Srinivas Vudutha, Hyderabad V. Income Tax Officer, Ward-15(3), Hyderabad

ITA 2011/Hyd/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4552 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2014-2015
• Appeal Filed On: 05-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: HARJEET SINGH
• Keywords: Business income

Judgement Text

ITA NO 2011 OF2017 SR INIVAS VUDUTHA HYDERABAD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.2011/HYD/2017 (ASSESSMENT YEAR: 2014-15) SHRI SRINIVAS VUDUTHA HYDERABAD PAN: ABSPV5179J VS INCOME TAX OFFICER WARD 15(3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI HARJEET SINGH FOR REVENUE : SHRI NILANJAN DEY, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2014-15 AGAIN ST THE ORDER OF THE CIT (A)-7, HYDERABAD, DATED 24.08. 2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y 2014-15 ON 9.9.2014 DECLARING TOTAL INCOME OF RS.11,08,818/- A FTER CLAIMING DEDUCTION OF RS.7,446/-UNDER CHAPTER VIA. THE RETUR N WAS SELECTED FOR SCRUTINY UNDER CASS FOR THE REASON LO W INCOME FROM TCS RECEIPTS LIQUOR. THEREFORE, ASSESSMENT U/S 143 (3) WAS INITIATED AND THE ASSESSEE WAS DIRECTED TO FURNISH THE REQUIRED INFORMATION ALONG WITH THE BOOKS OF ACCOUNT AND VOU CHERS. THE ASSESSEE, HOWEVER, EXPRESSED HIS INABILITY TO PRODU CE THE SAME DATE OF HEARING : 05.02.2019 DATE OF PRONOUNCEMENT : 15.02.2019 ITA NO 2011 OF2017 SR INIVAS VUDUTHA HYDERABAD. PAGE 2 OF 4 AND REQUESTED THE AO TO TREAT 2 TO 3% OF THE TURNOV ER AS PROFIT IN HIS CASE. THE AO, HOWEVER, ESTIMATED THE INCOME AT 5% OF THE PURCHASES REDUCED BY CLOSING STOCK AS SHOWN IN THE P&L A/C FOR THE A.Y 2013-14 AND ACCORDINGLY BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEA L BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE APPELLATE ORDER OF THE COMMISSIONER OF INCO ME (APPEALS)-7, HYDERABAD, IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE APPELLATE ORDER OF THE COMMISSIONER OF INCOM E (APPEALS)-7, HYDERABAD, IS NOT JUSTIFIED AND IS PREJUDICIAL TO THE APPELLANT AND CONTRARY TO LAW AN D CIRCUMSTANCES OF THE CASE. 3. THE APPELLATE ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-7, HYDERABAD, UPHOLDING THE ASSESSMENT ORDER UNDER UL S 143 (3) OF THE INCOME T AX ACT, IS NOT GOOD IN LAW AS THE ASSESSING OFFICER ESTIMATION OF BUSINESS INCOME @ 5% ON NET PURCHASES (STOCK PUT TO SALE) IS UNREASONABLE AND NOT JUSTIFI ED AND NOT ON PAR WITH PROFITS EARNED IN THE RETAIL LI QUOR TRADE BUSINESS AND IS BASED ON ESTIMATION, ASSUMPTIONS, AND SURMISES WITHOUT ANY CORROBORATIVE EVIDENCE, WHICH IS UNDEMOCRATIC AND UNTENABLE. 4. THE LEARNED COMMISSIONER OF INCOME (APPEALS)-7 I N HIS APPELLATE ORDER OF HAS QUOTED AND RELIED ON FIV E CASE LAWS OF IT AT IN UPHOLDING THE STAND OF THE ASSESSING OFFICER IN ESTIMATING INCOME @ 5% STOCK P UT USE IN LIQUOR TRADE BUSINESS BUT ALSO CONTRADICTED HIS OWN STATEMENT BY STATING UNIFORM PROFIT CANNOT BE ADOPTED IN EACH AND EVERY CASE OF SIMILAR BUSINESS AS IT HAS BEEN DECIDED IN VARIOUS CASES OF JURISDICTIO N IT AT THAT UNIFORM PROFIT CANNOT BE ADOPTED IN EACH AN D EVERY CASE OF SIMILAR BUSINESS THUS RENDERING THE S AID ORDER NOT BE JUSTIFIED. 5. THE LEARNED COMMISSIONER OF INCOME (APPEALS)-7 I N HIS APPELLATE ORDER UPHELD THE ESTIMATION INCOME @ 5% STOCK PUT USE STATING THAT THE APPELLANTS BUSINE SS IS SITUATED IN VERY CROWDED MUNICIPAL CITY LIMITS O F HYDERABAD WHEREIN HUGE DEMAND EXISTED FOR LIQUOR PRODUCTS DEALT BY THE APPELLANT, BUT THE FACT IS TH AT THE APPELLANT BUSINESS LOCATION IS NOT TO HIS ADVANTAGE AS ITA NO 2011 OF2017 SR INIVAS VUDUTHA HYDERABAD. PAGE 3 OF 4 IT SITUATED AT PLACE WHICH HAS NO PROPER DIRECT APPROACH OF ASSESSES TO CUSTOMERS AND IS ALSO SITUATED IN AREA WHICH HAS SIX LIQUORS SHOPS IN RAD IUS OF ONE KILOMETER AND IS RUNNING BUSINESS UNDER HIGH PRESSURE OF COMPETITION WHEREIN THE EARNINGS 5 % OF NET PROFIT IS IMPOSSIBLE. 6. THE APPELLATE ORDER OF THE COMMISSIONER OF INCOM E (APPEALS)-7, HYDERABAD, UPHOLDING THE STAND OF THE ASSESSING OFFICER IN ESTIMATING INCOME @ 5% STOCK P UT USE IS NOT JUSTIFIED AS THERE ARE DECIDED CASES OF THE HONORABLE APPELLATE TRIBUNAL ALLOWING THE ESTIMATIO N OF INCOME AT MUCH LOWER RATE FOR THE LIQUOR TRADE BUSINESS. 7. THE LEARNED COMMISSIONER OF INCOME (APPEALS)-7 APPELLATE ORDER UPHOLDING THE ESTIMATION INCOME @ 5 % STOCK PUT USE IS NOT JUSTIFIED AS WHEN THE APPELLAN T HAS FILED HIS RETURNS DECLARING TRUE AND CORRECT IN COME BASED ON OF BOOKS OF ACCOUNTS THEN WHY THE ASSESSIN G OFFICERS ASSUMPTIVE ESTIMATION OF BUSINESS INCOME T O BE ALLOWED WITHOUT STATING THE NATURE OF DEFECTIVEN ESS OF BOOKS ACCOUNTS. 8. THE APPELLANT CRAVES, LEAVES TO ADD, ALTER, AMEN D OR DELETE ANY OTHER GROUNDS AS THE OCCASION MAY REQUIR E DURING THE COURSE OF HEARING OF THE APPEAL BEFORE I TAT. 9. FOR THESE AND OTHER REASONS, THAT WILL BE URGED AT THE TIME HEARING OF THE APPEAL BEFORE THE ITAT, THE APPELLANT PRAYS THAT THE RELIEF AS DETAILED BE GRAN TED. 10. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SUBMISSIONS MADE BE FORE THE AUTHORITIES BELOW, PLACED RELIANCE UPON VARIOUS DEC ISIONS OF THE TRIBUNAL IN WHICH THE TRIBUNAL HAD DIRECTED THE AO TO ESTIMATE THE INCOME AT 3% OF THE COST OF GOODS PUT TO SALE. IN THE CASE OF SECUNDERABAD WINES VS. ITO IN ITA NO.181/HYD/2016, DATED 20.07.2016, THIS TRIBUNAL HAS HELD AS UNDER: 3. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FA VOUR OF ITA NO 2011 OF2017 SR INIVAS VUDUTHA HYDERABAD. PAGE 4 OF 4 THE ASSESSEE BY THE DECISION OF A BENCH OF THIS T RIBUNAL IN THE CASE OF SRI VENKATESWARA WINES IN ITA NO.1206/HYD/2015 DATED 27.11.2015 FOR THE A.Y 2011- 12 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 FOLLOWING THE SAME, TO WHICH BOTH OF US ARE SIGNATO RIES, WE DIRECT THE AO TO ADOPT 3% OF THE COST OF GOODS SOLD AS THE INCOME OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT ARGUE GROUND NOS.4 AND 5 AND THERE FORE, THE SAME ARE REJECTED AS NOT PRESSED. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO T O TREAT 3% OF THE COST OF GOODS PUT TO SALE AS HIS NET PROFIT FRO M THE RETAIL BUSINESS OF SALE OF WINES. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 15 TH FEBRUARY, 2019. VINODAN/SPS COPY TO: 1 SHRI SRINIVAS VUDUTHA, HOUSE NO.12-10-12, SITHAPH ALMANDI, SECUNDERABAD 500361 2 ITO WARD 15(3) IT TOWERS, HYDERABAD 3 CIT (A)-7 HYDERABAD 4 PR. CIT 7 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER