ITO, Ward-1, Nalgonda V. M/s Kakatiya Bar & Restaurant,, Nalgonda District

ITA 2026/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59150 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, AM & SMT. ASHA VIJAYARAGHAVAN, JM ITA NO.2026/HYD/2011 ASSESSMENT YEAR 2008-09 THE ITO, WARD 1, NALGONDA VS M/S KAKATIYA BAR & RESTAURANT, NALGONDA DISTRICT (PAN AAFFK1316E) APPELLANT RESPONDENT APPELLANT BY : SHRI T. DIWAKAR PRASAD RESPONDENT BY : NONE DATE OF HEARING : 11.1.2012 DATE OF PRONOUNCEMENT : 20.1.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM . THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) VI, HYDERAB AD DATED 26.9.2011 AND IT PERTAINS TO THE ASSESSMENT YEAR 20 08-09. 2. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS CARRYING ON THE BUSINESS OF RETAIL TRADE IN LIQUOR. RETURN OF INCOME WAS FILED ON 1.9.2008 ADMITTING TOTAL INCOME AT RS.33,410/-. THE ENTIRE PURCHASES OF THE ASSESSEE ARE FROM THE ANDHRA PRADESH BEVERAGES CORPORATION LTD. THE ASSESSING OFFICER OBSERVED THAT AS PER THE G.O.M.S. NO.184 DATED 7.2.2005 OF THE GOVT. OF ANDHRA PRADESH, THE RETAILERS MARGIN WAS FIXED AT 27% FOR ORDINARY LIQ UOR ITEMS, 20% FOR MEDIUM AND PREMIUM ITEMS AND 25% FOR BEER. SINCE THE ASSESSEE WAS UNABLE TO PRODUCE THE EVIDEN CE FOR ITS TURNOVER IN THE FORM OF SALE BILLS, THE ASSESSI NG OFFICER ITA NO.2026 OF 2011 KAKATIYA BAR & RESTAURANT, NALGONDA 2 COMPUTED THE TURNOVER BY ADOPTING THE PROFIT MARGIN AS 27% AND ADDED THE DIFFERENCE TO THE INCOME OF THE A SSESSEE AS SUPPRESSED TURNOVER. THE ASSESSEE HAS AGITATED AGAINST THIS ESTIMATION OF SUPPRESSED SALES AND ITS ASSESSM ENT AS THE ASSESSEES INCOME. 3. AGGRIEVED ASSESSEE PREFERRED APPEAL. THE CIT(A ), FOLLOWING HIS APPELLATE ORDER IN THE CASE OF M/S. KANAKA DURGA WINES FOR THE ASSESSMENT YEAR 2004- 05, DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE TAXABLE INCOME OF THE ASSESSEE BY ESTIMATING THE NET PROFIT AT 5% OF THE STOCKS PUT TO SALE, WHETHER PREMIUM NON-PREMIUM OR BEER ITEMS, DURING THE YEAR. HE ALS O DIRECTED THAT AS THE BOOKS ARE REJECTED, THE INCOME IS TO BE ESTIMATED NET OF ALL DEDUCTIONS. 4. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFO RE US. 5. I FIND THAT THE ISSUE IS SQUARELY COVERED BY TH E DECISION OF THE TRIBUNAL IN ITA NO.591/H/2011 DATED 28.7.201 1 IN THE CASE OF KANAKA DURGA WINES WHEREIN THE TRIBUNAL HAS DIRECTED AS UNDER: WE FIND THAT THE ASSESSING OFFICER HAS RIGHTLY ADO PTED THE SALE PRICE AT 30% OVER THE COST OF PURCHASE TO ARRI VE AT THE UNDERSTATEMENT OF SALES OF RS.93,65,993/- BY THE AS SESSEE. BUT AT THE SAME TIME, THE ENTIRE UNDERSTATEMENT OF SALES CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSE SSEE FOR THE YEAR UNDER CONSIDERATION. IT IS WELL SETTLED L AW THAT THE BEST GUIDE FOR ESTIMATION OF INCOME AFTER REJECTING THE BOOKS OF ACCOUNT IS EITHER PAST HISTORY OF THE ASSESSEE O R ANY OTHER ITA NO.2026 OF 2011 KAKATIYA BAR & RESTAURANT, NALGONDA 3 COMPARABLE CASES. THE LEARNED COUNSEL FOR THE ASSE SSEE CLEARLY DEMONSTRATED BEFORE US THAT THE ASSESSEES NET PROFIT IN THE PAST IS BETWEEN 0.12% TO 0.28% OF SALES. TH E COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MAN JIT SINGH BAGGA VS. ITO IN ITA NO.371 AND OTHERS DATED 30 TH SEPTEMBER, 2010 HELD THAT THE ESTIMATION OF NET PRO FIT AT 3% IS REASONABLE. IN VIEW OF THIS MATTER, ENDS OF JUS TICE WOULD BE MET IF WE ESTIMATE THE NET PROFIT OF THE ASSESSE E AT 3% OF THE PURCHASES OR STOCK PUT FOR SALE DURING THE YEAR UNDER CONSIDERATION AS AGAINST THE ESTIMATION OF 5% MADE BY THE CIT(A). 6. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIB UNAL, THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE NET P ROFIT AT 3% OF THE PURCHASES OR STOCK PUT FOR SALE DURING THE Y EAR, SUBJECT TO THE ASSESSED INCOME BEING NOT LESS THAN THE RETURNED INCOME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON: 20. 1.2012 SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 2012 COPY FORWARDED TO: 1. M/S KAKATIYA BAR & RESTAURANT, 20-240, VISWANATHA COMPLEX, SAGAR ROAD, MIRALAGUDA, NALGONDA DISTRICT. 2. THE ITO WARD-1, NALGONDA 3. THE CIT(A) VI , HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/