Sri T.Appalaswamy, Visakhapatnam V. The ACIT, Circle-5(1), Visakhapatnam, Visakhapatnam

ITA 66/VIZ/2012

• Counselvise Citation: 6625314 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 08-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Keywords: Rejection of books of accounts

Judgement Text

ITA NOS.65&66/VIZAG/2012 T. APPALASWAMY, VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS.65&66/VIZAG/2012 ASSESSMENT YEARS : 2007-08 & 2008-09 T. APPALASWAMY VISAKHAPATNAM VS. ACIT CIRCLE-5(1) VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AAQPT 9195F ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SHRI R.K. SINGH, ADDL. CIT DATE OF HEARING : 26.02.2014 DATE OF PRONOUNCEMENT : 03.03.2014 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- THESE APPEALS OF THE ASSESSEE ARE AGAINST A COMMON ORDER OF THE CIT(A) DATED 30.12.2011 PERTAINING TO THE ASSESSMEN T YEAR 2007-08 AND 2008-09. SINCE FACTS ARE IDENTICAL AND ISSUE IS CO MMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE CLUBBED TOGETHER AND DISPOSED OF IN THIS COMBINED ORDER. 2. THE ISSUE IN DISPUTE IN THE AFORESAID APPEAL IS CONFINED TO THE ESTIMATION OF PROFIT BY CIT(A) AT 16% ON THE TRADIN G OF INDIAN MADE FOREIGN LIQUOR. BRIEFLY THE FACTS ARE, THE ASSESSEE AN IND IVIDUAL CARRIES ON WINE BUSINESS THROUGH ITS TWO PROPRIETORY CONCERNS I.E. SRINU BAR & RESTAURANT AND PYDIMAMBA WINES. OFCOURSE, THE ASSESSEE ALSO CARRI ES ON EXECUTION OF CIVIL CONTRACT WORK OF VISAKHAPATNAM STEEL PLANT. THE AS SESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09 DECLARING TOTAL INCOME OF RS.13,17,990/- AND RS.11,41,204/- RESPECTIVELY. DURING THE SCRUTINY ASSESSMENT PROCEEDING, WHEN THE ASSESSING OFFICER C ALLED UPON THE ASSESSEE TO PRODUCE COMPLETE DETAILS OF SALE OF WINE ALONG W ITH RELEVANT BILLS/VOUCHERS, ITA NOS.65&66/VIZAG/2012 T. APPALASWAMY, VSKP 2 THE ASSESSEES AUTHORIZED REPRESENTATIVE EXPRESSED HIS INABILITY TO PRODUCE ANY ACCOUNTS, BILLS/VOUCHERS ETC. THE ASSESSEE ALS O COULD NOT PRODUCE THE STOCK REGISTER OR DETAILS OF SALES MADE AGAINST WIN ES. IN SUCH VIEW OF THE MATTER, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS FOR BOTH THE ASSESSMENT YEARS AND RESORTED TO ESTIMATION OF PROF IT FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSING OFFICER AFTER INCLUDING THE LICENSE FEE TO THE TOTAL PURCHASES MADE ESTIMATED THE NET PROFIT @ 10%. HOW EVER, SO FAR AS ASSESSMENT YEAR 2008-09 IS CONCERNED, THE ASSESSING OFFICER ADOPTED A DIFFERENT METHOD BY ESTIMATING THE GROSS TURNOVER A T 120% OF THE PURCHASES AND THEREAFTER ADDING THE LICENSE FEE, ESTIMATED TH E INCOME AT 5% OF THE TURNOVER. THE ASSESSEE BEING AGGRIEVED OF SUCH EST IMATION OF INCOME PREFERRED APPEALS BEFORE THE CIT(A). THE CIT(A) ON THE BASIS OF A DECISION OF THE HONBLE A.P. HIGH COURT IN THE CASE OF CIT VS. R.N. RAO AND OTHERS VIDE JUDGEMENT DATED 21.6.2011 WAS OF THE VIEW THAT PROF IT HAS TO BE ESTIMATED AT 16%. THOUGH THE ASSESSEE OBJECTED TO SUCH ESTIMATI ON OF PROFIT BY CONTENDING THAT THE CASE BEFORE THE HONBLE HIGH CO URT WAS RELATING TO SALE OF ARRACK, WHEREAS, THE ASSESSEE IS DEALING IN INDIAN MADE FOREIGN LIQUOR BEING PURCHASED FROM A.P. BEVERAGE CORPORATION LTD. BUT THE CIT(A) REJECTING SUCH CONTENTION OF THE ASSESSEE, ENHANCED THE ASSESSMENT BY ESTIMATING THE PROFIT AT 16% OF THE PURCHASE VALUE FOR BOTH THE ASSESSMEN T YEARS. 3. WE HAVE HEARD THE PARTIES, PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. IT IS THE CONTENTION OF THE LD. A.R. THAT THE ESTIMATION OF PROFIT AT 16% IS HI GH AND EXCESSIVE CONSIDERING THE NORMAL RATE OF PROFIT IN THIS LINE OF BUSINESS. WHEREAS, THE LD. D.R. SUPPORTED THE ORDER OF THE CIT(A). HAVING CONSIDER ED THE SUBMISSIONS OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE ISSUE IS NO M ORE RES INTEGRA IN VIEW OF A SERIES OF DECISIONS OF THE ITAT HYDERABAD BENCH IN SIMILAR CASES. THE COORDINATE BENCH IN CASE OF ITA NO.127/HYD/12 AND O THERS DATED 18.05.2012 AS WELL AS A NUMBER OF OTHER CASES HAVE HELD THAT P ROFIT IN CASE OF BUSINESS IN INDIAN MADE FOREIGN LIQUOR HAS TO BE ESTIMATED AT 5% OF THE PURCHASES MADE BY THE ASSESSEE. THEREFORE, FOLLOWING THE DECISION OF THE ITAT HYDERABAD BENCH, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIR ECT THE ASSESSING OFFICER TO ITA NOS.65&66/VIZAG/2012 T. APPALASWAMY, VSKP 3 ESTIMATE THE PROFIT FROM THE WINE BUSINESS OF THE A SSESSEE BY APPLYING THE RATE OF 5% OF THE PURCHASES MADE NET OF ALL OTHER D EDUCTIONS. THE ASSESSING OFFICER SHOULD ALSO BEAR IN MIND THAT IN NO CASE TH E INCOME DETERMINED SHOULD BE BELOW THE INCOME RETURNED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 3 RD MAR14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 3 RD MARCH, 2014 COPY TO 1 T. APPALASWAMY, S/O T. APPA RAO, HIG-178, VINAYAKA NAGAR, VISAKHAPATNAM. 2 ACIT CIRCLE - 5(1 ), VISAKHAPATNAM 3 THE CIT, VISAKHAPATNAM 4 THE CIT(A), VISAKHAPATNAM. 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER (B. VENU GOPAL) SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM