCIATES , CAS, H.NO. 16-11-740/1, G-4, SHAILAJA ESTATES, GADDIANNARAM, DILSUKHNAGAR, HYD 500060. 2) ITO, WARD 9(3), HYDERABAD. 3) CIT(A)-7, HYDERABAD. 4) PR.CIT-7, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE.