Kanchi Durga Prasad, Hyderabad V. Income Tax Officer, Ward-11(3), Hyderabad

ITA 352/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4603 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-08-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 20-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: K C DEVADAS
• Keywords: Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 352 & 353/HYD/2018 ASSESSMENT YEARS: 2013-14 & 2014-15 KANCHI DURGA PRASAD, HYDERABAD. PAN CPMPK4173B VS. ITO, WARD 11(3), HYDERABAD. (APPLICANT) (RES PONDENT) ASSESSEE BY : SHRI K.C. DEVADAS REVENUE BY : SHRI M. SITARAM DATE OF HEARING : 02-08-2018 DATE OF PRONOUNCEMENT : 10-08-2018 ORDER PER P. MADHAVI DEVI, J.M.: BOTH ARE ASSESSEES APPEALS AGAINST THE ORDER OF T HE CIT(A)-5, HYDERABAD DATED 30.06.2017 FOR THE A.YS 2 013- 14 AND 2014-15. THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL FOR THE A.Y 2013-14 AND ISSUE IS SAME FOR THE A.Y 2014-15 AS WELL: 1. THE ORDER OF THE HONBLE CIT(A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HONBLE CIT(A) OUGHT TO HAVE HELD THAT THE A CTION OF THE A.O WITH REGARD TO REJECTION OF ACCOUNT BOOKS A S ILLEGAL, IMPROPER AND WITHOUT BRINGING ANY MATERIAL ON RECOR D. 3. THE HONBLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE ASSESSEE MAINTAINED REGULAR ACCOUNT BOOKS AND VOUCH ERS AND FILED AUDITED FINANCIAL STATEMENTS ALONG WITH RETUR N OF INCOME 2 ITA.NO. 352 & 353/HYD/2018 SHRI KANCHI DURGA PRASAD, HYDERABAD. AND THEREFORE THE A.O OUGHT NOT HAVE REJECTED THE B OOK RESULT DECLARED. 4. THE HONBLE CIT(A) OUGHT TO HAVE OBSERVED THAT E STIMATION OF PROFIT AT 5% IN RESPECT OF IMFL BUSINESS WAS INJ UDICIOUS AND ILLEGAL AND THEREFORE OUGHT TO ACCEPT THE BOOK RESU LTS DECLARED BY THE ASSESSEE. 5. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF H EARING. 1.1 AT THE OUTSET, IT IS NOTICED THAT THERE IS A DE LAY OF 134 DAYS IN FILING OF THE APPEAL BEFORE THE TRIBUNAL AN D IN THE APPLICATION FOR CONDONATION OF THE DELAY, IT IS MEN TIONED THAT THE ASSESSEE HAD MISPLACED THE FILE AND IT WAS ONLY ON RECEIPT OF NOTICE FOR PAYMENT OF DEMAND THAT THE AS SESSEE TRACED OUT THE FILE AND THUS THERE WAS A DELAY. WE ARE SATISFIED WITH THE REASONS GIVEN FOR CONDONATION OF DELAY BY THE ASSESSEE AND THEREFORE WE CONDONE THE DELAY OF 134 DAYS. 2. FURTHER, WE FIND THAT THE ASSESSEE HAS INVOLVED IN THE BUSINESS OF SALE OF LIQUOR AND THE A.O HAD REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME AT 8% OF THE SALE RECEIPTS, WHEREAS THE CIT(A) HAS RESTRICTED IT TO 5% OF THE COST OF GOODS PUT TO SALE. WE FIND THAT IN SIM ILAR CASES, THE TRIBUNAL HAS RESTRICTED THE INCOME TO 3% OF THE COST OF GOODS PUT TO SALE. FOR THE SAKE OF READY REFERENCE , THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI TANNEE RU 3 ITA.NO. 352 & 353/HYD/2018 SHRI KANCHI DURGA PRASAD, HYDERABAD. MADHAVA RAO VS. ITO IN ITA NO. 42/HYD/2018 IS REPRODUCED HERE UNDER: 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE ORDERS PLACED ON RECORD. AT THE TIME OF HEARING, LD . COUNSEL FOR ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FA VOUR OF ASSESSEE BY 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, WHEREIN THAT BENCH HAS FOLLOWED THE DECISI ON OF A BENCH OF THIS TRIBUNAL IN THE CASE OF SRI VENKATESW ARA WINES IN ITA NO. 1206/HYD/2015, DT. 27-11-2015, WHEREIN AFTE R TAKING INTO CONSIDERATION SIMILAR CIRCUMSTANCES, THE TRIBU NAL HAS UPHELD THE ESTIMATION OF INCOME AT 3% OF THE COST O F THE GOODS SOLD. 5.1. IN THE CASE OF SURAJ HARJANI VS. ITO IN ITA N O. 1745/HYD/2017, DT. 11-04-2018, THE CO-ORDINATE BENC H HAS HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE MATERIAL ON RECORD. THERE IS NO DISPUTE WITH RE FERENCE TO THE FACT THAT BOOKS OF ACCOUNT ARE TO BE REJECTE D AND THE INCOME IS TO BE ESTIMATED. AO ESTIMATED THE INCOME @ 5% RELYING ON VARIOUS CO-ORDINATE BENCH DECISIONS, WHI CH WAS CONFIRMED BY THE CIT(A). HOWEVER, PERUSING THE VARIOUS ORDERS INDICATE THAT A UNIFORM NET PROFIT C ANNOT BE ADOPTED IN EACH AND EVERY CASE OF SIMILAR BUSINESS. THE ESTIMATION OF NET PROFIT MAY BE ON THE BASIS OF THE FACTS INVOLVED IN EACH AND EVERY CASE. IN ALL THE ORDERS RELIED UPON BEFORE US, ESTIMATION OF INCOME IS VARYING FRO M 2.5% TO 5%. THE LATEST ORDER BY THE SMC BENCH IN THE GRO UP 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 SUBMISSI ONS AND PERUSED THE RECORD. A.O. AS WELL AS LD. CIT (A) HAV E RELIED UPON THE DECISIONS OF THE ITAT RENDERED IN 2011 / 2 012 WHEREAS THE ASSESSING OFFICER, UNDER SIMILAR CIRCUMSTANCES, MADE SCRUTINY ASSESSMENTS WHEREIN TH E STRINGENT CHANGE IN POLICY AS WELL AS IMPACT OF THE HIGH COURT DIRECTIONS WERE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF ESTIMATING THE NET INCOME @ 3% AND IN FA CT IN THE LATER DECISIONS OF THE TRIBUNAL, THE NET INCOME WAS ESTIMATED @ 3% OF THE COST OF GOODS SOLD. UNDER THE SE CIRCUMSTANCES, CONSISTENT WITH THE VIEW TAKEN BY TH E 4 ITA.NO. 352 & 353/HYD/2018 SHRI KANCHI DURGA PRASAD, HYDERABAD. TRIBUNAL, CITED (SUPRA), I DIRECT THE A.O. TO ADOPT 3% OF THE COST OF THE GOODS SOLD AS THE INCOME OF THE ASSESSE ES. 5.1. KEEPING IN VIEW THE LATEST ORDER OF THE SMC BE NCH AND THE REASONS GIVEN THEREIN, WE ARE OF THE OPINIO N THAT ESTIMATION OF INCOME @ 3% WOULD BE REASONABLE ON TH E FACTS OF THE CASE. HOWEVER, AO IS DIRECTED TO KEEP IN MIND THAT THE ESTIMATED INCOME DOES NOT FALL LESS THAN T HE PROFIT DECLARED BY ASSESSEE, IN WHICH CASE THE PROFIT DECL ARED BY ASSESSEE SHOULD BE ACCEPTED. SUBJECT TO ABOVE DIREC TION, AO IS DIRECTED TO ESTIMATE THE PROFIT @ 3% OF THE C OST OF STOCK PUT TO SALE AND RE-DETERMINE THE TOTAL INCOME , ACCORDINGLY. 5.2. IN THE OTHER CASES ALSO RELIED UPON BY THE LD. COUNSEL, THE CO-ORDINATE BENCHES HAVE FIXED THE RATE OF NET PROF IT AT 3%. RESPECTFULLY FOLLOWING THE SAME, I DIRECT THE AO TO ADOPT 3% OF THE COST OF THE GOODS SOLD AS INCOME OF ASSESSEE, S UBJECT TO NOT BEING LESS THAN THE RETURNED INCOME. SINCE ASSESSEE DID NOT PRESS FOR THE GROUNDS ABOUT REJECTION OF BOOKS OF A CCOUNT, THE GROUNDS PERTAINING TO THAT EXTENT ARE REJECTED. 3. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL, WE DIRECT THE AO TO ESTIMATE THE PROFIT @ 3% OF THE COST OF THE GOODS PUT TO SALE. ACCORDINGLY, TH E GROUNDS RAISED BY THE ASSESSEE ARE CONSIDERED AS ALLOWED. 4. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2018. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 10 TH AUGUST, 2018 KRK/PVV 5 ITA.NO. 352 & 353/HYD/2018 SHRI KANCHI DURGA PRASAD, HYDERABAD. 1) SHRI KANCHI DURGA PRASAD, 10-03.19, PIPELINE ROA D, SANATHNAGAR, FATHE NAGAR, HYDERABAD. 2) ITO, WARD 11(3), HYDERABAD. 3) CIT(A)-5, HYDERABAD. 4) ADDL.CIT, RANGE-11, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE.