Mandadi Srinivas, Nalgonda Dist., Hyderabad V. ITO, Suryapet

ITA 544/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53710 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VENKATESWARA RAO
• Assessee Lawyers: D SATYANARAYANA
• Section: 234B; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I .T.A. NO. 544/HYD/2011 ASSESSMENT YEAR : 2007-08 SHRI MANDADI SRINIVAS PENPAHAD, NALGONDA DIST. PAN: AHZPM6395A VS. INCOME-TAX OFFICER SURYAPET APPELLANT RESPONDENT APPELLANT BY: SHRI D. SATYANARAYANA RESPONDENT BY: SHRI VENKATESWARA RAO DATE OF HEARING: 19.10.2011 DATE OF PRONOUNCEMENT: 19.10.2011 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), VIJAYAWADA 31/01/2011 FOR THE ASSESSMENT YE AR 2007-08. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO DETERMINATION OF INCOME AT 24% OF SALE RECEIPTS. T HE ASSESSEE ALSO RAISED A GROUND WITH REGARD TO LEVY OF INTEREST U/S. 234B OF THE INCOME-TAX ACT, 1961. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. SIMILAR ISSUE CAME UP FOR CON SIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF KANAKA DURGA WINES, HY DERABAD IN ITA NO. 591/HYD/2011 WHEREIN THE TRIBUNAL VIDE ORDER DATED 28.7.2011 HELD AS FOLLOWS: '5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S AN ADMITTED FACT THAT THE MAXIMUM RETAIL PRICE OF THE LIQUOR PR ODUCTS IS FIXED AT 30% OVER THE COST PRICE OF THE ASSESSEE A S PER THE UNDERSTANDING WITH APBCL. IT IS ALSO AN ADMITTED F ACT ABOUT ITS INABILITY TO MAINTAIN THE CASH SALES BILLS AND ACCORDINGLY THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE CANNOT BE RELIED UPON. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CON SIDERED VIEW THAT THE LOWER AUTHORITIES ARE CORRECT AND JUS TIFIED IN REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. WE I.T.A. NO. 544/HYD/2011 SHRI MANDADI SRINIVAS =================== 2 FIND THAT THE ASSESSING OFFICER HAS RIGHTLY ADOPTED THE SALE PRICE AT 30% OVER THE COST OF PURCHASE TO ARRIVE AT THE UNDERSTATEMENT OF SALES OF RS. 93,65,993/- BY THE A SSESSEE. BUT AT THE SAME TIME, THE ENTIRE UNDERSTATEMENT OF SALE S CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR T HE YEAR UNDER CONSIDERATION. IT IS WELL SETTLED LAW THAT T HE BEST GUIDE FOR ESTIMATION OF INCOME AFTER REJECTING THE BOOKS OF ACCOUNT IS EITHER PAST HISTORY OF THE ASSESSEE OR ANY OTHER CO MPARABLE CASES. THE LEARNED COUNSEL FOR THE ASSESSEE CLEARL Y DEMONSTRATED BEFORE US THAT THE ASSESSEE'S NET PROF IT IN THE PAST IS BETWEEN 0.12% TO 0.28% OF SALES. THE CO-ORDINAT E BENCH OF THE TRIBUNAL IN THE CASE OF MANJIT SINGH BAGGA VS. ITO IN ITA NO. 371 AND OTHERS DATED 30 TH SEPTEMBER, 2010 HELD THAT THE ESTIMATION OF NET PROFIT AT 3% IS REASONABLE. IN V IEW OF THIS MATTER, ENDS OF JUSTICE WOULD BE MET IF WE ESTIMATE THE NET PROFIT OF THE ASSESSEE AT 3% OF THE PURCHASES OR STOCK PUT FOR SALE DURING THE YEAR UNDER CONSIDERATION AS AGAINST THE ESTIMATION OF 5% MADE BY THE CIT(A). ACCORDINGLY, THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS REJECTED AND CROSS OBJ ECTION FILED BY THE ASSESSEE ON THIS ISSUE IS ALLOWED.' 4. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE DIR ECT THE ASSESSING OFFICER TO CONSIDER 3% OF THE PURCHASES O R STOCK PUT FOR SALE AS INCOME OF THE ASSESSEE. 5. FURTHER, LEVY OF INTEREST U/S. 234B OF THE ACT I S CONSEQUENTIAL AND MANDATORY IN NATURE AND THE SAME SHALL BE LEVIED AC CORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER, 2011. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 19 TH OCTOBER, 2011 TPRAO COPY FORWARDED TO: 1. SHRI MANDADI SRINIVAS, C/O. SHRI S. RAMA RAO, AD VOCATE, FLAT NO. 102, DOOR NO. 3-6-643, SRIYA'S ELEGANCE, S T. NO. 9, HIMAYATHNAGAR, HYDERABAD-500 029. 2. THE INCOME-TAX OFFICER, SURYAPET. 3. THE CIT(A), VIJAYAWADA 4. THE CIT-VI, HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD