Narender Reddy Ammareddygari, Medak V. Income Tax Officer, Ward-1, Siddipet

ITA 2285/Hyd/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5230 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 09-05-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 29-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA V

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 2285 /HYD/201 7 ASSESSMENT YEAR: 20 14 - 15 NARENDER REDDY AMMAREDDYGARI, MEDAK. PAN A FQPA 0361M VS. INCOME - TAX OFFICER, W ARD 1 , SIDDIPET ( APPELLANT ) (RESPONDENT) ASSESSEE BY : S MT. S. SANDHYA REVENUE BY : S MT. APARNA V DATE OF HEARING : 09/05 /201 9 DATE OF PRONOUNCEMENT : 15 / 0 5 / 201 9 O R D E R PER S . RIFAUR RAHMAN , A .M. : T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 7 , HYDERABAD , DATED 2 3 / 10 /201 7 FOR AY 20 1 4 - 15 . 2 . BRIEF FACTS OF THE CASE ARE, THE ASSESSEE , AN INDIVIDUAL, CARRYING ON RETAIL BUSINESS OF LIQUOR, FILED HI S RETURN OF INCOME FOR THE AY 201 4 - 15 ELECTR ONICALLY ON 2 3 / 11 /201 4 DECLARING INCOME OF RS. 6,28,550/ - / - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AN D ACCORDINGLY NOTICE U/S 143(2) W AS ISSUED AND SERVED ON THE ASSESSEE ON 19/09/2015. IN RESPONSE TO THE SAID NOTICE, THE AR OF THE ASSESSEE FILED THE REQUIRED INFORMATION CALLED FOR. 2.1 THE AO OBSERVE D THAT THE ASSESSEE HAS NOT SUBMITTED ANY SALES INVOICE/DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM THAT SALES WERE MADE AT A DISCOUNTED PRICE AS AGAINST THE MRP RATE FIXED BY THE GOVERNMENT. HE OPINED THAT WHEN THE SALES RECORDED WERE NOT 2 ITA NO. 2285 /HYD/1 7 NARENDER REDDY A, MEDAK EVIDENCED BY ANY SALE BILLS, IT IS DIFFICULT TO ARRIVE AT THE REAL PROFITS OF THE BUSINESS. 2.2 IN VIEW OF THE ABOVE OBSERVATIONS , CONSIDERING THE NATU RE OF BUSINESS CARRIED ON BY THE ASSESSEE AND EXPLANATION GIVEN BY THE ASSESSEE FOR LOW NET PROFIT AND THE JUDICIAL SETTLEMENT OF THE ISSUE IN THE CASES WHO ARE ENGAGED IN THE TRADING OF LIQUOR, THE AO ESTIMATED THE INCOME OF THE ASSESSEE @ 5% OF THE GOOD S PUT FOR SALE I.E., OPENING STOCK + PURCHASES MADE AS REDUCED BY CLOSING STOCK AS SHOWN IN THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31/03/2014 CLEAR OFF ALL THE EXPENDITURE CLAIMED, THE ADDITION OF WHICH COMES TO RS. 20,36,740/ - . 3 . WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) DISCUSSED THE ISSUE AT LENGTH ELABORATELY WITH CASE LAW AND, CONFIRMED ORDER OF AO. 4 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT. 3) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ESTIMATING THE INCOME AT 5% WITHOUT PROPERLY APPRECIATING THE FACTS STATED BEFORE HIM. 4) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 5 . LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 3 ITA NO. 2285 /HYD/1 7 NARENDER REDDY A, MEDAK 6 . CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. T HE COORDINATE BENCHES OF THIS TRIBUNAL CONSISTENTLY TAKING A VIEW THAT ESTIMATION OF INCOME AT 3% OF THE COST OF THE G OODS SOLD IS REASONABLE IN THIS LINE OF BUSINESS. IN THE CASE OF SRI VENKATESWARA WINES IN ITA NO. 1206/HYD/2015, DATED 27/11/2015 FOR AY 2011 - 12, THE COORDINATE BENCH HAS HELD AS UNDER: 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD , WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND THEREFORE, THE ESTIMATION OF INCOME IS JUSTIFIED. IT IS ONLY THE RATE AT WHICH THE INCOME IS TO BE ESTIMATED IS BEFORE US. A.O. HAS ESTIMATED THE INCOME AT 5% OF THE COST OF GOODS SOLD , WHILE THE ASSESSEE IS SEEKING THE ESTIMATION AT 3% OF THE COST OF GOODS SOLD. WE FIND THAT IN THE CASE OF VENKATESWARA WINES, NIZAMABAD (SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL HAS TAKEN NOTE OF THE DECISION OF HON'BLE HIGH COURT OF TELANGANA AND A NDHRA PRADESH IN ITA.NO.1198/HYD/2015 SAI VENKATESWARA WINES, SECUNDERABAD THE CASE OF CIT VS. KAMLEKAR SHANKAR LAL (SUPRA) TO HOLD AS UNDER : '6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE AO HAS CALLED FOR BOOKS O F ACCOUNT OF THE ASSESSEE BUT THE ASSESSEE HAD FAILED TO PRODUCE THE SAME. THEREFORE, AO HAD ESTIMATED THE INCOME OF THE' ASSESSEE AT 2.5% OF THE TURNOVER. THE CIT WANTS THE SAME TO BE ESTIMATED AT 5% OF THE TOTAL TURNOVER BECAUSE THE TRIBUNAL IN THE CASE OF AN ASSESSEE CARRYING ON THE SAME BUSINESS OF SALE OF IMFL HAS ESTIMATED THE INCOME AT 5% OF THE TURNOVER. THIS, IN OUR VIEW, IS NOT JUSTIFIED AS HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL. THE UNIFORM NET PROFIT CANNOT BE ADOPTED IN EACH AND EVERY CA SE OF SIMILAR BUSINESS. ESTIMATION OF NET PROFIT MUST BE ON THE BASIS OF FACTS INVOLVED IN EACH AND EVERY CASE. THEREFORE, IN OUR VIEW, THERE IS NO ERROR COMMITTED BY THE AU IN ESTIMATING THE PROFIT AT 2.5% OF THE TOTAL TURNOVER. THUS GROUNDS OF APPEAL NO. 2 & 3 ARE ALLOWED.' THEREFORE, WE DIRECT THE AO TO ADOPT 3% OF THE COST OF GOODS OF LIQUOR SOLD AS THE INCOME OF THE ASSESSEE. ACCORDINGLY, GROUND S RAISED BY THE ASSESSEE ON THIS ISSUE ARE PARTLY ALLOWED. 4 ITA NO. 2285 /HYD/1 7 NARENDER REDDY A, MEDAK 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . PRONOUNCED IN THE OPEN COURT ON 15 TH MAY , 201 9 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 15 TH MAY , 201 9 KV C OPY TO: - 1. SRI NARENDER REDDY AMMAREDDYGARI, PROP. SAMRAT BEER & WHISKY, 1 - 10 - 71/E&F, AUTO NAGAR STREET, MEDAK 502 110. 2. ITO, WARD 1, SUBHASH ROAD, SIDDIPET 502 103 3. CIT(A) 7, HYDERABAD 4. PR. CIT 7, HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE