Joga Sudhakar, Khammam V. Income Tax Officer, Ward-1, Kothagudem

ITA 24/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6480 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-07-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 03-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Assessee Lawyers: A V RAGHURAM
• Section: 142(1)

Judgement Text

IN THE IN COME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 2 4 /HYD/201 8 ASSESSMENT YEAR: 20 1 4 - 15 JOGA SUDHAKAR , KHAMMAM PAN ATHPJ 0756 E VS. INCOME - TAX OFFICER, WARD 1, KOTHAGUDEM ( APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI A.V. RAGHURAM REVENUE BY : SMT. M. NARMADA DATE OF HEARING 1 7 / 0 7 /2018 DATE OF PRONOUNCEMENT 2 7 / 0 7 / 201 8 O R D E R PER S . RIFAUR RAHMAN , A .M. : T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1 2 / 1 0 / 201 7 OF CIT(A) 7 , HYDERABAD FOR AY 20 1 4 - 15 . 2. BRIEFLY THE FACTS OF THE CASE ARE, THE ASSESSEE, AN INDIVIDUAL, D E RIVING INCOME FROM WINE BUSINESS, FILED HIS RETURN OF INCOME FOR AY 2014 - 15 ON 30/10/2014 DECLARING TOTAL INCOME OF RS. 1 1 , 30 , 4 30/ - . AS THE CASE WAS SELECTED FOR SCRUTINY, STATUTORY NOTICES WERE ISSUED U/S 143(2) AND 142(1) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT) AND IN RESPONSE THE ASSESSEE SUBMITTED THE NECESSARY INFORMATION. 2.1 SINCE THERE WERE DEFICIENCIES NOTICED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, THE AO REJ ECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE NET PROFIT @ 5% OF THE COST OF PURCHASES PUT FOR SALE FROM THE BUSINESS OF INCOME RELYING ON THE DECISION OF THE 2 ITA NO. 2 4 /HYD/1 8 JOGA SUDHAKAR , KHAMMAM HONBLE HIGH COURT OF AP IN THE CASE OF CIT VS. MEKALAL BAL EDDY IN ITTA NO. 28 & 29 OF 2013, DATE D 30/07/2013. 3. WHEN THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AGAINST THE SAID ORDER OF AO, THE CIT(A) CONFIRMED THE ORDER OF AO. THUS, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT( APPEALS) CONFIRMING THE ORDER OF THE AO IS ERRONEOUS BOTH ON FACTS AND IN LAW IN SO FAR AS IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ESTIMATION OF INCOME AT 5% ON STOCK PUT TO SALE BY M ERELY FOLLOWING THE DECISIONS OF THE I.T.A.T., THAT ARE RENDERED ON THE BASIS OF EARLIER EXCISE ACT WITHOUT APPRECIATING THE SUBMISSIONS ON THE NEW EXCISE ACT AND A LATER DECISION OF THE I.T.A.T., IN THE CASE OF LATE SHRI MUSHKAM, ADILABAD IN ITA NO.94/HYD /2017, DT.28 - 4 - 2017. 3. THE LEARNED CIT (A) ERRED IN FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT WHICH NOT IS A RATIO DISCIDENDI. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 5. CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. THE COORDINATE BENCHES OF THIS TRIBUNAL CONSISTENTLY TAKING VIEW THAT ESTIMATION OF INCOME AT 3% OF THE COST OF THE GOODS SOLD IS REASONABLE IN THIS LINE OF BUSINESS. IN THIS CONNECTION, THE ASSESSEE , INTER - ALIA, RELIED ON THE LATEST DECISION OF THE SMC BENCH IN THE CASE OF SRI KARATAM LAXMAIAH IN ITA NO. 22/HYD/2018, ORDER DATED 09/05/2018 WHEREIN IT WAS HELD AS UNDER: 4. AFTER HEARING RIVAL CONTENTIONS I FIND THAT THERE IS A CLEAVAGE OF OPINION BETWEEN DIFFERE NT BENCHES OF THE ITAT ON THIS ISSUE AS TO WHETHER THE PERCENTAGE SHOULD BE 3% OR 5 %. AS THE DECISION IN THE CASE OF SHRI LATE MUSHKAM, ADILABAD (SUPRA), AND IN THE CASE OF SHRI BADRI SRINIVAS AND OTHERS VS. ITO IN ITA NOS. 1515, 1516, 1517 & 1518/HYD/2017 , DATED 08.02.2018 WHICH IS THE LATEST ORDER'S ON THIS ISSUE, I PREFER TO FOLLOW THE SAME AND DIRECT THE A.O TO ESTIMATE THE INCOME OF THE ASSESSEE 3 ITA NO. 2 4 /HYD/1 8 JOGA SUDHAKAR , KHAMMAM @ 3% OF COST OF SALES OF STOCK FOR THE IMPUGNED ASSESSMENT YEAR. 5.1 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 ANDHRA PRADESH INITA.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 OF ACCOUNT OF THE ASSESSEE BUT THE ASSESSEE HAD FAILED TO PRO DUCE 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 CASE 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 SOLD AS THE INCOME OF THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD ARE PARTLY ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2018 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 27 TH JU LY , 2018 KV 4 ITA NO. 2 4 /HYD/1 8 JOGA SUDHAKAR , KHAMMAM C OPY TO: - 1) SRI JOGA SUDHAKAR , C/O S/SHRI K. VASANTKUMAR, AV RAGHURAM, P. VINOD & M. NEELIMA DEVI, ADVOCATES, 610 BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500 001. 2) ITO, WARD 1, KOTHAGUDEM 3) CIT(A) 7 HYDERABAD. 4) PR. CIT - 7 , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE