Appeal Details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 6449 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 4 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-07-2018
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
25-07-2018
Assessment Year
2010-2011
Appeal Filed On
22-03-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 539/HYD/2017 ASSESSMENT YEAR: 2010-11 S VITTAL REDDY, SHANKARPALLY, RR DISTRICT [PAN: BXYPS0373J] VS THE INCOME TAX OFFICER, WARD-1, VIKARABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A. KIRAN MANOHAR, AR FOR REVENUE : SHRI RAJEEV BENJWAL, DR DATE OF HEARING : 25-07-2018 DATE OF PRONOUNCEMENT : 27-07-2018 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-2, HYDERABAD, DATED 28-07-2016, CONFIRMING THE ACTION OF THE ASSESSING OFF ICER (AO) IN REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE NET PROFIT AT 5%. CONDONATION OF DELAY: 2. THIS APPEAL HAS BEEN FILED WITH A DELAY OF ONE HU NDRED AND TWENTY SIX (126) DAYS. ASSESSEE HAS FILED A PE TITION FOR SEEKING CONDONATION OF DELAY FOR THE APPEAL, BY STATING AS UNDER: I.T.A. NO. 539/HYD/2017 :- 2 - : PETITION REQUESTING FOR CONDONATION OF DELAY: THE PETITIONER HUMBLY SUBMITS THAT FOR THE ASSESSME NT YEAR 2010-11 HE FILED RETURN OF INCOME ADMITTING AN INCOME OF RS . 4,97,530/-. THE ASSESSMENT WAS COMPLETED UNDER SEC.L43(3) OF THE I. T. ACT VIDE ORDER DATED 5.3.2013. AGGRIEVED WITH THE ASSESSMENT, THE PETITIONER FILED AN APPEAL BEFORE THE HON'BLE COMMISSIONER OF INCOME -TAX (APPEALS)- III, HYDERABAD. LATER ON THE APPEAL WAS TRANSFERRED TO THE JURISDICTION OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) -2, HYDERABAD WHO DISPOSED THE SAME VIDE ORDER IN ITA NO.0447/201 4-15 DATED 28.7.2016. THE SAID ORDER WAS SERVED ON PETITIONER' S ADVOCATE ON 17.9.2016. IN THIS REGARD THE PETITIONER HUMBLY SUB MITS THAT HE WAS RUNNING HIS BUSINESS ACTIVITY AT SHANKARPALLY TILL 30.6.2012. THE EXCISE LICENCE HAS EXPIRED ON 30.6.2012 AND HE DID NOT GET THE RENEWAL AND, THEREFORE, THE BUSINESS CEASED TO EXIS T. CONSEQUENTLY, HE HAD NO CONTACT WITH THE ADDRESS AT SHANKARPALLY AS HE IS A RESIDENT OF ZAHEERABAD. DURING THE RELEVANT PERIOD, THE MOTHER OF THE PETITIONER SMT. S. MANEMMA WAS SERIOUSLY ILL WITH A BDOMINAL DISORDERS. THE PETITIONER WAS PREOCCUPIED WITH THE MEDICAL TREATMENT OF HIS MOTHER. SHE UNDERWENT EXTENSIVE MEDICAL EXAM INATIONS AT DIFFERENT HOSPITALS AND LATER IT WAS DIAGNOSED AS M ALIGNANCY (ANNEXURE NO.10 OF THE MEDICAL RECORD). THE MEDICAL RECORD IS ANNEXED TO THIS PETITION. THE PETITIONER WAS ATTEND ING ON HIS AILING MOTHER AND HE WAS NOT IN A POSITION TO ATTEND NORMA L WORKS. HE CAME TO KNOW OF THE APPELLATE ORDER OF CIT (APPEALS) IN THE THIRD WEEK OF MARCH, 2017. HE CONTACTED THE ADVOCATE ON 20.3.2017 . THE APPEAL FEE WAS PAID ON 21.3.2017 IN THE EVENING HOURS AND THE APPEAL PAPERS WERE SIGNED ON 22.3.2017. THE APPEAL IS BEIN G FILED BEFORE THE HON'BLE ITA T ON THE SAME DAY. THERE IS A DELAY OF 126 DAYS. THE APPELLANT HUMBLY SUBMITS THAT THE DELAY IS FOR THE REASONS SUBMITTED ABOVE WHICH ARE BEYOND THE CONTROL OF THE PETITIONE R AND IS NOT INTENTIONAL. THE PETITIONER, THEREFORE, PRAYS THE H ON'BLE INCOME-TAX APPELLATE TRIBUNAL TO KINDLY CONDONE THE DELAY AND PASS APPROPRIATE ORDERS GRANTING RELIEF AS PRAYED FOR. SD/- 2.1. CONSIDERING THE PETITION FOR CONDONATION OF DELAY AND BEING SATISFIED WITH THE REASONABLE CAUSE FOR THE DELA Y, I HEREBY CONDONE THE DELAY IN FILING THE APPEAL, WHICH IS ADMITTED TO BE HEARD ON MERITS. I.T.A. NO. 539/HYD/2017 :- 3 - : 3. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE IS AN IND IVIDUAL, DERIVING INCOME FROM RUNNING OF WINE SHOP. HE FILE D HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, DECLARING INCOME OF RS. 4,97,530/-. IN THE SCRUTINY A SSESSMENT PROCEEDINGS, AFTER VERIFICATION OF VARIOUS DETAILS, AO WAS OF THE OPINION THAT THE BOOKS OF ACCOUNT CANNOT BE RELIED UPON AND RESORTED TO ESTIMATION OF NET PROFIT AT 5% OF THE PURCHASE OR STOCK PUT TO SALE AT RS. 2,39,94,480/. HE THEREFORE E STIMATED INCOME AT 5% WHICH WORKS OUT TO RS. 11,99,724. AGGRI EVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), W HO AFTER CONSIDERING ASSESSEES SUBMISSIONS AND FOLLOWING VA RIOUS DECISIONS OF CO-ORDINATE BENCHES, CONFIRMED THE ESTIMA TION AT 5% . FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 4. LD. COUNSEL RESTRICTED THE ARGUMENTS TO THE GROUNDS RAISED ON ESTIMATION OF INCOME AT 5% WHICH IS ON HIGHE R SIDE AND VARIOUS CO-ORDINATE BENCHES HAVE DETERMINED THE P ROFIT AT 3% OF THE STOCK PUT TO SALE. LD. COUNSEL FILED THE DE CISION OF CO-ORDINATE BENCH IN THE CASE OF SECUNDERABAD WINES V S. ITO IN ITA NO. 181/HYD/2016, DT. 20-07-2016. 5. LD.DR, HOWEVER, SUBMITTED THAT LD.CIT(A) HAS FAIRLY CONSIDERED 5% AS ESTIMATED BY THE AO AND RELIED ON V ARIOUS CO-ORDINATE BENCH DECISIONS AS MENTIONED BY CIT(A) IN THE IMPUGNED ORDER. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS PLACED ON RECORD. AT THE TIME OF HEARING, LD. COUNSEL I.T.A. NO. 539/HYD/2017 :- 4 - : FOR ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAV OUR OF ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN THE C ASE 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 VENKATES WARA WINES IN ITA NO. 1206/HYD/2015, DT. 27-11-2015, WHER EIN AFTER TAKING INTO CONSIDERATION SIMILAR CIRCUMSTANCES, THE TRIBUNAL HAS UPHELD THE ESTIMATION OF INCOME AT 3% OF T HE COST OF THE GOODS SOLD. 6.1. IN THE CASE OF SURAJ HARJANI VS. ITO IN ITA NO. 1745/HYD/2017, DT. 11-04-2018, THE CO-ORDINATE BENCH H AS HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE MATERIAL ON RECORD. THERE IS NO DISPUTE WITH REFER ENCE TO THE FACT THAT BOOKS OF ACCOUNT ARE TO BE REJECTED AND THE INCOME IS TO BE ESTIMATED. AO ESTIMATED THE INCOME @ 5% RELYING ON VARIOUS CO- ORDINATE BENCH DECISIONS, WHICH WAS CONFIRMED BY THE CIT(A). HOWE VER, PERUSING THE VARIOUS ORDERS INDICATE THAT A UNIFORM NET PROFIT C ANNOT BE ADOPTED IN EACH AND EVERY CASE OF SIMILAR BUSINESS. THE ESTIMA TION OF NET PROFIT MAY BE ON THE BASIS OF THE FACTS INVOLVED IN EACH A ND EVERY CASE. IN ALL THE ORDERS RELIED UPON BEFORE US, ESTIMATION OF INCOME IS VARYING FROM 2.5% TO 5%. THE LATEST ORDER BY THE SMC BENCH IN THE GROUP 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 SUBMISSION S AND PERUSED THE RECORD. A.O. AS WELL AS LD. CIT (A) HAVE RELIED UPON THE DECISIONS OF THE ITAT RENDERED IN 2011 / 2012 WHEREAS THE ASSESSING O FFICER, UNDER SIMILAR CIRCUMSTANCES, MADE SCRUTINY ASSESSMENTS WHE REIN THE STRINGENT CHANGE IN POLICY AS WELL AS IMPACT OF THE H IGH COURT DIRECTIONS WERE TAKEN INTO CONSIDERATION FOR THE PUR POSE OF ESTIMATING THE NET INCOME @ 3% AND IN FACT IN THE LAT ER DECISIONS OF THE TRIBUNAL, THE NET INCOME WAS ESTIMATED @ 3% OF T HE COST OF GOODS SOLD. UNDER THESE CIRCUMSTANCES, CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL, CITED (SUPRA), I DIRECT THE A.O. TO ADO PT 3% OF THE COST OF THE GOODS SOLD AS THE INCOME OF THE ASSESSEES. I.T.A. NO. 539/HYD/2017 :- 5 - : 5.1. KEEPING IN VIEW THE LATEST ORDER OF THE SMC BE NCH AND THE REASONS GIVEN THEREIN, WE ARE OF THE OPINION THAT E STIMATION OF INCOME @ 3% WOULD BE REASONABLE ON THE FACTS OF THE CASE. HOWEVER, AO IS DIRECTED TO KEEP IN MIND THAT THE ESTIMATED INCOME DOES NOT FALL LESS THAN THE PROFIT DECLARED BY ASSESSEE, IN WHICH CASE THE PROFIT DECLARED BY ASSESSEE SHOULD BE ACCEPTED. SUBJECT TO ABOVE DIRECTION, AO IS DIRECTED TO ESTIMATE THE PROFIT @ 3% OF THE C OST OF STOCK PUT TO SALE AND RE-DETERMINE THE TOTAL INCOME, ACCORDIN GLY. 6.2. RESPECTFULLY FOLLOWING THE SAME, I DIRECT THE AO TO ADOPT 3% OF THE COST OF THE GOODS SOLD AS INCOME OF ASSESS EE, SUBJECT TO NOT BEING LESS THAN THE RETURNED INCOME. THE GROUNDS PERTAINING TO THIS ISSUE ARE ALLOWED. 6.3. GROUND NO. 4 IS RAISED ON THE ISSUE OF ADDITION OF RS. 33,370/- WHICH IS INTEREST ON DEPOSITS. THIS AMOUNT WAS BROUGHT TO TAX SEPARATELY AND NOT CONSIDERED AS BUSIN ESS INCOME. ASSESSEE EVEN THOUGH RAISED A GROUND ON THIS NO ARGUMENTS HAVE BEEN ADVANCED ON THIS ISSUE. EVEN OT HERWISE, WHEN INCOME IS ESTIMATED ON THE BUSINESS, INCOMES OTHE R THAN FROM BUSINESS ARE TO BE BROUGHT TO TAX SEPARATELY. SI NCE THE INTEREST WAS EARNED ON FIXED DEPOSITS, THE SAME WILL FO RM PART OF INCOME FROM OTHER SOURCES. GROUND NO. 4 IS THEREFO RE REJECTED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH JULY, 2018 TNMM I.T.A. NO. 539/HYD/2017 :- 6 - : COPY TO : 1. SRI S. VITTAL REDDY, H.NO. 1-2-30, MANIKPRABHU S TREET, ZAHEERABAD, SANGAREDDY DISTRICT. 2. THE INCOME TAX OFFICER, WARD-1, VIKARABAD. 3. CIT (APPEALS)-2, HYDERABAD. 4. PR.CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.
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