Bajaru Badrinarayana Goud L/r & Father of Sri Late Naveen Goud , Hyderabad V. Income Tax Officer, Ward-15(2), Hyderabad

ITA 249/Hyd/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4970 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-10-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAY DEY
• Assessee Lawyers: S RAMA RAO
• Section: 143(3)

Judgement Text

ITA NO 249 OF 2018 BAJAR U BADRINARAYANA GOUD HYDERABAD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.249/HYD/2018 (ASSESSMENT YEAR: 2013-14) SHRI BAJARU BADRINARAYANA GOUD L/R & FATHER OF SRI LATE NAVEEN GOUD, HYDERABAD PAN: ALJPG5694E VS INCOME TAX OFFICER WARD 15(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI NILANJAY DEY, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2013-14 AGAIN ST THE ORDER OF THE CIT (A)-7, HYDERABAD, DATED 17.11. 2017. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED CIT (A) ERRONEOUS BOT H ON FACTS AND IN LAW. 2. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTI ON OF THE AO IN REJECTING THE BOOKS OF ACCOUNT AND IN RES ORTING TO ESTIMATION OF INCOME. 3. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ESTI MATION OF INCOME AT 5% OF THE PURCHASE PRICE MADE BY THE A O. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. DATE OF HEARING: 04.10.2018 DATE OF PRONOUNCEMENT : 24.10.2018 ITA NO 249 OF 2018 BAJAR U BADRINARAYANA GOUD HYDERABAD. PAGE 2 OF 4 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, ENGAGED IN THE LIQUOR BUSINESS, FILED H IS RETURN OF INCOME FOR THE A.Y 2013-14 ON 24.09.2013, DECLARING AN INCOME OF RS.93,96,670. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT THE ASSESSEE HAD A TURNOVER OF RS.3,65,26,212/- DURING THE YEAR AND RECORDED A NET PROFIT OF RS.5,10,560 WHICH COMES TO 1.4%. THIS ACCORDING TO THE AO WAS TOO LOW. THE ASSESSEES EXPLANATION WAS, THEREFORE, CALLED FOR. THE ASSESSEE STATED THAT HE IS RUNNING A WINE SHOP WHER E ISSUANCE OF SALE BILLS IS NOT POSSIBLE AND THEREFORE, THE INCOM E MAY BE ESTIMATED @ 3% ON COST OF GOODS PUT TO SALE AS HELD BY THE TRIBUNAL IN THE RECENT JUDGMENTS. THE AO WAS ,HOWEV ER, NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT THERE IS A DIFFERENCE RANGING FROM 5.3% TO 27.34% I N MRP OVER THE SALE PRICE AND IN SALE OF LIQUORS, IT RANGE FROM 11 .96% TO 44.16% AND THAT THE ASSESSEE HAS NOT PAID ANY ADDITIONAL L ICENSE FEE TO PURCHASE ANY EXCESS OF REGULAR QUOTA OF THE RELEVAN T A.Y. THEREFORE, HE ESTIMATED THE PROFIT AT 5% OF THE COS T OF THE GOODS PUT TO SALE AND BROUGHT IT TO TAX. AGGRIEVED, THE A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDE R OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT IN SIMILAR SET OF FACTS, WE HAVE ESTIMATED THE NET PROFIT AT 3% OF THE COST OF THE GOODS PUT T O SALE. FOR THE SAKE OF CONVENIENCE AND READY REFERENCE, THE RELEVA NT PARAGRAPHS IN THE CASE OF SRI VENKATESWARA WINES, SCUNDERABAD IN ITA NO.1206/HYD/2015 IS REPRODUCED HEREUNDER: ITA NO 249 OF 2018 BAJAR U BADRINARAYANA GOUD HYDERABAD. PAGE 3 OF 4 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF A CCOUNT AND THEREFORE, THE ESTIMATION OF INCOME IS JUSTIFIED. IT IS ONLY THE R ATE AT WHICH THE INCOME IS TO BE ESTIMATED IS BEFORE US. A.O. HAS ESTIMATED THE INCO ME 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 W INES, NI ZAMABAD (SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL HAS TAKEN NOTE OF THE DECISION OF HON'BLE HIGH COURT OF TELANGANA AND ANDHRA PRADESH IN THE CASE O F 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 ASSES SEE BUT THE ASSESSEE HAD FAILED TO PRODUCE THE SAME. THEREFORE, AO HAD ESTIMATED TH E 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 ASS ESSEE CARRYING ON THE SAME BUSINESS OF SALE OF IMFL HAS ESTIMATED THE INCOME A T 5% OF THE TURNOVER. THIS, IN OUR VIEW, IS NOT JUSTIFIED AS HELD BY THE COORDINAT E BENCH OF THIS TRIBUNAL. THE ITA.NO.1206/HYD/2015 SAI VENKATESWARA WINES, SE CUNDERABAD 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 I N 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.' 5.1. IN THE CASE BEFORE US, THE ASSESSEE IS AGREEAB LE TO THE ESTIMATION OF INCOME AT 3% OF THE COST OF GOODS SOLD. AS THE FACTS BEFORE U S ARE SIMILAR TO THE FACTS BEFORE THE TRIBUNAL IN THE CASE OF VENKATESWARA W INES, NI ZAMABAD (SUPRA) AND THE UNIFORM RATE OF PROFIT CANNOT BE ADOPTED IN THE CAS E OF EVERY ASSESSEE IN SIMILAR BUSINESS, WE ALLOW GROUND NO.2 OF THE ASSESSEE. 4. RESPECTFULLY FOLLOWING THE DECISION OF THE COORD INATE BENCH (TO WHICH BOTH OF US ARE SIGNATORIES), THE AO IS DIRECTED TO ESTIMATE THE NET PROFIT AT 3% OF THE COST OF GOODS PUT TO SALE. THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 24 TH OCTOBER, 2018. VINODAN/SPS ITA NO 249 OF 2018 BAJAR U BADRINARAYANA GOUD HYDERABAD. PAGE 4 OF 4 COPY TO: 1 SRI BAJARU BADRINARAYANA GOUD, L/R & FATHER OF SR I LATE NAVEEN GOUD, 2-9-179/2, SRI RAMA COLONY, UPPAL, HYDERABAD 2 ITO WARD 15(2) IT TOWERS, AC GUARDS, HYDERABAD 3 CIT (A)-7 HYDERABAD 4 PR. CIT 7 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER