Pallapati Kanaka Raju, Vijayawada V. The income Tax Officer, Ward-1(2), Vijayawada

ITA 461/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3769 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Business income
• Section: 143(3); 143(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 461 / VIZ /201 8 (ASST. YEAR : 2008 - 0 9 ) PALLAPATI KANAKA RAJU, D.NO. 70 - 8 - 6 , EMPLOYEES STREET, SANTHI NAGAR, PATAMATA, VIJAYAWADA. V S . IT O , WARD - 1( 2 ), VIJAYAWADA . PAN NO. AKWPP 3540 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 28 / 0 8 /201 9 . DATE OF PRONOUNCEMENT : 30 / 0 8 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , GUNTUR , DATED 20 /0 6 /201 8 FOR THE ASSESSMENT YEAR 200 8 - 0 9 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT T HE ASSESSEE IS AN INDIVIDUAL CARRYING IN THE BUSINESS OF IMFL, FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,48 ,880/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED U/SEC. 143(1) AND THEREAFTER 2 ITA NO. 461/VIZ/2018 ( PALLAPATI KANAKA RAJU ) SELECTED FOR SCRUTINY UNDER CASS AND AFTER FOLLOWING DUE PROCEDURE, ASSESSMENT WAS COMPLETED U/SEC. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') , DATED 31/12/2010 . 3 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT ON VERIFICATION OF THE TRADING ACCOUNT FOR THE YEAR ENDED 31/03/2008, IT IS NOTICED THAT THE ASSESSEE HAS ADMITTED GROSS PROFIT AT 13.5% ONLY, WHEREAS THE APBCL HAS ALLOWED AND FIXED GROSS PROFIT AT 25% ON AVERAGE PRICE ON GOODS PURCHASED . THE SAME IS PUT TO THE NOTICE OF THE ASSESSEE FOR ADOPTING PERCENTAGE AT 25% ON NET SALES . ACCORDINGLY, THE ASSESSING OFFICER HAS ESTIMATED THE GROSS PROFIT AT 25% AS AGAINST 13.5% ADOPTED BY THE ASSESSEE. 4 . ON APPEAL BEFORE THE LD. CIT(A) , THE ASSESSEE HAS RAISED GROUND NO S .3 & 5 IN GROUNDS OF APPEAL THAT THE ASSESSING OFFICER HAS ESTIMATED THE GROSS PROFIT WITHOUT REJECTING THE BOOKS OF ACCOUNT OR WITHOUT POINTING OUT ANY MISTAKE . THE GROUND NOS. 3 & 5 RAISED BEFORE THE LD. CIT(A) ARE EXTRACTED AS UNDER: - 3) THE ASSESSING OFFICER SHOU L D HAVE CONSIDERED THE FACT THAT THE APPELLANT MAINTAINED BOOKS OF ACCOUNT IN THE REGULAR COURSE OF BUSINESS, SUCH ACCOUNTS WERE SUBJECTED TO TAX AUDIT AND THAT HE DID NOT COME ACROSS ANY DEFECT IN THE BOOKS OF ACCOUNT AS DISCUSSED IN THE ASSESSMENT ORDER. 5) THERE IS NO SCOPE F OR ESTIMATE OF GROSS PROFIT AND THE ASSESSING OFFICER SHOULD HAVE ACCEPTED THE BOOK RESULTS. 3 ITA NO. 461/VIZ/2018 ( PALLAPATI KANAKA RAJU ) 5. THE LD. CIT(A) WITHOUT CONSIDERING THE GROUNDS RAISED BY THE ASSESSEE, CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6 . ON APPEAL BEFORE US, THE ASSESSEE HAS RAISED THE FOLL O W I NG SPECIFIC GROUNDS: - 2. THE LD. CIT(A) - 1, GUNTUR FAILED TO CONSIDER THAT THE ASSESSING OFFICER ERRED IN RESOR T ING FOR ESTIMATION OF BUSINESS PROFIT WITHOUT FINDING ANY DEFECT OR DISCREPANCY IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT AND WITHOUT REJECTING THE BOOKS OF ACCOUNT. 3. THE LD. CIT(A) - 1, GUNTUR I S NOT JU STIFIED IN DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE BUSINESS INCOME EVEN THOUGH THE APPELLANT HAS DEDUCED HIS BOOK RESULTS OUT OF REGULARLY MAINTAINED AND AUDITED BOOKS OF ACCOUNT WHICH WERE SCRUTINIZED BY THE ASSESSING OFFICER WITHOUT POINTING OUT ANY DEFECT/DISCREPANCY. 7 . LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER IS NOT CORRECT IN ESTIMAT ING THE GROSS PROFIT WITHOUT REJECTING THE BOOKS OF ACCOUNT . FOR THAT, HE RELIED ON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PATIALA DISTRICT CO - OPERATIVE MILK PRODUCERS UNION LTD . [(2010) 328 ITR 615)] AND SUBMITTED THAT ISSUE MAY BE REMITTED BACK TO THE FILE OF THE LD. CIT(A) FOR ADJU DI CATION OF THE GROUNDS RAISED BEFORE HIM. 8 . ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 4 ITA NO. 461/VIZ/2018 ( PALLAPATI KANAKA RAJU ) 9. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 10 . WE FIND THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE GROSS PROFIT AT 25% AS AGAINST 13.5% SHOWN BY THE ASSESSEE. WE ALSO FIND THAT THE ASSESSEE HAS RAISED SPECIFIC GROUNDS BEFORE THE LD.CIT(A) IN RESPECT OF ESTIMATION OF GROSS PROFIT BY THE ASSESSING OFFICER WITHOUT REJECTING THE BOOKS OF ACCOUNT , WHICH WERE NOT ADJU DI CATED BY THE LD. CIT(A). T HEREFORE , WE DIRECT THE LD. CIT(A) TO ADJUDICATE THE GROUND NOS. 3 & 5 RAISED BEFORE HIM IN RESPECT OF ESTIMATION WITHOUT REJECTING THE BOOKS OF ACCOUNT AND PASS THE ORDERS IN ACCORDANCE WITH LAW. THUS, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 11 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON TH IS 3 0 T H DAY OF AUGUST , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 0 T H AUGUST , 201 9 . VR/ - 5 ITA NO. 461/VIZ/2018 ( PALLAPATI KANAKA RAJU ) COPY TO: 1. THE ASSESSEE PALLAPATI KANAKA RAJU, D.NO. 70 - 8 - 6, EMPLOYEES STREET, SANTHI NAGAR, PATAMATA, VIJAYAWADA. 2. THE REVENUE ITO, WARD - 1(2), VIJAYAWADA. 3. THE PR. CIT , VIJAYAWADA. 4. THE CIT(A) - 1, GUNTUR. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.