Damera Pitchaiah, Hyd, Hyderabad V. ITO, Ward-11(1), Hyderabad, Hyderabad

ITA 447/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5995 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: K A SAI PRASAD
• Section: 144

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 447/HYD/2016 ASSESSMENT YEAR: 2011-12 SHRI DAMERA PITCHAIAH HYDERABAD. PAN ANFPP 6051N VS. THE INCOME TAX OFFICER, WARD 11(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.A. SAI PRASAD (AR) REVENUE BY : SMT U. MINI CHANDRAN (DR) DATE OF HEARING : 23-11-2016 DATE OF PRONOUNCEMENT : 30 -11-2016 ORDER PER P. MADHAVI DEVI, J.M.: IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE OR DER OF THE CIT (APPEALS) IN UPHOLDING THE ASSESSMENT ORDER ESTIMAT ING THE INCOME OF THE ASSESSEE AT 5% OF THE TOTAL TURNOVER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, W HO IS INTO THE BUSINESS OF TRADING IN CEMENT, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 29-09-2011, ADMITTING AN INCOME OF RS. 5,43,926/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143 (3) OF THE ACT, THE ASSESSING OFFICER (AO) DIRECTED THE ASSESSEE T O PRODUCE THE BOOKS OF ACCOUNT, SUCH AS CASH BOOK, LEDGER, PURCHASE AND S ALE BILLS, SOURCES OF CASH DEPOSITS ETC,. THE ASSESSEE, HOWEVER PRODUCED ONLY SALES LEDGER ITA NO.447/HYD/2016 DAMERA PITCHAIAH HYDERABAD PAGE 2 OF 3 AND CASH BOOK FROM WHICH, THE AO NOTICED THAT THERE WERE HUGE CASH CREDITS WHICH WERE RECORDED AS AMOUNTS RECEIVED AGA INST CREDIT SALES. THE ASSESSEE WAS THEREFORE ASKED TO PRODUCE ACCOUNT COPIES OF SUCH PARTIES FROM THEIR BOOKS. 3. SINCE THE ASSESSEE DID NOT COMPLY WITH THE REQUI REMENTS THE OF AO, THE AO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME OF THE ASSESSEE AT 5% OF THE TURNOVER UNDER SECTION 144 OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (AP PEALS), WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS I N SECOND APPEAL BEFORE US. 4. THE LD COUNSEL FOR THE ASSESSEE, WHILE REITERATI NG THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW, HAS FILED A STATEMENT SHOWING THE COMPARATIVE PROFIT PERCENTAGES OF THE A SSESSEE AS WELL AS OTHER SIMILARLY PLACED ASSESSEES IN SIMILAR LINE OF BUSINESS, ACCORDING TO WHICH THE NET PROFIT FOR THE ASSESSMENT YEAR 2010-1 1 AND 2011-12 WAS WORKED OUT AT 0.41% TO 1.19% (MARGIN). THUS, ACCOR DING TO HIM, IN THE LINE OF BUSINESS CARRIED ON BY THE ASSESSEE, MAXIMU M NET PROFIT MARGIN WAS 1.19% AND THE CIT (APPEALS) HAS ERRED IN CONFIR MING THE ESTIMATION OF PROFIT AT 5% OF THE TURNOVER WHICH IS VERY HIGH. HE HAS ALSO FILED A COPY OF THE ASSESSMENT ORDER IN THE CASE OF SHRI MU RALIDHAR DHARLAPALI, WHO IS ALSO A DEALER IN CEMENT, WHEREIN, THE AO HIM SELF HAS ESTIMATED THE PROFIT @ 1.5% OF THE TOTAL SALES. HE HAS ALSO FILE D BEFORE US THE COPIES OF THE ORDERS IN THE CASE OF SIMILARLY PLACED ASSESSEE S TO DRIVE HIS POINT THAT THE ESTIMATION OF NET PROFIT AT 1.5% IS REASONABLE. 5. THE LD DR, HOWEVER, VEHEMENTLY SUPPORTED THE ORD ER OR THE AUTHORITIES BELOW:- ITA NO.447/HYD/2016 DAMERA PITCHAIAH HYDERABAD PAGE 3 OF 3 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATER IAL ON RECORD, WE FIND THAT THE ESTIMATION OF NET INCOME AT 5% OF THE TOTAL TURNOVER IS IN FACT EXCESSIVE AS COMPARED TO SIMILARLY PLACED ASSE SSEES. IN FACT, IN THE CASE OF AN ASSESSEE CARRYING ON SIMILAR BUSINESS AS ASSESSEE, THE A.O. HAS ESTIMATED THE PROFIT @ 1.5% OF THE TURNOVER. TA KING THE OVERALL PICTURE INTO CONSIDERATION, WE DEEM IT FIT AND PROP ER TO RESTRICT THE ESTIMATION OF INCOME OF NET PROFIT TO 1.5% OF THE T OTAL TURNOVER. THE ASSESSEE GETS RELIEF, ACCORDINGLY. 7. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2016. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 30 TH NOVEMBER, 2016 KRK COPY TO:- 1) SHRI DAMARERA PITCHAIAH, C/O. CH. PARTHASARAT HY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1 ASHOKNAGAR, HYDERABAD 500 020. 2) ITO, WARD - 11(1), HYDERABAD . 3) CIT ( APPEALS)-5 4) THE PCIT, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE