Rajesh Govindram Kanodia , Hyderabad V. Income Tax Officer, Ward-4(5), Hyderabad

ITA 256/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8877 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 17-02-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 27-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Tax effect
• Section: 201; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 256 /HYD/201 9 ASSESSMENT YEAR: 201 4 - 15 SHRI RAJESH GOVINDRAM KANODIA HYDERABAD [PAN: A JZPK6458Q ] VS. INCOME TAX OFFICER WARD 4 (5 ) HYDERABAD ( APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.A. SAI PRASAD, ADV. REVENUE BY : S MT. NIVEDITA BISWAS, DR DATE OF HEARING: 17 /02/2021 DATE OF PRONOUNCEMENT: 23 /0 3 /2021 ORDER PER SMT. P. MADHAVI DEVI, J.M TH IS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF THE CIT(A) - 1 , HYDERABAD, DATED 17.12.2018 FOR A.Y. 201 4 - 15. 2. BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE, AN INDIVIDUAL , ENGAGED IN THE BUSINESS OF WHOLESALE TRADE OF EDIBLE OIL, FILED HIS ITA 256/H/19 AY 2014 - 15 RAJESH GOVINDRAM KANODIA, HYD 2 RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.9,98,650/ - . D URING THE ASSESSMENT PROCEEDINGS U /S 143 (3) OF THE ACT, THE ASSESSEE WAS DIRECTED TO PRODUCE A NOTE ON HIS BUSINESS ACTIVITY , C OPY OF RETURN OF INCOME , FULL Y AUDITED BALANCE SHEET, PROFIT AND LOSS ACCOUNT, ANNEXURES , COMPUTATION OF TOTAL INCOME AND BANK STATEMENTS ETC. HOWEVER , ASSESSEE DID NOT FURNISH ANY EVIDENCE AND THEREFORE , THE AO SOUGHT TO COMPLETE THE ASSESSMENT BY ESTIMATING INCOME OF ASSESSEE AT 8% OF THE TURNOVER. AT THIS JUNCTURE , ASSESSEE A PPEARED AND EXPRESSED HIS INABILITY TO PRODUCE THE EVIDENCE . DURING THE STATEMENT RECORDED UNDER OATH AFTER ISSUANCE OF SUMMONS U/S 131 O F THE ACT, ASSESSEE WAS REQUIRED TO RECONCILE THE REPORTED TURNOVER OF RS.32,86,31,568/ - AS AGAINST THE TOTAL CREDITS OF RS.113,61,50,264/ - INTO THE ASSESSEES CURRENT BANK A/C WITH SBI. AT THIS POINT, THE ASSESSEE ADMITTED THAT HIS CORRECT TURNOVER WAS R S.113,61,50,264/ - AND THAT HIS NET INCOME WOULD BE RS. 37,87,167/ - ON A TURNOVER OF RS. 113,61,50,264/ - AT THE RATE OF AROUND RS. 2/ - PER 10 KG OF EDIBLE OIL SOLD BY HIM . THE AO HOWEVER WAS NOT CONVINCED WITH ASSESSEES SUBMISSIONS AND THEREFORE HE ESTIMATED NET INCOME AT 8% OF THE TOTAL TURNOVER OF RS113,61,50,264/ - THAT IS RS. 9,08,92,020/ - AND BROUGHT IT TO TAX. 2.1. AG GRIEVED , ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE ESTIMATION OF INCOME AT 8% OF THE GROSS RECEIPTS IS EXCESSIVE AND THAT THE NET PROFIT IN THIS BUSINESS IS IN THE RANGE OF 0. 20 % TO 0.26% ONLY. HE ALSO PLACED RELIANCE UPON THE CB DT S C IRCULAR /GUIDANCE NOTE/INSTRUCTION F.NO.2/48/68 - IT(IMV) DATED ITA 256/H/19 AY 2014 - 15 RAJESH GOVINDRAM KANODIA, HYD 3 26.02.1969 AND ALSO THE DECISION OF ITAT VIZAG IN THE CA SE OF K.SRINIVASA RAO AND OTHERS REPORTED IN 125 TTJ 500 AS PER WHICH THE AO OUGHT TO HAVE ARRIVED AT THE NET WORTH AND MADE ASSESSMENT. HOWEVER , NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE THE CIT(A) , DUE TO WHICH APPEAL OF TH E ASSESSEE WAS DISMISSED. 2.1. TH E ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL. 1. THE LD.CIT(A) IS NOT JUSTIFIED IN FACTS AND CIRCUMSTANCES OF THE CASE, TO DISPOSE OF THE APPEAL WITHOUT GRANTING TIME ASKED FOR. 2. THE LD.CIT(A) IS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IN CONFIRMING THE ESTIMATE OF INCOME AT 8%, WHICH IS ON HIGHER SIDE IN THIS LINE OF BUSINESS. TOTAL TAX EFFECT: RS.3,05,67,966/ - . 3. THE L D. COUNSEL FOR TH E ASSESSEE STATED THAT THE NET PROFIT REPORTED BY THE ASSESSEE IS AROUND 0.2 0 % TO 0. 26% AND SINCE AO DID NOT FIND ANY DEFICIENCIES, THE AO OUGHT TO HAVE ACCEPT ED THE SAID PERCENTAGE OFFERED BY THE ASSESSEE . HE SUBMITTED THAT IN SIMI LAR CASE S OF ASSESSES , NET PROFIT ESTIMATED / ACCEPTED BY THE AO WAS AROUND 0.2% TO A MAXIMUM OF 2.55%. THE DETAILS OF SUCH ASSESSES ARE ALSO FILED BEFORE US. HE THEREFORE REQUESTED THAT THE NET PROFIT OFFERED BY ASSESSEE ON ITS GR OSS TURN OVER BE ACCEPTED. THE DR , HOWEVER SUBMITTED THAT ASSESSEE H AS NOT FURNISHED ANY DETAILS BEFORE THE AO OR THE C IT(A) AND THEREFORE ESTIMATION OF NET PROFIT AT 8% OF THE GR O SS TURNOVER AS PER BANK STATEMENT OF THE ASSESSEE IS TO BE UPHELD . ITA 256/H/19 AY 2014 - 15 RAJESH GOVINDRAM KANODIA, HYD 4 4. HAVING REGARD TO RIVAL CONTENTIONS AND MATERIAL PLACED ON RECORD AS WELL AS CASE L AWS CITED, WE FIND THAT THE ASSESSEE HA S REPORTED A TURN OVER OF RS. 32,86,31,568/ - ONLY AS AGAINST THE TOTAL CREDITS OF RS. 113,61,50,264/ - INTO HIS BANK A/C . THE ASSESSEE HAS NOT S UBMITTED HIS BOOKS OF ACCOUNTS , THEREFORE THE AO WAS CONSTRAINED TO ESTIMATE THE NET PROFIT ON THE TURNOVER. HOWEVER , THE AO HAS ADOPTED 8% OF THE TURN OVER , WHEREAS IN THE PAPER BOOK FILED BY ASSESSEE , HE HAS BROUGHT OUT THE INSTANCES OF SIMILAR ASSESSE S WHERE NET PROFIT HAS BEEN ESTIMATED / ACCEPTED AT A MAXIMUM OF 2.55% FOR AY 2013 - 14 . S INCE NONE APPEARED FOR ASSESSEE BEFORE THE CIT (A) , THE APPEAL OF ASSESSEE WAS DISMISSED FOR NON - APPEARANCE . T HEREFORE , ONLY TO GIVE THE ASSESSEE ANOTHER OPPORTUNITY TO EXPLAIN THE ISSUE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE BACK TO THE FILE OF CIT (A) WITH A DIRECTION TO RECONSIDER THE ISSUE IN ACCORDANCE WITH LAW AND ALSO IN ACCORDANCE WITH COMPARATIVE CASES. ASSESSEE IS DIRECTED TO PRODUCE ALL THE RELEVANT MATERIAL BEFORE THE CIT (A) . 5. IN THE RESULT , ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD M ARCH, 2021 . SD/ - SD/ - (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 23 RD MARCH, 2021 . * GMV ITA 256/H/19 AY 2014 - 15 RAJESH GOVINDRAM KANODIA, HYD 5 COPY TO: 1 SHRI RAJESH GOVINDRAM KANODIA, C/O CH. PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, ASHOK NAGAR, HYDERABAD 500 020. 2 (I) ITO WARD 4 ( 5 ) HYDERABAD (II) ACIT, RANGE 4 , HYDERABAD 3 CIT (A) - 1 HYDERABAD 4 PR. CIT 1 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE