Arvapally Chandraiah, Medak V. Income Tax Officer, Ward-1, Siddipet

ITA 2283/Hyd/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6456 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-07-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 29-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J PAVITRAN KUMAR
• Assessee Lawyers: T CHAITANYA KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 2283/HYD/2017 ASSESSMENT YEAR: 2014-15 SRI ARVAPALLY CHANDRAIAH, DUMPALAPALLY (V), DUBBAK (M), MEDAK DIST., [PAN: AMLPA7210R] VS THE INCOME TAX OFFICER, WARD-1, SIDDIPET (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI T. CHAITANYA KUMAR, AR FOR REVENUE : SHRI J. PAVITRAN KUMAR, DR DATE OF HEARING : 26-07-2018 DATE OF PRONOUNCEMENT : 27-07-2018 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-7, HYDERABAD, DATED 04-08-2017, CONFIRMING THE ACTION OF THE ASSESSING OFF ICER (AO) IN REJECTING THE BOOKS OF ACCOUNT, BUT ESTIMATED TH E NET PROFIT AT 4% OF THE COST OF THE GOODS SOLD AS AGAINST 5 % ASSESSED BY AO. 2. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE IS AN IND IVIDUAL, CARRYING ON RETAIL BUSINESS OF LIQUOR, FILED HIS RETU RN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ADMITTING TO TAL INCOME OF RS. 9,54,940/-. IN THE SCRUTINY ASSESSMENT I.T.A. NO. 2283/HYD/2017 :- 2 - : PROCEEDINGS, AFTER VERIFICATION OF VARIOUS DETAILS, AO WAS OF THE OPINION THAT THE BOOKS OF ACCOUNT CANNOT BE RELIED UPON AND RESORTED TO ESTIMATION OF NET PROFIT AT 5% OF THE PURCHASE OR STOCK PUT TO SALE AT RS. 5,35,09,221/-. HE THEREFORE ES TIMATED INCOME AT 5% WHICH WORKS OUT TO RS. 26,75,461/-. AGG RIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), W HO AFTER CONSIDERING ASSESSEES SUBMISSIONS AND FOLLOWING VA RIOUS DECISIONS OF CO-ORDINATE BENCHES, REDUCED THE ESTIMATIO N FROM 5% TO 4%. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 3. EVEN THOUGH ASSESSEE WAS CHALLENGING THE REJECTION OF BOOKS OF ACCOUNT, LD. COUNSEL RESTRICTED THE ARGUMENTS TO THE GROUNDS RAISED AT NOS. 3 & 4 I.E., ESTIMATION OF INCO ME AT 4% IS ON HIGHER SIDE AND VARIOUS CO-ORDINATE BENCHES HA VE DETERMINED THE PROFIT AT 3% OF THE STOCK PUT TO SALE. LD . COUNSEL FILED THE DECISION OF CO-ORDINATE BENCH IN TH E CASE OF SECUNDERABAD WINES VS. ITO IN ITA NO. 181/HYD/2016, DT. 20-07-2016. 4. LD.DR, HOWEVER, SUBMITTED THAT LD.CIT(A) HAS FAIRLY CONSIDERED 4% AS AGAINST 5% ESTIMATED BY THE AO AND R ELIED ON VARIOUS CO-ORDINATE BENCH DECISIONS AS MENTIONED B Y CIT(A) IN THE IMPUGNED ORDER. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS PLACED ON RECORD. AT THE TIME OF HEARING, LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAV OUR OF ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN THE C ASE OF I.T.A. NO. 2283/HYD/2017 :- 3 - : SECUNDERABAD WINES VS. ITO IN ITA NO. 181/HYD/2016, DT. 20-07-2016, WHEREIN THAT BENCH HAS FOLLOWED THE DECISI ON OF A BENCH OF THIS TRIBUNAL IN THE CASE OF SRI VENKATES WARA WINES IN ITA NO. 1206/HYD/2015, DT. 27-11-2015, WHER EIN AFTER TAKING INTO CONSIDERATION SIMILAR CIRCUMSTANCES, THE TRIBUNAL HAS UPHELD THE ESTIMATION OF INCOME AT 3% OF T HE COST OF THE GOODS SOLD. 5.1. IN THE CASE OF SURAJ HARJANI VS. ITO IN ITA NO. 1745/HYD/2017, DT. 11-04-2018, THE CO-ORDINATE BENCH H AS HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE MATERIAL ON RECORD. THERE IS NO DISPUTE WITH REFER ENCE TO THE FACT THAT BOOKS OF ACCOUNT ARE TO BE REJECTED AND THE INCOME IS TO BE ESTIMATED. AO ESTIMATED THE INCOME @ 5% RELYING ON VARIOUS CO- ORDINATE BENCH DECISIONS, WHICH WAS CONFIRMED BY THE CIT(A). HOWE VER, PERUSING THE VARIOUS ORDERS INDICATE THAT A UNIFORM NET PROFIT C ANNOT BE ADOPTED IN EACH AND EVERY CASE OF SIMILAR BUSINESS. THE ESTIMA TION OF NET PROFIT MAY BE ON THE BASIS OF THE FACTS INVOLVED IN EACH A ND EVERY CASE. IN ALL THE ORDERS RELIED UPON BEFORE US, ESTIMATION OF INCOME IS VARYING FROM 2.5% TO 5%. THE LATEST ORDER BY THE SMC BENCH IN THE GROUP CASE OF BADRI SRINIVAS VS. ITO (SUPRA) IS @ 3%. IN THE SAID CASE, THE BENCH HAS CONSIDERED THE ISSUE AS UNDER: 11. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND PERUSED THE RECORD. A.O. AS WELL AS LD. CIT (A) HAVE RELIED UPON THE DECISIONS OF THE ITAT RENDERED IN 2011 / 2012 WHEREAS THE ASSESSING O FFICER, UNDER SIMILAR CIRCUMSTANCES, MADE SCRUTINY ASSESSMENTS WHE REIN THE STRINGENT CHANGE IN POLICY AS WELL AS IMPACT OF THE H IGH COURT DIRECTIONS WERE TAKEN INTO CONSIDERATION FOR THE PUR POSE OF ESTIMATING THE NET INCOME @ 3% AND IN FACT IN THE LAT ER DECISIONS OF THE TRIBUNAL, THE NET INCOME WAS ESTIMATED @ 3% OF T HE COST OF GOODS SOLD. UNDER THESE CIRCUMSTANCES, CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL, CITED (SUPRA), I DIRECT THE A.O. TO ADO PT 3% OF THE COST OF THE GOODS SOLD AS THE INCOME OF THE ASSESSEES. 5.1. KEEPING IN VIEW THE LATEST ORDER OF THE SMC BE NCH AND THE REASONS GIVEN THEREIN, WE ARE OF THE OPINION THAT E STIMATION OF INCOME I.T.A. NO. 2283/HYD/2017 :- 4 - : @ 3% WOULD BE REASONABLE ON THE FACTS OF THE CASE. HOWEVER, AO IS DIRECTED TO KEEP IN MIND THAT THE ESTIMATED INCOME DOES NOT FALL LESS THAN THE PROFIT DECLARED BY ASSESSEE, IN WHICH CASE THE PROFIT DECLARED BY ASSESSEE SHOULD BE ACCEPTED. SUBJECT TO ABOVE DIRECTION, AO IS DIRECTED TO ESTIMATE THE PROFIT @ 3% OF THE C OST OF STOCK PUT TO SALE AND RE-DETERMINE THE TOTAL INCOME, ACCORDIN GLY. 5.2. RESPECTFULLY FOLLOWING THE SAME, I DIRECT THE AO TO ADOPT 3% OF THE COST OF THE GOODS SOLD AS INCOME OF ASSESS EE, SUBJECT TO NOT BEING LESS THAN THE RETURNED INCOME. SINCE ASSE SSEE DID NOT PRESS FOR THE GROUNDS ABOUT REJECTION OF BOOKS OF A CCOUNT, THE GROUNDS PERTAINING TO THAT EXTENT ARE REJECTED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH JULY, 2018 TNMM I.T.A. NO. 2283/HYD/2017 :- 5 - : COPY TO : 1. SRI ARVAPALLY CHANDRAIAH, # 2-89, DUMPALAPALLY ( V), DUBBAK (M), MEDAK DIST., 2. THE INCOME TAX OFFICER, WARD-1, SIDDIPET. 3. CIT (APPEALS)-7, HYDERABAD. 4. PR.CIT-7, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.