Pullaiah Daniyakula, Khammam V. Income Tax Officer, Ward-1, Khammam

ITA 428/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4288 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 02-05-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 28-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH PARUCHURI
• Assessee Lawyers: M CHANDRAMOUWLESW RAO
• Section: 143(3); 142(1)

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. 428 HYD/201 8 ASSESSMENT YEAR: 20 1 4 - 15 PULLAIAH DANIYAKULA, KHAMMAM. PAN A HMPD8910H VS. INCOME - TAX OFFICER , WARD 1, KHAMMAM A PPELLANT RESPONDENT ASSESSEE BY: S H RI M. CHANDRAMOUWLESW RAO REVENUE BY: S HRI DINESH PARUCHURI DATE OF HEARING: 02/ 0 5 / 201 9 DATE OF PRONOUNCEMENT: 10 / 0 5 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 7 , HYDERABAD, DATED, 11 / 12 /201 7 FOR AY 20 1 4 - 15 . 2. BRIEF FACTS OF THE CASE ARE, ASSESSEE, AN INDIVIDUAL, DERIVES I NCOME FROM BUSINESS IN PURCHASE AND SALE OF LIQUOR, FILED HIS RETURN OF INCOME FOR THE AY 2014 - 15 ON 04/02/2015 ADMITTING TOTAL INCOME AT RS. 14,81,000/ - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR LIMITED SCRUTINY UNDER CASS AND NOTICE U/S 143(2) AND 142(1) WERE ISSUED AND SERVED ON THE ASSESSEE. ASSESSMENT WAS COMPLETED U/S 143(3) ON 28/06/2016 DETERMINING TOTAL INCOME AT RS. 28,70,340/ - INCLUDING ESTIMATION OF INCOME FROM BUSINESS AT THE RATE OF 5% I.E. RS. 26,01,408/ - ON TOTAL TURNOVER OF RS. 5,20,28,160/ - AND RS. 73,782/ - TOWARDS INCOME FROM OTHER SOURCES. TO COME TO I.T.A. NO. 428 /HYD/1 8 PULLAIAH DANIYAKULA 2 THIS CONCLUSION, THE AO HELD THAT IN VIEW OF THE DEFICIENCIES NOTICED IN MAINTENANCE OF BOOKS OF ACCOUNT, THE BOOKS OF ACCOUNT WERE REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND ACCORDINGLY, THE NET PROFIT WAS ESTIMATED AT 5% OF THE COST OF STOCK PUT FOR SALE. 3. WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), THE CIT(A) DIRECTED THE AO TO ESTIMATE THE INCOME AT 4% OF THE COST OF GOODS SOLD IN LIQUOR BUSINESS. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING T HE ACTION OF CIT(A). 5. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, THE LD. AR OF THE ASSESSEE RELIED ON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF GARINE CHADRAMOULI IN ITA NO. 429/HYD/2018 VI DE ORDER DATED 03/04/2019 WHEREIN IT WAS OBSERVED AS UNDER: 6. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. THE ASSESSMENT WAS SELECTED TO VERIFY THE BANK DEPOSITS AND TURNOVER OF THE ASSESSEE WHETHER THEY MATCH. AS THE ASSESSEE IS IN THE BU SINESS OF PURCHASE AND SALE OF LIQUOR AND ELECTRICALS, IT IS A FACT THAT ASSESSEE MAY NOT BE ABLE TO MAINTAIN THE SALE BILLS AS THE SALES ARE MOSTLY ON ACROSS THE COUNTER. BUT THE PURCHASES ARE FROM THE REGISTERED SOURCE, MOSTLY FROM GOVERNMENT AGENCIES. I T IS NOT DIFFICULT TO DETERMINE THE ACTUAL SALES. WE NOTICE THAT ASSESSING OFFICER HAS VERIFIED THE EXPENSES ETC., WHICH IS NOT THE MANDATE OF LIMITED SCRUTINY. THE CBDT DIRECTIVES ARE BINDING ON THE ASSESSING OFFICER AND IN CASE, ASSESSING OFFICER FINDS THAT THE ASSESSMENT HAS TO BE MADE ON EXTENSIVE BASIS DUE TO THE REASON THAT THERE ARE INCIDENCES OF TAX EVASION FOUND. ASSESSING OFFICER CAN EXTEND THE ASSESSMENT BY TAKING DUE PERMISSION FROM CIT / PR.CIT. IN THIS CASE, THERE IS NO ISSUE OF ANY TAX EVASION AND THE ASSESSING OFFICER SUO MOTTO DID THE EXTENSIVE ASSESSMENT EVEN THOUGH THE MANDATE WAS TO MAKE LIMITED SCRUTINY. I.T.A. NO. 428 /HYD/1 8 PULLAIAH DANIYAKULA 3 6.1. CONSIDERING THE FACTS OF THE CASE, THE ASSESSEE COULD NOT SUBMIT THE SALES BILLS DUE TO THE NATURE OF BUSINESS AND ASSESSING OFFI CER HAS NOT FOUND ANY DISCREPANCY IN THE BANK DEPOSITS AND TURNOVER OF THE ASSESSEE. WE ARE COMING ACROSS SO MANY CASES OF WINE BUSINESS, IN WHICH ASSESSEES WERE NOT ABLE TO SUBMIT PROPER VOUCHERS DUE TO THE NATURE OF BUSINESS AND MOSTLY ESTIMATED @3%. THE CASE BEFORE US ALSO FALLS IN THE SIMILAR CATEGORY AND ASSESSEE WAS NOT ABLE TO MAINTAIN PROPER RECORDS AND SHOWN PROFIT @2%. FOR THE SAKE OF JUDICIAL PRECEDENT, WE ARE INTENDED TO PROCEED WITH THE ESTIMATION BUT THE ISSUE BEFORE US IS NOT ON REJECTION OF BOOKS OR ESTIMATION OF INCOME. BEFORE US, WHETHER LIMITED SCRUTINY MANDATE CAN BE EXTENDED. AS PER THE CBDT DIRECTIVE, ASSESSING OFFICER CANNOT DO SO WITHOUT FOLLOWING PROPER PROCEDURE. IN THE GIVEN CASE, ASSESSING OFFICER HAS MADE EXTENSIVE ASSESSMENT WIT HOUT MANDATE. THEREFORE, WE NEED TO RESTRICT OURSELVES TO ADDRESS THIS ISSUE. HOWEVER, WE DIRECT THE ASSESSING OFFICER TO ACCEPT THE BOOKS OF ACCOUNT SINCE HE HAS NOT FOUND ANY DISCREPANCIES IN VERIFICATION OF DEPOSITS AND TURNOVER AS PER LIMITED MANDATE. EVEN IN CASE, ASSESSING OFFICER FOUND DISCREPANCY, HE COULD HAVE INVOKED SECTION 68. THEREFORE, THE GROUND RAISED BY ASSESSEE IS ALLOWED. THE ISSUE IN THE CASE ON HA N D IS SIMILAR TO THE ABOVE CASE, WE ARE INCLINED TO FOLLOW THE ABOVE CASE AND ALLOW THE A PPEAL FILED BY THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 10 TH MAY , 201 9. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH MAY , 201 9. KV I.T.A. NO. 428 /HYD/1 8 PULLAIAH DANIYAKULA 4 COPY FORWARDED TO: 1. PULLAIAH DANIYAKULA, C/O M. CHANDRAMOULESWARA RAO, CAS., FLAT NO. C - 3, SKYLARK APARTMENT, BASHEERBAGH, HYD ERABAD 500 029 2 . IT O , WARD 1 , KHAMMAM. 3 . CIT (A) - 7 , HYDERABAD 4. PR. CIT - 7 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE